SRI KANYAKA PARAMESWARI VARTHAKA SANGAM,,GANAPAVARAM vs. THE ITO,, RAJAHMUNDRY

IN THE INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM BENCH, VISAKHAPATNAM BEFORE SHRI V. DURGA RAO, HON’BLE JUDICIAL MEMBER & SHRI D.S. SUNDER SINGH, HON’BLE ACCOUNTANT MEMBER ITA No. 218/VIZ/2017 Sri Kanyaka Parameswari vs. ITO (Exemptions), Varthaka Sangam, D.No. Rajahmundry. 7-12/13, Main Road, Ganapavaram, W.G. District. PAN No. AAATS 4841 D (Appellant) (Respondent) Assessee by : Shri C. Subrahmanyam, FCA. Department By : Shri D.K. Sonawal, CIT DR Date of hearing : 21/07/2019. Date of pronouncement : 07/08/2019. O R D E R PER V. DURGA RAO, JUDICIAL MEMBER

This appeal by the assessee is directed against the order of Commissioner of Income Tax (Exemptions), Hyderabad, dated 21/06/2016, whereby application for registration u/sec. 12A has been rejected. 2. There is a delay of 233 days in filing the appeal. The assessee has filed a condonation application along with affidavit and medical certificate. “The assessee trust has come into existence in the year 1957 and has been filing tax returns regularly and claiming exemption of its income.

2 ITA No.218/VIZ/2017 (Sri Kanyaka Parameswari Varthaka Sangam)

Whereas, mentioning of the registration number granted by the Income Tax Dept. u/s.12AA of the I.T.Act has become mandatory and as the society has misplaced the registration certificate, it has been advised by its Tax Consultant to apply for a fresh certificate. Accordingly, SKPVS applied for registration u/s.12AA of the I.T.Act by filing Form No.10A & 10GG on 18th March'15 before the Commissioner of Income Tax(Exemptions) Hyderabad. Whereas, the learned CIT(E) rejected the registration vide his order dt.281h Sapt'15 for the reason that the winding up clause of the society has not been properly drawn in the Memorandum of Association of the Society. The society on the advice of the Tax Consultant 'after rectifying the winding up clause, once again applied for registration u/s.12AA on 31st Dember, 15 before the CIT(E) Hyderabad. This time the learned CIT(E) vide his order dt.21st June'16 refused registration stating that the objects of the trust are in the nature of mutual benefit of the members. After receipt of the second order the society has approached the Dept. bringing into its notice that it has been filing tax returns for the last two decades claiming exemption, the Departmental Authorities informed only course available is to approach appellate authorities if it has grievance. The development arising out of the refusal of registration was put up before the committee members of society in the committee meeting held on dt.28.07.2016 and the future course of action to be taken. The members suggested to contact the auditor not knowing that there is time limit for filing the appeal. When contacted the auditor’s office informed that the CA is not available till dt.15.08.2016. On being approached, our auditor Sri CA D.Viswanath explained that since there are two adverse orders of CIT(E) refusing registration dt.28-092015& dt.21-06-2016,he is unable to know which order should be appealed against. However, he suggested to consult senior Chartered Accountant C. Subrahmanyam in this matter. But in the meanwhile I met with an accident by slipping in the bathroom spraining my ankle and advised by doctor for bed rest and it took one month to recover. In this situation I have forgotten the matter. The same was realized while discussing the accounts for F.Y.2016-17 in committee meeting held in the 1St week of April'17 that the appeal was not filed.

3 ITA No.218/VIZ/2017 (Sri Kanyaka Parameswari Varthaka Sangam) Immediately we approached Sri C.Subrahmanyam Chartered Accountant on 1th Apr'17 who informed that the filing of appeal should be within 60 days from the date of receipt of the order. To this I informed that the events that have happened as above causing delay. He informed that since there is huge delay an affidavit explaining the reasons for delay in filing the appeal is to be filed before the Hon'ble bench for its consideration and condonation of delay if it is satisfactory. In view of the fact that I suffered injury to my ankle causing bed rest our Tax Consultant could not advise immediately which order passed by CIT(E) u/s.12AA(1)(b)(ii) should be appealed, as we are ignorant of the tax laws & provisions of the appeal it could not be filed within the stipulated date. As appeal is filed with a delay of 233 days the Hon'ble bench is requested to condone the delay in the interest of justice and admit the appeal for its disposal on-merits.” From the above, we find there is a sufficient cause in non- filing of the appeal in time. Therefore, it is a fit case to condone the delay. Accordingly, delay is condoned. 3. Facts of the case, in brief, are that the assessee is a trust has filed an application in Form 10A on 31/12/2015 seeking registration u/sec. 12AA of the Income Tax Act, 1961 (hereinafter referred to as 'Act'). The main objects of the assessee-trust are as under:- “1. To develop moral, social, economical and political awareness among members and general public. 2. To establish library facility for the development of knowledge among members and general public. 3. To establish schools to impart education in the field of small scale industries for the benefit of members and general public. 12. To correspond with the Government and trade unions of this country and other countries about the difficulties

