OTTERS CLUB, MUMBAI v. DIRECTORE OF INCOME TAX (EXEMP), MUMBAI

MA 102/MUM/2016 | 2009-2010
Pronouncement Date: 30-09-2016 | Result: Dismissed

Appeal Details

RSA Number 10219924 RSA 2016
Bench Mumbai
Appeal Number MA 102/MUM/2016
Duration Of Justice 4 month(s) 24 day(s)
Appellant OTTERS CLUB, MUMBAI
Respondent DIRECTORE OF INCOME TAX (EXEMP), MUMBAI
Appeal Type Miscellaneous Application
Pronouncement Date 30-09-2016
Appeal Filed By Assessee
Order Result Dismissed
Bench Allotted C
Tribunal Order Date 30-09-2016
Assessment Year 2009-2010
Appeal Filed On 06-05-2016
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH MUMBAI BEFORE S/SHRI R.C.SHARMA ACCOUNTANT MEMBER AND AMARJIT SINGH JUDICIAL MEMBER M.A. NO. 102/M/2016 (ARISING OUT OF ITA NO. 2658/MUM/2012) ( / ASSESSMENT YEAR: 2009-10) OTTERS CLUB CARTER ROAD BANDRA MUMBAI - 400050 / VS. DIT (E) PIRAMAL CHAMBERS 6 TH FLOOR LALBAUG MUMBAI - 400013 ./ ./ PAN/GIR NO. : AAATO00013F ( / APPELLANT ) .. ( / RESPONDENT ) / DATE OF HEARING: 16.09.2016 !' /DATE OF PRONOUNCEMENT:30.09.2016 #$ / O R D E R PER AMARJIT SINGH JM: THE ASSESSEE MOVED AN APPLICATION U/S.254(2) OF THE INCOME TAX ACT 1961( IN SHORT THE ACT) FOR THE RECTIFICATION OF THE MISTAKE IN THE ORDER DATED 03.02.2016 PASSED BY THE TRIBUNAL IN IT A 2658/M/2012. ASSESSEE BY: SHRI NITESH JOSHI DEPARTMENT BY: SMT. SURABHI SHARMA M.A. 102/M/16 A.Y. 2009-10 2 2. THE APPLICANT WAS FORMED AS A CHARITABLE TRUST IN THE YEAR 1972 BY TRUST DEED DATED 08.12.1972 AND WAS REGIST ERED WITH THE CHARITY COMMISSIONER UNDER THE BOMBAY PUBLIC TRUSTS ACT 1950. IT HAS ALSO BEEN REGISTERED WITH THE DIRECTOR OF INCOM E TAX (EXEMPTION) MUMBAI [HEREINAFTER REFERRED TO AS THE DIT(E)] U/S.12A OF THE ACT ON 16.03.1974. THE ACTIVITY OF THE TRUST WAS TO PROVIDE SWIMMING POOL FACILITIES FOR AQUATIC EVENTS AND TRAINING FACILITIES FOR OTHER SPORTS LIKE SQUASH BILLIARDS AND TABLE TENNIS ETC. THE SAID ACTIVITIES WERE CARRIED OUT FOR THE PERIOD W.E.F. 1972-73. THE PLOT WAS LEASED OUT BY THE GOVERNMENT OF MAHARASHTR A FOR PROMOTING THE SAID OBJECT. EARLIER TO THE PRESENT ORDER DATE D 03.02.2016 THE TRUST WAS FOUND ELIGIBLE FOR CLAIM OF EXEMPTION U/S .11 OF THE ACT IN DIFFERENT YEARS MENTIONED IN PARA 3 OF THE APPLICAT ION. ON 02.02.2012 THE RESPONDENT ISSUED A NOTICE FOR THE CANCELLATION U/S.12A OF THE ACT. THE REGISTRATION OF THE TRUST COULD ONLY BE CANCELL ED U/S.12A OF THE ACT ONLY ON THE SATISFACTION OF FOLLOWING CONDITION :- I. THE ACTIVITIES OF THE TRUST ARE NOT GENUINE; OR II SUCH ACTIVITIES ARE NOT BEING CARRIED OUT IN ACC ORDANCE WITH THE OBJECTS OF THE TRUST. THESE CONDITIONS WERE NOT SATISFIED BUT THE DIT(E) HAS WRONGLY CANCELLED THE REGISTRATION BY VIRTUE OF ORDER DATE D 01.03.2012 UNDER CHALLENGED. IT IS ALSO OBJECTED