Sathgamaya Women Charitable Society,, Hyderabad v. Director of Income Tax (Exemptions)., Hyderabad

ITA 1709/HYD/2013 | misc
Pronouncement Date: 11-04-2014 | Result: Allowed

Appeal Details

RSA Number 170922514 RSA 2013
Assessee PAN ABWFS7701B
Bench Hyderabad
Appeal Number ITA 1709/HYD/2013
Duration Of Justice 4 month(s) 5 day(s)
Appellant Sathgamaya Women Charitable Society,, Hyderabad
Respondent Director of Income Tax (Exemptions)., Hyderabad
Appeal Type Income Tax Appeal
Pronouncement Date 11-04-2014
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted A
Tribunal Order Date 11-04-2014
Assessment Year misc
Appeal Filed On 06-12-2013
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES A : HYDERABAD BEFORE S/SHRI B. RAMAKOTAIAH ACCOUNTANT MEMBER AND V. DURGA RAO JUDICIAL MEMBER ITA.NO.1709/HYD/2013 SATHGAMAYA WOMEN CHARITABLE SOCIETY CHOUTUPPAL NALGONDA DT. PAN ABWFS 7701B VS. DIT (EXEMPTIONS) HYDERABAD. (APPELLANT) (RESPONDENT) FOR ASSESSEE : MR. E.S. RANGANATH FOR REVENUE : MR. P. SOMASEKHAR REDDY DATE OF HEARING : 08.04.2014 DATE OF PRONOUNCEMENT : 11.04.2014 ORDER PER B. RAMAKOTAIAH A.M. THIS APPEAL WAS FILED BY THE ASSESSEE AGA INST THE ORDER OF THE DIT(E) HYDERABAD DATED 25.09.2013. 2. BRIEFLY STATED THE ASSESSEE-SOCIETY WAS REGIS TERED UNDER A.P. SOCIETIES REGISTRATION ACT 2011 ON 03.0 2.2011 VIDE REGISTRATION NO. 45 OF 2011. THE SOCIETY HAS FILED AN APPLICATION IN FORM NO.10A ON 08.03.2013 SEEKING REGISTRATION UNDER SECTION 12AA OF THE INCOME TAX A CT 1961 TO THE DIRECTOR OF INCOME TAX (EXEMPTIONS). THE DEPART MENT HAS ISSUED A QUESTIONNAIRE TO THE ASSESSEE SOCIETY VIDE LETTER DATED 24.06.2013 REQUESTING THE ASSESSEE SOCIETY TO FURNI SH ORIGINAL MEMORANDUM OF ASSOCIATION AND BYE LAWS FOR VERIFICA TION AND 2 ITA.NO.1709/HYD/2013 SATHGAMYA WOMEN CHARITABLE SOCIETY CHOUTUPPAL NALGONDA DIST. DETAILED INFORMATION ON SPECIFIC POINTS AND TO PROD UCE BOOKS OF ACCOUNTS FOR VERIFICATION. ON VERIFICATION OF THE I NFORMATION FURNISHED BY THE ASSESSEE-SOCIETY IN RESPONSE THE DIT(E) FOUND THAT THE ASSESSEE SOCIETY CANNOT BE GRANTED R EGISTRATION UNDER SECTION 12AA OF THE ACT. HE REFERRED MORE SPE CIFICALLY ASSESSEES REPLY TO QUESTION NO.13 OF THE QUESTIONN AIRE CLAUSES 1 2 3 AND 4 OF PARA 3 OF THE MEMORANDUM O F ASSOCIATION WHICH SPEAK OF BY ESTABLISHING A TRAI NING INSTITUTE FOR ASSEMBLING OF ELECTRIC VOLTAGE STABIL IZERS (I) TO PROMOTE THE UPLIFTMENT AND EMPOWERMENT OF RURAL WOM EN AND CHILDREN IRRESPECTIVE OF CASTE RACE COMMUNITY CR EED LANGUAGE OF SOCIETY STATUS (II) TO PROVIDE JOB OPPO RTUNITIES FOR UNEMPLOYED RURAL WOMEN. (III) TO PROVIDE JOB OPPORT UNITIES FOR UN EMPLOYED RURAL WOMEN. (IV) TO UNDERTAKE AND ESTA BLISH EDUCATIONAL TECHNICAL AND TRAINING INSTITUTIONS OR OTHER INSTITUTIONS OF SIMILAR NATURE. AND (V) TO CARRY ON SMALL SCALE OR OTHER INDUSTRY TO PROVIDE EMPLOYMENT AND TRAINING F OR RURAL WOMEN. THE DIT(E) WAS OF THE VIEW THAT AS PER THE I NFORMATION PROVIDED BY THE ASSESSEE SOCIETY IT IS DOING BUSIN ESS OF SUPPLYING STABILIZERS WITH AN INTENTION TO MAKE