4 ITA No.218/VIZ/2017 (Sri Kanyaka Parameswari Varthaka Sangam) and to avoid such difficulties in trade in respect of traders and members of the trust. 13. To explain and communicate the opinion and details of the Bills, Acts, Communiques, Ordinances issued/ passed by the Government in respect of trade. To take necessary measures on the losses resultant in respect of such Bills, Acts. To discuss with the Government to pass new bills, which are useful to the traders. To give suggestions to the traders to conduct their business in accordance with the law. 14. To observe that the members of the trust, in their own business entities, not to develop any unhealthy competition, viz., black marketing, bad habits etc. among themselves. If so, action should be taken against them and to encourage good habits among themselves.” The ld.CIT(E) by considering the above objects of the trust, he came to a conclusion that the trust is created for mutual benefits of the trustees & members, therefore, rejected the registration sought u/sec. 12AA of the Act. 4. On being aggrieved, assessee carried the matter in appeal before this Tribunal. 5. Ld.AR has submitted that the assessee–trust was created in the year 1915 in a building, which is donated by philanthropist Raja Venkatadri Apparao. As on date, charitable activities are conducting in the same building. It is also submitted that some of the portion of the building has been given for rent and receipts thereon are utilizing for charitable activities. In the year 1957, the assessee got registered under the Registration of Societies Act and in the year 1970, the assessee got registered with the

5 ITA No.218/VIZ/2017 (Sri Kanyaka Parameswari Varthaka Sangam) Income-tax. From 1970 onwards, the assessee getting exemption u/sec. 11 and also continuing charitable activities. In the year 2015, the assessee has applied for registration u/sec. 12A for the reason that the old certificate was missing and in the recent system, unless registration is given computer is not accepting the return of income. Therefore, a fresh approval for 12A is applied and the ld.CIT(E) without considering the activities carried by the assessee, rejected the registration u/sec. 12A. The assessee also filed various details in respect of activities carried which was pointed out from the paper book at page Nos.31 to 33 & 38 and submitted that the assessee has incurred certain amounts towards charitable activities and submitted that registration u/sec. 12A may be granted. 6. On the other hand, ld.DR relied on the order of the ld.CIT(E). 7. We have heard both the sides, perused the material available on record and order of the ld.CIT(E). 8. From the material available on record, we find that the assessee is an old trust. From the objects of the trust, it is clear that the assessee is existed to undertake certain charitable activities. From the paper book at page Nos. 31 to 33 & 38, it is very clear that the assessee has incurred certain expenditure for free education, cultural development expenses, health & Hygiene

6 ITA No.218/VIZ/2017 (Sri Kanyaka Parameswari Varthaka Sangam) Awareness expenses, chalivendram & pure drinking water supply expenses and annadanam expenses. From the above, it is clear that the assessee incurred certain expenditure towards charitable activities, therefore, we find that ld.CIT(E) without looking into the activities carried by the assessee, simply denied the registration by observing that it is only a mutual benefit of the members. We find that the ld.CIT(E) is not correct in denying the registration u/sec. 12A of the Act. In our opinion, when the assessee is incurring certain expenditure towards charitable activities, it cannot be said that it is mutual benefit association, therefore the order passed by the ld.CIT(E) is cancelled and the registration u/sec. 12AA to the trust is granted. Thus, this appeal filed by the assessee is allowed. 9. Insofar as 80G is concerned, it is open to the assessee to file a fresh application before the ld.CIT(E). In turn, the ld. CIT(E) is directed to consider the same in accordance with law. 10. In the result, appeal filed by the assessee is allowed. Order Pronounced in open Court on this 07th day of August, 2019.

Sd/- sd/- (D.S. SUNDER SINGH) (V. DURGA RAO) Accountant Member Judicial Member Dated: 07th August, 2019. vr/-

7 ITA No.218/VIZ/2017 (Sri Kanyaka Parameswari Varthaka Sangam) Copy to: 1. The Assessee – Sri Kanyaka Parameswari Varthaka Sangam, D.No.7-12/13, Main Road, Ganapavaram, W.G. District. 2. The Revenue – ITO(Exemptions), Rajahmundry. 3. The CIT(E), Hyderabad. 4. The D.R., Visakhapatnam. 5. Guard file. By order

(VUKKEM RAMBABU) Sr. Private Secretary, ITAT, Visakhapatnam.