THAT THE TRIBUNAL DID NOT PASS THE ORDER M.A. 102/M/16 A.Y. 2009-10 3 WITHIN THE PERIOD OF 90 DAYS THEREFORE THE ORDER DATED 03.02.2016 PASSED BY THE TRIBUNAL IS WRONG AGAINST LAW AND FAC TS AND IS LIABLE TO BE RECALLED. IT IS ALSO STATED THAT IT IS NOT THE CASE OF THE RESPONDENT THAT THE ACTIVITIES OF THE TRUST WAS NOT BEING CARR IED OUT IN ACCORDANCE WITH ITS OBJECTS. IT IS ALSO STATED THAT THE TRIBU NAL FAILED TO CONSIDER THE LAW RELIED BY THE APPLICANT PROPERLY SUCH AS SA E INDIA VS. DIT(E) (2015)67 SOT 15 AND DIT(E) BANGALORE VS. KARNATAK A INDUSTRIAL AREA DEVELOPMENT BOARD (2015) 229 TAXMAN 539 (KARN) AND KODAVA SAMAJ VS. DIT(E) ITA NO.200/BAN/2012 AND KHAR GYMKH ANA VS. DIT(E) ITA NO.175/MUM/2012 AND OTHER LAW WHICH HAS BEEN MENTIONED IN PARA 9 OF THE APPLICATION THEREFORE THE ORDER OF THE TRIBUNAL IS WRONG AGAINST LAW AND FACTS AND IS LIAB LE TO BE RECALLED AND RECTIFIED IN ACCORDANCE WITH THE PROVISION OF SECTI ON 254(2) OF THE ACT. 3. NOTICE GIVEN. 4. WE HAVE CAREFULLY GONE THROUGH THE MISCEL LANEOUS APPLICATION FILED BY THE ASSESSEE AS WELL AS ORDER OF THE TRIBU NAL. THROUGH THIS MISCELLANEOUS APPLICATION ASSESSEE HAS REQUESTED TO THE BENCH TO RECALL ITS ORDER DATED 03.02.2016 OR PASSED SUCH O RDER AS MAY BE THINK. HOWEVER NO MISTAKE MUCH LESS AN APPARENT M ISTAKE WAS POINTED OUT IN THE MISCELLANEOUS APPLICATION. UNDE R PROVISIONS OF SECTION 254(2) OF THE ACT TRIBUNAL IS EMPOWERED TO RECTIFY APPARENT MISTAKE AND NOT TO REVIEW ITS OWN ORDER OR TO REACH AT A DIFFERENT CONCLUSION. AFTER GOING THROUGH THE MISCELLANEOUS APPLICATION IT M.A. 102/M/16 A.Y. 2009-10 4 APPEARS THAT LEARNED AR WANTED TO CHANGE THE CONCLU SION ALREADY DRAWN BY THE TRIBUNAL WHICH IS NOT PERMITTED U/S.25 4(2) OF THE ACT. THE BONE CONTENTION OF THE APPLICANT IS THAT THE EX EMPTION U/S.12A OF THE ACT COULD NOT BE CANCELLED MERELY BECAUSE RECEI PT OF THE APPLICANT EXCEEDED THRESHOLD LIMIT AS PROVIDED TO SECTION 2(1 5) OF THE ACT. IT IS ALSO ARGUED THAT THE EXEMPTION CAN ONLY BE DENIED W HEN THE ACTIVITIES OF THE TRUST ARE NOT GENUINE AND ARE NOT BEING CARR IED OUT IN ACCORDANCE WITH THE OBJECTS OF THE TRUST / INSTITUT ION AND IN THIS CASE THESE POINTS HAVE NOT BEEN DECIDED BY THE DIT(E) T HEREFORE IN THE SAID CIRCUMSTANCES THE EXEMPTION CANNOT BE DENIED I N THE INTEREST OF JUSTICE. IT IS ALSO ARGUED THAT THE EXEMPTION HAS BEEN DENIED RETROSPECTIVELY FOR THE PERIOD W.E.F 2009-10 WHICH IS ALSO WRONG AGAINST LAW AND FACTS BECAUSE ORDER WAS PASSED ON 0 1.03.2012 AND ACCORDINGLY THIS ORDER IS LIABLE TO BE AMENDED / RE CTIFIED IN ACCORDANCE WITH LAW. 5. BEFORE GOING FURTHER IT IS MADE CLEAR THAT IN THE APPEAL FILED BY THE ASSESSEE THE TRIBUNAL HAS UPHELD THE ORDER O F DIT(E) DATED 01.03.2012 IN QUESTION WHEREIN THE REGISTRATION WAS