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Income Tax Appellate Tribunal, DELHI BENCH ‘F’, NEW DELHI
Before: Dr. B. R. R. KumarSh. Yogesh Kumar US
Per Dr. B. R. R. Kumar, Accountant Member:
The present appeal has been filed by the assessee against the order of ld. CIT(E), New Delhi dated 21.03.2018.
2. Following grounds have been filed by the assessee:
“1. That the assessment order passed by learned CIT (E) H.O. New Delhi is illegal, bad in law and not maintainable or the fact and circumstance of the case.
Association is running to create a sense of mutual Cooperation and brotherhood among the people of the society at large without any discrimination to any caste, creed or sex. The same are obtained through.
a) Promotion of Social Welfare b) To create a sense of mutual cooperation and brotherhood among all the members of the Association. c) To work for the eradication of social evils prevailing within community. d) To do all which other things beneficial for the welfare of mankind. e) The Society provide facility towards Aadhar Camp for the whole residents of West Enclave, Pitampura, New Delhi-110034, and a member of Bhagidari Scheme pertaining to NCT of Delhi. f) To provide the space for free eye check up of residents of West Enclave, Pitampura, New Delhi.”
The assessee filed appeal in Tribunal on 02.05.2018. The case was posted for hearing on 29.09.2021, 31.01.2022, 31.03.2022, 20.06.2022 and on 28.11.2022. None attended on behalf of the assessee. Owing to the consistence, non- attendance on the part of the assessee, it can be safely presumed that the assessee is no more interested to pursue the case. Hence, it is decided to adjudicate the issue on merits taking into consideration, the records available before us.
The assessee filed application on 18.09.2017 in Form No. 10G seeking registration u/s 12A and 80G of the Income Tax Act, 1961 respectively.
As per the letter dated 03.10.2017 'NOTE ON ACTIVITIES OF THE ASSOCIATION' filed by the assessee states that, “The Association is Resident welfare Association at West Enclave, Pitampura, New Delhi-110034 having its registered office at C- 2/49, West Enclave, Pitampura, New Delhi-34. Association is running to create a sense mutual cooperation and brotherhood among the people of the society at large without any discrimination to any caste, creed or sex." A Prima facie perusal of the submission of the applicant revealed that it is an association of welfare of residents of the colony and other maintenance services of the colony of a particular area/location.
The association works towards the attainment of object of relief to the poor/ needy among the people of society at large without any discrimination of any cast, creed or sex whose details are as under:
a) Promotion of Social Welfare b) To create a sense of mutual cooperation and brotherhood among all the members of the Association. c) To work for the eradication of social evils prevailing within community. d) To do all which other things beneficial for the welfare of mankind. e) The Society provide facility towards Aadhar Camp for the whole residents of West Enclave, Pitampura, New Delhi-110034, and a member of Bhagidari Scheme pertaining to NCT of Delhi. f) To provide the space for Free eye check up residents of West Enclave, Pitampura, New Delhi.
All these objects falls within the advancement of object of general Public utility as described u/s 2(15) of the Income Tax Act, 1961.”
The ld. CIT(A) examined the objects contained in the MOA and activities of the Society. As per the Memorandum of Association filed with this office, the aims and objects of the association are:-
To organize social, cultural and recreational activities for the welfare of residents as a whole and promotion of harmonious relationship amongst its members.
The ld. CIT(A) held that the society is primarily a group of residents who intend to undertake activities for welfare of residents of the colony and other maintenance services of its members only. Though, it also proposes to carry out some other activities benefit of which can be availed by general public but the predominant objects of the society are for the benefit of its members. Only incidental benefits if at all, can be availed by the people of surrounding areas, etc., or any stranger passing through. Farther, no such activity was brought on record to suggest that any charitable work carried out for the benefit of general public.
The ld. CIT(A) held that when the objects of the assessee society are for welfare of resident of the colony and other maintenance services of the colony the same would not form activities for charitable purpose for the purpose of grant of registration u/s 12A of the Act. The RWA Society is a mutual concern of the members who form the society and the whole idea of this mutual society is that the particular members comprising is should be benefited out of their own contribution therefore it cannot be said to be for the purpose of charity.
We find that similar issue has been adjudicated by the ITAT Agra in the case of Madhav Rao Scindia Enclave Resident Welfare Society (23 taxmann.com 33). The ITAT has held as under:
In the instant case, the admitted facts were that the objects of the assessee society were for welfare of resident of the colony and other maintenance services of the colony. Section 12AA requires that the Commissioner(Appeals) is to satisfy himself about the objects of the society and genuineness of the activities. Whether the object of the society was charitable or not was to be examined. Section 2(15) provides the definition of charitable purposes. [Para 5] Charity is necessarily altruistic, and involves the idea and aid or benefit to others. Mutual benefit societies and charitable societies both are different type of societies. Mutual society is not charitable for two reasons; firstly, although a member, according to his poverty or misfortune; might share in the funds held by the society for the mutual benefit of the subscribing members, it cannot be said that he had subscribed for a charitable purpose where in truth he had subscribed for the primary purpose of protecting himself or his family or colony; secondly, whereas the possible beneficiaries of a charity have no right to demand anything from the party who administers the charity, in a mutual society a member can claim benefits as of right in return for his own and his co-members' subscriptions. Charity must be by way of bounty, it cannot be by way of bargain. Therefore, the mutual society would be non- charitable on the further ground that the benefit of the subscribing members is not public benefit, whereas the definition in section 2(15) requires charity to be of a public character. Further, a person incurring expenditure on him by out of his own income does not amount to expenditure on charity. In the instant case, the society was formed for welfare of a colony by the members for the benefit of the members. Such society could not be said to be for the purpose of charity. Before a society could be held to be 'charitable' there must be an element of charity to public at large. The society under consideration was a mutual concern of the members who formed the society and the whole idea of this mutual society was that the particular members comprising it should be benefited out of their own contribution. [Para 6] In the light of above discussions, the assessee society was not a charitable society within the meaning of the Act so that registration under section 12A/12AA could be granted. Therefore, the Commissioner (Appeals) had rightly rejected the assessee's registration under section 12A/12AA.
Since the facts of the instant case are akin to the facts adjudicated in the said order, we hereby decline to interfere with the order of the ld. CIT(A).
In the result, the appeal of the assessee is dismissed. Order Pronounced in the Open Court on 30/11/2022.