SAHAYATHA, PROHIBITION & EXCISE DEPARTMENT, TELANGANA STATE EMPLOYEES THRIFT AND BENEVOLENT MUTUAL ASSOCIATION, HYDERABADRUST, HYDERABAD,HYDERABAD vs. CIT, EXEMPTIONS, HYDERABAD, HYDERABAD

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ITA 712/HYD/2017Status: DisposedITAT Hyderabad25 February 20216 pages
AI SummaryPartly Allowed

What did the Tribunal hold?

The Tribunal condoned the delay in filing the appeals, noting it was due to circumstances beyond the assessees' control. It directed the CIT(E) to re-examine the issue of registration afresh, considering the material provided by the assessees. The Tribunal also clarified that the mutuality principle does not apply if registration as a charitable activity is sought.

What were the facts?

The assessees, various employee welfare trusts and associations, sought registration under Section 12AA of the Income Tax Act. The CIT(E) denied registration, stating their objects were beneficial only to state government employees and lacked broader social interest. The appeals were filed with a delay.

What were the issues?

Whether the assessees' objects qualify as charitable for the purpose of Section 12AA registration, and whether the mutuality principle is applicable.

Which sections of the Income-tax Act were involved?

Section 12AA,Section 2(15)

AI-generated summary — verify with the full judgment below

Cases cited in this judgment(1)Show list

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Income Tax Appellate Tribunal, HYDERABAD BENCHES “A”: HYDERABAD

Before: SHRI SATBEER SINGH GODARA & SHRI LAXMI PRASAD SAHU

For Appellant: Shri Y.V. Bhanu Narayana
For Respondent: Shri Sibendu Moharana
Hearing: 04/02/2021Pronounced: 25/02/2021

Date of hearing: 04/02/2021 Date of pronouncement: 25/02/2021 O R D E R PER BENCH: The instant batch of four appeals pertains to as many assessees mentioned in the cause title. Relevant details of these cases are as follows:

:- 2 -: and others S.No. order dated/Case No. Proceedings u/s 01 1131/H/2017 CIT(E), Hyderabad, 30/11/2016, 12A&80G Case No. CIT(E)/Hyd/78(5)/ 12A&80G/ 2016-17 02 711/Hyd/2017 CIT(E), Hyderabad, 20/01/2017, -do- Case No. CIT(E)/Hyd/72(08)/ 12A&80G/2016-17. 03 712/H/2017 CIT(E), Hyderabad, 15/12/2016, -do- Case No. CIT(E)/Hyd/73(08)/ 12A&80G/2016-17 04 1629/H/2017 CIT(E), Hyderabad, 30/11/2016, -do- Case No. CIT(E)/Hyd/81(5)/ 12A&80G/2016-17

2.

We notice at the outset that assessees’ appeals suffer from 28 days delay in & 712/H/2017 and 127 days delay in ITA No. 1131/Hyd/2019; respectively. They have filed condonation petition(s) along with the affidavits averring therein that there was a communication gap with the Auditor’s Office as well as the auditor’s office was preoccupied with the work related to Pradhan Mantri Garib Kalyan Yojana causing the impugned delay in filing of the instant appeals. Case law Collector Land Acquisition vs Mst. Katiji & Ors, 1987 AIR 1353 (SC) and University of Delhi Vs. Union of India, Civil Appeal No. 9488 & 9489/2019 dated 17 December, 2019 hold that such a delay; supported by cogent reasons, deserves to be condoned so as to make way for the cause of substantial justice. We accordingly hold that assessee’s impugned

:- 3 -: and others delays are neither intentional nor deliberate but due to the circumstances beyond their control. Cases are now taken up for adjudication on merits.

3.

Heard both the assessees’ and department.

4.

It transpires during the course of hearing that these assessees’ identical sole substantive grievance is that the CIT(E) orders under challenge have erred in law and on facts in denying them section 12AA registration. He has termed assessees’ objects as beneficial for employees of the state government only without involving any charitable purposes u/s 2(15) of the Act thereby lacking the broader social interest.

5.

Learned authorised representative’s case on the other hand is that these assessees/societies’ respective objective clauses as well as their activities aim for helping employees hereinabove facing financial crises without any aid(s) from the recognized financial institutions in normal course. We

:- 4 -: and others are of the view in this peculiar backdrop that larger interest of justice would be served in case learned CIT(E) examines entire issue in dispute afresh in the light of the material/records coming from the taxpayers side. We order accordingly. We direct all these assessees to appear before CIT(E) on or before 31st July, 2021 with all the relevant evidences; at their own risk and responsibility to be followed by three effective opportunities of hearing.

6.

Mr. Moharana lastly pointed out that these assessees have also claimed themselves as covered under “mutuality” principle. We quote Investor’s Club Trichur Vs. CIT [2008] 318 ITR 427 (Kerala) holds that once assessees’ themselves have sought registration as carrying charitable activity u/s 2(15) rws 12AA of the Act, mutuality principle does not apply. We thus direct the department that not to treat the assessees as eligible for mutuality benefit in view thereof.

:- 5 -: and others

7.

These assessees’ appeals are partly allowed for statistical purposes in above terms. Pronounced in the open court on 25th February, 2021.

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