S.S. JAIN SABHA GOLF LINK, LUDHIANA,LUDHIANA vs. CIT EXEMPTIONS, JALANDHAR

Per Udayan Dasgupta, J.M.:

This appeal is filed by the assessee against the order of the ld. CIT (Exemptions)
Chandigarh dated 11.06.2024 rejecting an application for registration u/s 12A(1)(ac)(iii) of the Income Tax Act, 1961. 2
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registration process, queries were raised and submission has been made accompanied by copies of provisional registration u/s 12AB, copies of memorandum of association, financial statements and copies of bank statement with narrations of debit and credit entries, but the application for registration has been rejected by the ld. CIT(E) in absence of any dissolution clause, investment clause, irrevocability clause, utilization clause and beneficiary clause mentioned in the memorandum of association with the observation that in absence of aforesaid clause, the presumption of law is that the assets and liabilities of the societies will be distributed amongst the members of the society in case of society closes its operation. It was further alleged that though the donations has been collected but there has not been any spending on any religious activity so far as it is evident from the financial statement.
6. Now, the assessee is in appeal before the Tribunal on the grounds contained in the memorandum of appeal which are as follows:
“1) The appellant society was formed in the year 2021, taking inspiration from Acharaya
Arun Muni Ji Maharaj Sahib. In India various S.S. Jain Sabha Society have been in existence which manage the Jain Religious activity and Jain worship place i.e. "Jain Sthanak" (Temple for Jain Religion). Jain Sthanak is a pious place where men & women having belief in Jain religion happened to visit for Darshan of Jain monks and saints, prayers, Satsang, meditation and worshipping God. The appellant to fulfil point 4 of Objective clause no. 5, started work to construct a Jain Sthanak in the Golf link area. Beside, during the financial year of 2022-
23 S.S. Jain Sabha has done many work for Jain religious activity which include every 15th day "Namokar Mantar Path", organize the pravachan of Jain saints, Vihar of Jain saints,

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promote the Jain philosophy and knowledge to young generation, as per the objectives of the appellant.
2) To further its objectives, the society initially received a 200 sq yard land donation from a member to commence its activities. Recognizing the need for a larger space to effectively achieve its goals, it sold the old plot and purchased a larger plot of size 322 sq. yard. The society then started construction thereupon. Construction of the worship place is in itself a part of religious activities as there can be no second use of the property other than worship.
All the donations received by the members of the society and devotees are entirely put into making of the worship place.
3) That the power to grant regular registration to any trust is based upon two factors as per
Section 12AB(1):
-To satisfy about the genuineness of its activities.
-To satisfy about the compliance of such requirements of any other law which are material for the purpose of achieving its objects.
4) We also refer to the "specified violation" as mentioned in explanation to sub section 4 of section 12AB, your honour will appreciate that no-where the appellant is falling under the specified violations from clause (a) to clause (g). The society is only performing activities in accordance with the objectives as enumerated in its MOA.
5) The appellant operates exclusively for religious purposes and does not seek to misuse any tax benefits. The cancellation provisions were introduced to address the misuse of trust funds for private gain, which is not applicable in this case. The society has not engaged in any trade, commerce, business, or service activities. Therefore, cancelling the registration would undermine the very foundation of the society's genuine objective.
6) Moreover, rejecting the application of regular registration, in the absence of dissolution clause, investment clause, irrevocability clause, utilization clause and beneficiary clause in the applicant's MOA, would be unjust as appellant is a society which is duly registered and bound by the framework of society's registration Act that ensures that its objectives are non- commercial in nature and that the society is bound to operate not for any private gains. The 5
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society has obtained registration certificate from the society's registration Act which in itself is an absolute proof that the society is only and only meant for the public religious purpose and not for any private benefits of its members. Further, in its earlier correspondences, upon being notified by the CIT (A), the appellant has agreed to incorporate the missing clauses in the MOA of the society in accordance with the Income Tax Act and in accordance with the CIT (A) findings. The appellant, hereby again states that it acknowledges its oversight and is ready to revise the MOA to incorporate the mentioned clauses if a reasonable opportunity is being granted by the Honorable ITAT.
7) A fair reading of the society's MOA, reveals that in clause no. 19 and in clause no. 20, it is explicitly mentioned that society will never get dissolved and would be perpetual in nature.
Further that no benefit will be passed on by the society to its members. That the society's objective is to utilize the fund raised in Jain worship place and activities related to Jain religion as written in the objective clause of the society. In the above background, the rejection of registration needs reconsideration.
8) The appellant would also like to draw honorable ITAT's attention to the recent case law of Ajit Education & public welfare society vs. CIT (2019). As well as in the case of CIT v.
Tapagacha Sangh Mota (2015) 232 taxman 715(Gj.) in both these cases, there was an absence of dissolution clause in the MOA of the assessee society. On this pretext, exemption was denied purporting that on dissolution, benefit would go to specified persons u/s 13(3) of the Income Tax Act, 1961. The reason for rejection by revenue could not be sustained as the benefit which may or may not accrue w's 13(3), did not have an effect on the genuineness of the activities of the society. It was held that the eventuality relied upon by the revenue was based on whims and fancies without there being any definite basis that any mis-utilization would occur for sure in future.
9) Likewise, in the case of CIT Central Circle v. AS kapparaju brothers’ charitable foundation trust (2012) 17 Taxmann.com 56 (Chen 'A'-Trib)-it was held that the purpose of creation of trust was to save the property of authors of trust from various enactments such as urban ceiling act etc-such inference is totally based on presumption hence registration cannot be denied.

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10) The appellants-case is similar to the above cited case laws wherein ITAT opined that the Ld. Chief commissioner has denied the approval not because he found the activities not genuine but for the reason that an event may occur in future benefitting certain specified persons, the occurrence of the event being also not definite. The reason for denying is far- fetched and against the grain and spirit of this section which extends the benefit of exemption from tax to genuine societies. It further opined that undoubtedly, a contingency occurring in the future cannot change the fact situation in the present. Consequently, the case was set aside and exemption was entitled to the assessee by the honorable ITAT.
11) The appellant is ready to modify the MOA which is under active consideration.
12) The appellant craves leave to alter, modify, amend, withdraw or raise additional grounds of appeal on or before completion of appellate proceedings.”