PR. COMMISSIONER OF INCOME TAX, JAIPUR vs. VYAPAR SANGH

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ITA/46/2017HC RajasthanRJHC01039689201721 March 2018Author: GOPAL KRISHAN VYAS,RAMCHANDRA SINGH JHALA4 pages
AI SummaryDismissed

What did the High Court hold?

The High Court held that the ITAT had not committed any error in allowing the appeal filed by the assessee. Upon perusal of the objects of the society, it was evident that while some objects were for the benefit of members and their establishments, the benefits also extended to other associations, women, children, old persons, education, social health, and other objects in the interest of the public at large. Therefore, the High Court found that the CIT(E)'s rejection of registration was incorrect. Consequently, the Court concluded that no substantial question of law emerged for its consideration. The appeal was dismissed, and the operative direction was to uphold the ITAT's order granting registration under Section 12AA and Section 80G.

What were the facts?

The Commissioner of Income Tax (Exemption), Jaipur (CIT(E)) rejected the application for approval under Section 12AA of the Income Tax Act, 1961, filed by the assessee, Vyapar Sangh Court Road, Hanumangarh Junction, on March 29, 2016. The CIT(E) observed on August 12, 2016, that the society's activities were not charitable as they primarily benefited a limited group of members and their businesses. The assessee appealed this decision to the Income Tax Appellate Tribunal (ITAT), Jodhpur Bench. The ITAT, in its order dated May 24, 2017, allowed the assessee's appeal, directing the grant of registration under Section 12AA and Section 80G. The Income Tax Department (appellant) has filed this appeal against the ITAT's order.

What were the issues?

1. Whether, on the facts and circumstances of the case, the learned ITAT was right in law in allowing the application under Section 12AA for registration, considering the substantial question of law that emerges for consideration. Assessee's Arguments: The judgment does not record any specific arguments made by the assessee before the High Court. However, the ITAT's reasoning, as stated in the judgment, indicates that the assessee likely argued that the society's objects extended benefits beyond its members to the public at large, including other associations, women, children, the elderly, education, social health, and other public interest activities. Revenue's Arguments: The appellant (Revenue) argued that the ITAT's order was not in consonance with the law and was passed without application of mind. They contended that a substantial question of law arises regarding the ITAT's correctness in allowing the Section 12AA registration.

Which sections of the Income-tax Act were involved?

Section 12AA,Section 80G

AI-generated summary — verify with the full judgment below

Cause title — parties, addresses and appearances
HIGH COURT OF JUDICATURE FOR RAJASTHAN AT JODHPUR D.B. Income Tax Appeal No. 46 / 2017 Commissioner of Income Tax-Exemption, Jaipur. ----Appellant Versus Vyapar Sangh Court Road, Hanumangarh Junction. ----Respondent _____________________________________________________ For Appellant(s) : Mr. K.K. Bissa. _____________________________________________________ HON'BLE MR. JUSTICE GOPAL KRISHAN VYAS HON'BLE MR. JUSTICE RAMCHANDRA SINGH JHALA

Judgment 21/03/2018

In this Income-tax Appeal filed under Section 260-A of the Income Tax Act, 1961, the appellant Income Tax Department, has challenged the order dated 24.05.2017 passed by Income Tax Appellate Tribunal, Jodhpur Bench, Jodhpur in ITA No.336/Jodh/2016. As per facts of the case, the respondent/assessee filed an application for approval under Section 12AA in Form No.10A of the Income Tax Act on 29.03.2016. The C.I.T. (E), Jodhpur, after examining the aims and objects of the Society vide its order dated 12.08.2016 observed that the activities of the respondent- Society cannot be held as charitable as the benefit of the society is sought