CANCELLED / WITHDRAWN FOR THE PERIOD W.E.F. 2009-10. THE BONE CONTENTION OF THE REPRESENTATIVE OF THE ASSESSEE IS THAT THE EXEMPTIO N CANNOT BE CANCELLED ON THE BASIS OF THIS FACT THAT THE RECEIP T OF THE ASSESSEE HAS BEEN EXCEEDED THE PERMISSIBLE LIMIT AS MENTIONED IN THE PROVISO OF SECTION 2(15) OF THE ACT. THE ORDER DATED 03.02.20 16 SPEAKS THAT THE M.A. 102/M/16 A.Y. 2009-10 5 REGISTRATION U/S.11 OF THE ACT WAS NOT CANCELLED ME RELY ON THE GROUND OF THAT THE RECEIPT OF THE ASSESSEE EXCEEDS THE PER MISSIBLE LIMIT. INFACT THE ACTIVITY OF THE ASSESSEE WAS FOUND TO BE THE NA TURE OF TRADE COMMERCE AND BUSINESS. THAT THE REGISTRATION U/S.1 2A OF THE ACT COULD BE CANCELLED SPECIFICALLY IN TWO CIRCUMSTANCE S SUCH AS WHEN THE ACTIVITY OF THE TRUST / INSTITUTION WAS NOT BEING C ARRIED OUT IN ACCORDANCE WITH THE OBJECTS OF THE TRUST AND ACTIVI TY OF THE TRUST/ INSTITUTION WAS NOT FOUND TO BE GENUINE. THE DIT(E ) HAS ALSO SPECIFIED THIS FACT THAT THE ACTIVITY OF THE TRUST WAS NO IN ACCORDANCE WITH ITS OBJECT. HERE THE CONCERNED PARA AT PAGE 5 OF THE DIT(E) IS HEREBY REPRODUCED BELOW: WITH REGARD TO THE INCOME SHOWN BY THE ASSESSEE CL UB FROM SOCIAL ACTIVITIES LIKE SOCIAL FUNCTIONS LIBRARY P AVILION HALL BOARD ROOM OPEN TERRACE ETC. THE HONBLE ITAT IN THE ASSESSEE CLUBS OWN CASE FOR A.Y.2003-04 HAD HELD THAT THESE ACTIVITIES CANNOT BE SAID TO BE FOR THE OBJECT OF THE CLUB EXC EPT FOR FUNCTION BEING ORGANIZED ON INDEPENDENCE DAY REPUB LIC DAY AND DIWALI AND HAS FURTHER HELD THAT THESE ACTIVITI ES WOULD NOT QUALIFY FOR EXEMPTION U/S.11 OF THE ACT. THEREFORE THE ABOVE ACTIVITIES CLEARLY PARTAKE THE CHARACTER OF TRADING ACTIVITIES AS WELL AS NOT BEING IN ACCORDANCE WITH THE OBJECT OF THE CLUB. THE SAID OBSERVATION HAS BEEN MADE BY THE INCOME TA X APPELLATE TRIBUNAL IN THE ASSESSEES OWN CASE IN ITA NO.6042/ MUM/2006 FOR M.A. 102/M/16 A.Y. 2009-10 6 A.Y.2003-04 DATED 28 TH JANUARY 2009. THERE IS NOTHING ON RECORD THAT THESE FINDINGS HAVE BEEN SET ASIDE BY ANY COURT. HO WEVER THE DIT(E) HAS ALSO PLACED RELIANCE UPON THIS OBSERVATIONS. T HE LAW RELIED BY THE REPRESENTATIVE OF THE APPLICANT HAS DULY BEEN DISCU SSED IN THE ORDER AND THE TRIBUNAL HAS ARRIVED AT THIS CONCLUSION THA T THE CONFIRMATION OF THE CANCELLATION OF THE REGISTRATION WAS NOT MERELY ON THE BASIS OF THE EXCESS EXPENDITURE U/S.2(15) OF THE ACT BUT THE SAM E WAS ALSO FOR NOT WORKING IN ACCORDANCE WITH THE OBJECT OF THE CLUB. HOWEVER WE REPRODUCED THE FINDING OF THE DIT(E) UNDER CHALLENG E. ONCE A CHARITABLE TRUST / INSTITUTION HIT BY AFORE SAID PROVISO THEN THERE IS DEEMING PROVISION THAT SUCH ENTITY SH ALL NOT BE FOR A CHARITABLE PURPOSE. HENCE ONCE THE ASSESSEE TRU ST / INSTITUTION LOOSES ITS CHARITABLE CHARACTER THEN OB VIOUSLY THERE IS CHANGE IN