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Income Tax Appellate Tribunal, MUMBAI BENCH “ B”, MUMBAI
आदेश/ ORDER PER VIKAS AWASTHY, J.M: This appeal by the assessee is directed against the order of Commissioner of Income Tax (Exemptions) Mumbai [in short ‘the CIT(E)’] dated 29/01/2021 rejecting assessee’s application for grant of registration under section 12AA of the Income Tax Act, 1961 ( in short ‘the Act’).
Shri Nitesh Joshi appearing on behalf of the assessee submitted that the assessee is a charitable society registered under the Societies Registration Act, 1960. The assessee was formed in accordance with orders of Maharashtra Real Estate Self Regulatory Authority ( MahaRERA) dated 11/10/2019. The assessee was registered as Self Regulatory Organisation (SRO) by MahaRERA on 15/03/2021. The objects of the assessee are in congruence with the objects specified by MahaRERA for SRO for promoters. The CIT(E) rejected the application for grant of registration under section 12AA of the Act solely for the reason that the objects of assessee are charitable as well as non- charitable/mutual. The ld.Counsel for the assessee submitted that a perusal of Memorandum of Association at page 28 of the Paper Book would show that the aims and objects of the assessee are purely charitable in nature and for the advancement of promoters and all stake holders involved in development of real estate business. The ld.Counsel for the assessee further pointed that another reason for non-grant of registration under section 12AA is that the activity of the society are restricted to its members who are builders/developers/contractors, hence, it is not for society at large. The ld.Counsel for the assessee pointed that the assessee society was formed in accordance with MahaRERA order dated 11/10/2019. The assessee is SRO for promoters and its objects conforms to the objects outlined by MahaRERA. The membership of the society is open to all who are engaged in the field of construction, development, building of housing, Real Estate Development and other related activities. The ld.Counsel for the assessee submitted that the Hon'ble Rajasthan High Court in the case of CIT vs. Jodhpur Chartered Accountants Society, 258 ITR 548 held that even if section of public is given benefit it cannot be said that the trust is not for charitable purpose in the interest of the public.
Per contra, Shri Mahesh Akhade, representing the Department vehemently defended the impugned order and prayed for dismissing the appeal by the assessee. The ld.Departmental Representative submitted that objects of the assessee are not purely charitable in nature and, hence, the activities of the assessee would not fall within the meaning of charitable purpose defined under section 2(15) of the Act. The membership to the assessee is open only to selective category of persons who are promoters, builders and developers. The membership is not open to public at large. The activities of the assessee are mutual among a particular class than for general public.
We have heard the submissions made by rival sides and have examined the impugned order and documents on record. The assessee is in appeal against rejection of its application for grant of registration under section 12AA of the Act. The CIT(E) has rejected assessee’s application for registration on two counts:
(i) The assessee is having mixed objects of charitable and non-charitable Nature; (ii) The activities of the assessee are restricted to only specific category of Persons.
The assessee is a society and its members are in Real Estate Development related activities. It has been formed as SRO for promoters in line with MahaRERA order dated 11/10/2019. The registration was granted to assessee by MahaRERA subject to specific objects mentioned in the registration certificate dated 15/03/2021. The same are reproduced herein below: (a) “The SRO shall encourage its members to comply with the provisions of the Act, applicable rules, regulations, orders or circulars issued by the MahaRERA from time to time.
(b) The SRO shall be responsible for carrying out awareness and education activities among its members. (c) The SRO shall specify standard of conduct for its members and also shall be responsible for the implementation of the same by its members. (d) Governing norms of the SRO should not be in conflict with Rules, Regulations, Circulars and Orders of MahaRERA. (e) The SRO shall discharge such other functions as may be specified by MahaRERA from time to time.”