(2 of 4) [ITA-46/2017]

to be given to the limited group of persons i.e. members and their business establishments only. Thus, the respondent-assessee is not entitled to have its registration under Section 12AA of the Act. Being aggrieved by and dissatisfied with aforesaid order dated 12.08.2016, the respondent/assessee preferred an appeal before the learned I.T.A.T., Jodhpur and the learned ITAT allowed

the appeal vide its order dated 24.05.2017 while holding that out of the objects of the Society, few objects are meant for the benefit of the members and their establishment but at the same time the benefits also extends to other associations, women, children, old persons, education and social health and other objects in the interests of public at large. It was thus wrong and incorrect to say that benefits extended only to the members and their business establishment. The learned ITAT held that C.I.T. (E) was not justified in rejecting registration under Section 12AA of the Income Tax Act and issued direction to grant registration under Section 12AA and under Section 80G (5) (6) of the Act. Mr. K.K. Bissa, learned counsel for the appellants vehemently argued that the order of ITAT is not in consonance with law because it has been passed without application of mind, therefore, a substantial question of law emerges for consideration as to whether on the facts and circumstances of the case the learned ITAT was right in law in allowing the application under Section 12AA for registration. After hearing learned counsel for the appellant, we have perused the aims and objects which are incorporated in the order of C.I.T. (E) (Annex.1), which reads thus: -

(3 of 4) [ITA-46/2017]

**d& lnL;ksa esa ,drk esytksy o ln~Hkkouk dks iSnk djukA [k& vukt o vU; oLrqvksa dk O;kij tks lnL;ksa ls lEcfU/kr gks mldks mfpr c<+kok nsuk o lnL;ksa ds vf/kdkjksa dh j{kk djukA x& lnL;ksa dk O;kikj ls lEcfU/kr fo’k;ksa ij ljdkj o vU; foHkkxksa esa izfrfuf/kRo djukA ?k& gj fdLe ds vukt ls lEcfU/kr vkadM+ksa o nwljh lwpuk,a bdV~Bh djuk o lnL;ksa dks vukt ij ljdkjh izfrcU/k o vU; vkns”kksa o dj lEcfU/kh fo’k;ksa esa mfpr lykg nsukA M+& lnL;ksa ds O;kikj lEcU/kh vkilh erHksnksa dks lqy>kukA p& vU; ,lksfl;s”ku ftudk mn~ns”; bl ,lksfl;s”ku ds mn~ns”;ksa ls feyrs&tqyrs gksa] lg;ksx nsukA N& ,d lnL; O;fDrxr :i ls ftl leL;k dk gy djus esa vleFkZ gksa mlds lkewfgr :i ls gy djus dh dksf”k”k djukA t& ml la?k dk mn~ns”; L=h f”k{kk] cky f”k{kk] izkS<+ f”k{kk] tu&LokLF; dk;Z] lkoZtfud lqfo/kk,a ,oa jpukRed dk;Z djuk ,oa tufgr ds fy, dksbZ dk;Z djukA >& mijksDr mn~ns”;ksa dh izkfIr ds fy, izR;{k o ijks{k :i ls dk;Z djukA la?k dh jkf”k mijksDr mn~ns”;ksa ds fy, gh O;; dh tk;sxhA bu mn~ns”;ksa dh iwfrZ esa fdlh dk dksbZ O;fDrxr ykHk fufgr ugha gSA**

We have also perused the finding given by learned C.I.T. (E) in three lines, in which the CIT (E) held that if the objects of the applicant are for the benefit of a limited group of person then it is not a charitable organization. In our opinion, upon perusal of the objects incorporated in the order it cannot be said that any error has been committed by the learned I.T.A.T. in allowing the appeal filed by the respondent/assessee because it is evident from the objects that few objects are meant for the benefit of the members and their establishment but at the same time the benefits also extends to (4 of 4) [ITA-46/2017]

other associations, women, children, old persons, education and social health and other objects in the interests of public at large. Therefore, we find that no substantial question of law emerges for consideration by this Court. Consequently, the instant appeal is hereby dismissed.

(RAMCHANDRA SINGH JHALA) J. (GOPAL KRISHAN VYAS) J.

DJ/- 22

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