THE STATUS OF SUCH ASSESSEE AND IT IS NO LONGER CAN BE HOLD TO BE FOR CHARITABLE PURPOSE. ONCE IT IS HELD THAT THE ASSESSEE IS NOT FOR CHARITABLE PURPOSE THEN THE TRU ST ITSELF BECOMES NON GENUINE FOR THE PURPOSE OF SECTION 11 O F THE I.T.ACT AS IT LOOSES ITS PUBLIC CHARITABLE STATUS AND ACCORDINGLY THE PROVISION OF SECTION 12AA(3) OF THE ACT GETS AT TRACTED. AS DISCUSSED IN EARLIER PARAGRAPH THAT HONBLE ITAT IN ASSESSEES OWN CASE HAS HELD THAT SOME OF THE ACTIVITIES AS CA RRIED OUT BY THE ASSESSEE CANNOT BE SAID TO BE FOR THE OBJECT OF CLUB. HENCE THE ACTIVITIES ARE NOT IN ACCORDANCE WITH THE OBJEC TS SOUGHT TO BE M.A. 102/M/16 A.Y. 2009-10 7 PURSUED BY THE INSTITUTION. THUS IN VIEW OF THE FA CTS AND CIRCUMSTANCES AS DISCUSSED ABOVE I THEREFORE ACCO RDINGLY HOLD THAT THE ASSESSEE TRUST HAS BECOME NON GENUINE FOR THE PURPOSE U/S.12AA(3) READ WITH SECTION 11 OF THE I.T.ACT AS FOR ALLOWING EXEMPTION THE TRUST / INSTITUTION SHOULD BE FOR CHA RITABLE / RELIGIOUS PURPOSE THEREFORE THE REGISTRATION AS A LLOWED TO IT IS HEREBY CANCELLED / WITHDRAWN W.E.F A.Y.2009-10 AND THE ASSESSEE TRUST IS ACCORDINGLY HELD AS NON CHARITABL E TRUST / INSTITUTION. IN VIEW OF THE SAID CIRCUMSTANCES IT IS QUITE CLEA R THAT THE REGISTRATION OF THE APPLICANT HAS NOT BEEN CANCELLED MERELY ON T HE GROUND OF ACCESS EXPENDITURE OF THE PERMISSIBLE LIMIT U/S 2(1 5) OF THE ACT AND APPLICABILITY OF LAW IS ALSO CLEAR WHICH HAS BEEN D ISCUSSED WHILE PASSING THE ORDER DATED 3-2-2016 WHICH DOES NOT REQ UIRE TO BE DISCUSSED AGAIN. ANY HOW THE OBSERVATION IN CASE I. E BANGALORE VS. KARNATAKA INDUSTRIAL AREA DEVELOPMENT BOARD (2015) 229 TAXMAN 539 (KARN) HAS DULY BEEN COMPLIED WITH. WITH REGAR D TO ASSESSEES CONTENTION THAT ORDER WAS PASSED BEYOND 90 DAYS WE FOUND THAT NECESSARY ADMINISTRATIVE CLEARANCE HAD BEEN TAKEN A ND THE ORDER WAS PASSED ON 03.02.2016. ACCORDINGLY WE ARE OF THE VIEW THAT THE PRESENT M.A. IS LIABLE TO BE DISMISSED AS THERE IS NO MISTAKE MUCH AN APPARENT MISTAKE IN THE ORDER OF THE TRIBUNAL DATED 03.02.2016. M.A. 102/M/16 A.Y. 2009-10 8 7. IN THE RESULT MISCELLANEOUS APPLICATION OF THE ASSESSEE U/S.254(2) OF THE INCOME TAX ACT 1961( IN SHORT T HE ACT) FOR THE RECTIFICATION OF THE MISTAKE IN THE ORDER DATED 0 3.02.2015 PASSED BY THE TRIBUNAL IN ITA 2658/M/2012 IS HEREBY ORDERED T O BE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 30 TH SEPTEMBER 2016 . SD/- SD/- (R.C.SHARMA) (AMARJIT SINGH) # / ACCOUNTANT MEMBER %& # /JUDICIAL MEMBER ' ( MUMBAI; )# DATED : 30 TH SEPTEMBER 2016. MP MP MP MP !'#$ %$' / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. * ( ) / THE CIT(A)- 4. * / CIT 5. -./ &&01 01' ' ( / DR ITAT MUMBAI 6. /34 5 / GUARD FILE. / BY ORDER - & //TRUE COPY// &/' ( (DY./ASSTT. REGISTRAR) ' ( / ITAT MUMBAI