A perusal of Memorandum of Association of the assessee (at pages 28 & 29 of the Paper Book) would show that the aims and objects of the assessee are in harmony with the objects listed(supra) in registration certificate granted by MahaRERA. The objects on which the CIT(E) has raised objection (reproduced in the impugned order) are in fact the activities to be carried out by the assessee for the attainment of main objects and are not objects per-se. We are of considered view that the objection of CIT(E) that some of the objects mentioned in Memorandum of Association of the assessee are non-charitable/mutual is contrary to the facts and hence, unsustainable.
In so far as the observations of the CIT(E) that the membership of the society is only for selected category of persons and not for public at large, we observe that the assessee society has been formed for the benefit of section of public and not specified individuals. If the society is carrying out activities for a section of general public and not for few specified individuals, the activities would be deemed to have been held as for general public. The Hon'ble Rajasthan High Court in the case of CIT vs. Jodhpur Chartered Accountants Society(supra) while dealing with similar controversy held as under: “It is well settled that in order that a purpose may qualify for being regarded as an object of general public utility, it must be intended to benefit a section of public as distinguished from specified individuals. We do not consider it necessary to deal with all the cases cited at the Bar except the decision of the apex court in Ahmedabad Rana Caste Association vs. CIT [1971] 82 ITR 704, which provides sufficient binding guideline to resolve the controversy involved in the instant case. We may usefully extract the observations of the Supreme Court making the position clear with respect to benefit to a section of the public and specified individuals (headnote) :
". ... an object beneficial to a section of the public is an object of general public utility. To serve a charitable purpose it is not necessary that the object should be to benefit the whole of mankind or all persons in a country or State. It is sufficient if the intention to benefit a section of the public as distinguished from a specified individual is present. The section of the community sought to be benefited must be sufficiently definite and identifiable by some common quality of a public or impersonal nature."
Applying the test laid down by the apex court in Ahmedabad Rana Caste Association v. CIT [1971] 82 ITR 704, we find that the predominant object of the society is dissemination of knowledge and education of commercial laws, tax laws for the benefit of general public to inculcate a sense of responsibility towards the nation and foster law abiding citizens. The objects clause of the constitution emphasises to propagate and disseminate knowledge about the auditing, accounting, direct and indirect taxes by holding seminars, conferences and workshops, etc. The fruits of such seminars, conferences, etc., would be available to the public at large, thus, it appears that the society is not for the benefit of a small group of individuals and it is also not only for the benefit of members but to promote awareness and education of the commercial and tax laws for the general public without any profit motive. As observed by the Supreme Court, to serve a charitable purpose it is not necessary that the object should be to benefit the whole of mankind or all persons in a country or State, even if a section of the public is given benefit, it cannot be said that it is not a trust for charitable purpose in the interest of the public. In the situation of explosion in population, the vast changes brought by the scientific technology and other developments, more particularly, the universal concept of globalization, new trends in the world order to meet the ever growing challenges to organizing seminars, conferences and workshops to educate the people of commercial laws, tax laws, auditing, accounting, direct and indirect taxes are of great general public utility, at least to a section of people falling in the category of charitable institution. Thus, the Tribunal has rightly directed the Commissioner of Income-tax to grant registration to the applicant-society under section 12A of the Income-tax. Act, 1961” [Emphasized by us] In the present case, the assessee has been formed with a object inter-alia to create awareness of various real estate laws to the members of general public at large, to encourage and advance the knowledge, study and practice of the ethics in the profession of real estate, to hold meetings, conferences, exhibitions and study circle for promoting the study and research relating to real estate industry, to print, publish, distribute books, periodicals, magazines and other print material concerning the real estate sector, etc. Thus, the activities of assessee fall within the domain of advancement of any other object of general public utility to be carried out by a section of general public. In the light of judgment rendered by Hon'ble Rajasthan High Court(supra) we find no merit in the objection raised by the CIT(E) on this count.
Ergo, the impugned order is quashed and the CIT(E) is directed to grant registration under section 12AA of the Act to the assessee.
In the result, appeal by the assessee is allowed. Order pronounced in the open court on Friday the 17th day of December, 2021.