PRO FIT. THE DIT(E) FURTHER NOTED THAT EVEN IF THE CONTENTION OF THE ASSESSEE SOCIETY WAS THAT IT IS A CHARITABLE INSTITUTION HAS TO BE ACCEPTED THE RELEVANT OBJECTS OF THE ASSESSEE SOCI ETY FALL UNDER THE HEAD ADVANCEMENT OF ANY OTHER OBJECT OF GENERA L PUBLIC UTILITY AS PER THE DEFINITION UNDER SECTION 2(15) OF THE I.T. ACT AND NOT RELIEF TO THE POOR AS CLAIMED BY THE ASSESS EE. HE FURTHER NOTED THAT TRAINING THE RURAL WOMEN FOR MAK ING VOLTAGE STABILIZERS WOULD NOT COME UNDER THE HEAD EDUCATIO N IN VIEW OF THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF SOLE TRUSTEE LOK SHIKSHANA TRUST VS. CIT 101 ITR 2 34. IN THIS 3 ITA.NO.1709/HYD/2013 SATHGAMYA WOMEN CHARITABLE SOCIETY CHOUTUPPAL NALGONDA DIST. VIEW OF THE MATTER AND TAKING INTO ACCOUNT THE TURN OVER OF THE ASSESSEE SOCIETY FOR THE F.YS. 2011-12 AND 2012-13 THE DIT(E) CONCLUDED THAT AS THE ASSESSEE WAS PURSUING THE OBJ ECT OF GENERAL PUBLIC UTILITY IT WAS HIT BY TWO PROVISOS OF SECTION 2(15) AND IT CANNOT BE GRANTED REGISTRATION UNDER SECTION 12AA OF THE ACT. HE ACCORDINGLY REJECTED THE APPLICATION OF TH E ASSESSEE FOR REGISTRATION UNDER SECTION 12AA OF THE ACT VIDE ORD ER DATED 25.09.2013. HENCE THE ASSESSEE IS IN APPEAL BEFORE US AGAINST THE SAME. 3. LD. COUNSEL EXPLAINED THAT ASSESSEE-TRUST WAS INVOLVED IN UPLIFTMENT OF POOR AND IF THERE IS ANY COMMERCIAL ACTIVITY SECTION 11(4) AND (4A) WILL APPLY BUT NOT REFUSAL OF REGISTRATION. HE ALSO OBJECTED TO THE OBSERVATIONS OF THE DIT THAT ASSESSEE WAS INVOLVED IN OTHER GENERAL OBJECT OF PUBLIC UTILITY SO AS TO HIT BY THE PROVISO TO SECTION 2(1 5). LD. COUNSEL ALSO EXPLAINED THE ACTIVITY OF THE SOCIETY TO SUBMI T THAT ASSESSEE SOCIETY TRAINS THE RURAL WOMEN AND THEN EN GAGES THEM IN ASSEMBLING WORK OF PIECE RATE BASIS TO ENAB LE THEM TO EARN AROUND RS.5000/- PER MONTH. FOR THIS PURPOSE THE SOCIETY HAS A TIE-UP WITH M/S. V-GUARD INDUSTRIES L TD AND ASSESSEE IS INVOLVED IN CHARITABLE ACTIVITY. THEREF ORE REJECTION OF REGISTRATION IS NOT CORRECT ON THE PART OF DIT(E ). 4. LD. D.R. HOWEVER REFERRED TO THE ORDER OF THE DIT(E) TO SUBMIT THAT ASSESSEES ACTIVITIES CANNOT BE CONSIDERED AS CHARITABLE PURPOSE AS THE ASSESSEE IS NOT INVOLVED IN MAIN THREE OBJECTS BUT COMES WITHIN THE PURVIEW O OBJECTS OF GENERAL PUBLIC UTILITY. THEREFORE THE ORDER OF THE DIT(E) REQUIRE CONFIRMATION. 4 ITA.NO.1709/HYD/2013 SATHGAMYA WOMEN CHARITABLE SOCIETY CHOUTUPPAL NALGONDA DIST. 5. LD. COUNSEL IN REPLY SUBMITTED THAT ASSESSEE HAVING BEEN REGISTERED AS A CHARITABLE SOCIETY UND ER THE A.P. SOCIETIES REGISTRATION ACT IT IS VERY CLEAR THAT I T HAS BEEN OPERATING AS NO PROFIT - NO LOSS BASIS AND THEREF ORE FOR THAT REASON ALSO SOCIETY SHOULD BE GRANTED REGISTRATION . 