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Income Tax Appellate Tribunal, PUNE BENCHES “A” :: PUNE
Before: SHRI S.S.GODARA & DR. DIPAK P. RIPOTE
ORDER
PER DR. DIPAK P. RIPOTE, AM:
This appeal filed by the Assessee is directed against the order of ld.Commissioner of Income Tax (Exemption), Pune dated 30.03.2021 under section 12AA(1)(b)(ii) of the Act. The Assessee has raised the following grounds of appeal:
1. The learned CIT, Exemption, Pune; erred in law and on facts in not granting registration u/s 12A of the ITA, 1961 to appellant company.
2. Appellant contends that, appellant made detailed submissions upon all the issues raised, whereas, the learned CIT, Exemption, Pune; declined the registration u/s 12A of the ITA, 1961 on grounds of the activities of the appellant company not being genuine enough without affording any further opportunity to appellant, to make a SAY in the Govind Foundation [A]
matter and as such, vitiated principle of natural justice.
3. The learned CIT, Exemption, Pune erred in law and on facts in making following erroneous and fallacious observations:
- Appellant is engaged in business activity for increasing milk production. - The benefit of appellant's activities extends only to the promoter company and its network and not the society at large. - Appellant is a mere extension of the promoter company's activities. The learned CIT, Exemption, Pune erred in law and on facts in denying registration u/s 12A of the ITA, 1961 on the basis of above observations.
4. Appellant craves leave to add, alter, clarify, explain, modify, delete any of the grounds of appeal, and to seek any just and fair relief.”
Brief facts of the case are that in this case ld.CIT(E) had rejected the assessee’s application for registration under section 12AA of the Act for the various reasons mentioned in the order. The ld.Authorised Representative(ld.AR) of the Assessee submitted a paper book containing Memorandum of Assessment(MoA) and audited account as on 31.03.2021 and audited accounts as on 31.03.2020.
The ld.AR submitted that the Govind Foundation is helping the farmers and has carried out various activities as mentioned in the submission of the assessee dated 11.11.2020 and 19.01.2021. The ld.AR explained that assessee is carrying out artificial insemination Govind Foundation [A] for the cattle’s to help the farmers to increase milk production of cattle. The ld.AR explained that entire trust of the assessee is to help farmers.
The ld.Departmental Representative(ld.DR) for the Revenue explained that assessee is a Section 8 Company registered with ROC and it is part of the Govind Milk and Milk Products Pvt. Ltd. The ld.DR explained that 99.9% of the shareholding of Govind Foundation i.e. assessee is with Govind Milk and Milk Products Pvt. Ltd. All the activities of the assessee are only for the farmers who are milk suppliers of Govind Milk and Milk Products Pvt. Ltd., The ld.DR also brought to our notice from the submission of the assessee that assessee himself had admitted in the submission as under: “As per the need of procurement department we are planning to provide the services to the milk producers to have maximum benefit for their life stock.”
The ld.DR emphasized that thus it is an admitted position by the assessee in its submission that the services are provided as per requirement of the procurement department which means procurement department of the Govind Milk and Milk Products Pvt. Ltd., The ld.DR also submitted that the activity of artificial insemination is not mentioned in the objects of the assessee and assessee is charging farmers for the Insemination of cattles. Govind Foundation [A]
We have heard both the parties and perused the records. Assessee is a company registered under section 8 of the Companies Act, 2013. 99.99% of its shareholding is with Govind Milk and Milk Products Pvt. Ltd., and one share is with Shivanjali Naik Nimbalkar, it seems that Shivanjali Naik Nimbalkar who is holding only one share of the company is related to the Govind Milk and Milk Products Pvt. Ltd., We have requested the ld.AR to point out that object clause according to which the activity of artificial insemination for cattle’s have been performed by the assessee. However, the ld.AR could not specifically point out to any clause and kept on explaining the general clauses. We have already noted that the ld.DR claimed that the activity of artificial insemination is only for the farmers who are supplying milk to the Govind Milk and Milk Products Pvt. Ltd., and it is not mentioned in the object clause of the assessee. However, the ld.AR explained that ld.CIT(E) has not rejected the 12AA application on this ground. Since it is a fact that neither the ld.AR, nor the ld.DR could explain us under which clause of the objects the activity of artificial insemination on the basis of payment has been carried out!. Therefore, in the interest of justice, we are of the opinion that a proper analysis of objects and activities of the assessee is required which has not been carried out by the ld.CIT(E). The Hon’ble Supreme Court in the case of Ananda Social Govind Foundation [A] & Education Trust vs. CIT [2020] 114 taxmann.com 693 (SC) has observed as under : “11. The purpose of section 12AA of the Act is to enable registration only of such trust or institution whose objects and activities are genuine. In other words, the Commissioner is bound to satisfy himself that the object of the Trust are genuine and that its activities are in furtherance of the objects of the Trust, that is equally genuine.
Since section 12AA pertains to the registration of the Trust and not to assess of what a trust has actually done, we are of the view that the term ‘activities; in the provision includes ‘proposed activities’. That is to say, a Commissioner is bound to consider whether the objects of the Trust are genuinely charitable in nature and whether the activities which the Trust proposed to carry on are genuine in the sense that they are in line with the objects of the Trust. ….. ….. ….. ….. ……. Similarly, the situation would be different where the trust has before applying for registration found to have under taken activities contrary to the objects of the Trust.”
Thus, the ld.CIT(E) has to analyse the objects and activities of the assessee, therefore, it is set-aside to ld.CIT(E) for denovo adjudication after giving opportunity to the assessee. The ld.CIT(E) shall decide the case in the light of Hon’ble Supreme Court’s decision in the case of Ahmedabad Urban Development Authority and Noble Education Trust by which the Hon’ble Supreme Court explained the entire law on charitable activities. Accordingly, Govind Foundation [A] grounds of appeal raised by the assessee are allowed for statistical purpose.
In the result, appeal of the assessee is allowed for statistical purpose. Order pronounced in the open Court on 13th December, 2022.