6. WE HAVE CONSIDERED THE RIVAL CONTENTIONS AND PERUSED THE DOCUMENTS PLACED ON RECORD INCLUDING TH E MEMORANDUM OF ASSOCIATION. THE SOCIETY WAS FORMED W ITH AN AVOWED OBJECT OF TRAINING THE RURAL WOMEN AND ENGAG ING THEM IN SOME PRODUCTIVE WORK. THE DIT(E) HAS CONSIDERED THE RECEIPTS FROM M/S. V-GUARD INDUSTRIES AS A COMMERCI AL ACTIVITY. WE ARE OF THE OPINION THAT DIT(E) DID NOT EXAMINE FULLY THE ACTIVITIES OF THE SOCIETY. IT WAS INFORMED THAT M/S. V-GUARD INDUSTRIES LTD. IS ENGAGING RURAL WOMEN IN SUCH ASS EMBLY ACTIVITIES AND FOR THAT PURPOSE SOCIETYS LIKE ASS ESSEE WERE ENGAGED AT VARIOUS PLACES. IN ORDER TO CONSIDER WHE THER IT IS AN ARRANGEMENT MADE BY M/S. V-GUARD INDUSTRIES SO AS T O OBTAIN ASSEMBLED PRODUCT AT A LESSER COST FOR WHICH THIS F ORUM WAS USED OR WHETHER SOCIETY IS GENUINELY INVOLVED IN UP LIFTMENT OF RURAL WOMEN THE ACTIVITIES REQUIRE DEEPER EXAMINAT ION BY EXAMINING ASSESSEES AGREEMENT WITH M/S. V-GUARD INDUSTRIES. NOT ONLY THAT AS SEEN FROM THE BALANCE SHEET FILED AS ON 31.03.2013 ASSESSEE HAS TAKEN LOAN FROM CANA RA BANK A SUM OF RS.27 50 000/-. WHAT ARE THE GUARANTEES G IVEN TO THE BANK WHILE OBTAINING THE LOAN ALONG WITH LOAN T AKEN FROM OTHERS OF RS.5 10 000/- SUNDRY CREDITORS TO AN EXT ENT OF RS.41 00 000/- ALSO REQUIRE EXAMINATION TO SEE WHET HER ASSESSEE IS INVOLVED IN ANY COMMERCIAL ACTIVITY. WH AT WE NOTICED FROM THE INCOME- EXPENDITURE STATEMENT WAS THAT THERE WERE ONLY SALES/COLLECTION OF SUPPLY OF STABILIZERS AND 5 ITA.NO.1709/HYD/2013 SATHGAMYA WOMEN CHARITABLE SOCIETY CHOUTUPPAL NALGONDA DIST. DONATIONS WERE NOT THERE AT ALL. THE ENTIRE EXPENDI TURE ALSO MAINLY PERTAINS TO PURCHASE OF STOCK AND OTHER INCI DENTAL EXPENDITURE MAINLY IN THE NATURE OF COMMERCIAL ACTI VITY. WHETHER THIS IS INCIDENTAL TO THE UPLIFTMENT OF POO R OR IT IS ONLY FACADE FOR RUNNING THE BUSINESS ORGANIZATION FOR TH E PURPOSE OF M/S. V-GUARD INDUSTRIES REQUIRE DETAILED EXAMINATIO N. MOREOVER IF ASSESSEE IS INDULGED IN TRAINING THE NUMBER OF PEOPLE TRAINED AND THEIR SOCIAL STATUS INCLUDING TH E FINANCIAL STATUS WHETHER THEY ARE POOR OR NOT REQUIRE FURTHER EXAMINATION. UNLESS THESE ASPECTS ARE EXAMINED IT IS VERY DIFFICULT TO ESTABLISH WHETHER ASSESSEE IS MAINLY F ORMED FOR THE PURPOSE OF RELIEF OF THE POOR SO AS TO CONSIDER A S A CHARITABLE PURPOSE OR IT IS INVOLVED IN CARRYING OF ANY ACTIVI TY IN THE NATURE OF TRADE COMMERCE OR BUSINESS SO AS TO GET EXCLUDED BY VIRTUE OF PROVISO TO SECTION 2(15). THESE ASPECTS R EQUIRE FURTHER EXAMINATION. THEREFORE IN ORDER TO EXAMINE THESE F ACTS THE ORDER OF THE DIT(E) IS SET ASIDE AND ISSUE OF REGIS TRATION IS RESTORED TO THE FILE OF DIT(E) TO MAKE FURTHER ENQU IRY AND DETERMINE AFRESH. GROUNDS OF THE ASSESSEE ARE ACCOR DINGLY CONSIDERED AS ALLOWED FOR STATISTICAL PURPOSES. 7. IN THE RESULT APPEAL OF THE ASSESSEE IS ALLOWE D FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 11.04.2014 SD/- SD/- (V. DURGA RAO) (B. RAMAKOTAIAH) JUDICIAL MEMBER ACCOUNTANT MEMBER HYDERABAD DATED 11 TH APRIL 2014 VBP/- 6 ITA.NO.1709/HYD/2013 SATHGAMYA WOMEN CHARITABLE SOCIETY CHOUTUPPAL NALGONDA DIST. COPY TO : 1. SATHGAMYA WOMEN CHARITABLE SOCIETY 4-94/A/1 LAKKARAM CHOUTUPPAL NALGONDA DT. C/O. NATARAJ IYER & CO. CHARTERED ACCOUNTANTS 1-10-126 ASHOKNAGAR HYDERABAD 500 020. 2. DIRECTOR OF INCOME TAX (EXEMPTIONS) HYDERABAD. 3. ADIT(E)-II HYDERABAD 4. D.R. ITAT A BENCH HYDERABAD.