THE VIJAYAWADA MACHINERY MERCHANTS ASSOCIATION,VIJAYAWADA vs. THE CIT, VIJAYAWADA, VIJAYAWADA

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. 688/VIZ/2013 The Vijayawada Machinery vs. CIT, Vijayawada. Merchants Association, D.No.11-39-11, Katurivari Street, Vijayawada. PAN No. AABAT 8447 L (Appellant) (Respondent) Assessee by : Shri I. Kama Sastry, FCA. Department By : Shri Deba Kumar Sonawal, CIT DR Date of hearing : 23/04/2018. Date of pronouncement : 26/04/2018. 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, Vijayawada, dated 26/09/2013. 2. Facts of the case, in brief, are that the assessee-The Vijayawada Machinery Merchants Association is a registered society, filed an application for registration under section 12AA of the Income Tax Act, 1961 (hereinafter referred to as "Act") with the following main objects:- a) To promote and encourage unanimity and friendly feeling among the machinery merchants carrying on trade in mills stores, oil engines, expeller and gin machinery spare parts

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and other allied machinery; tractors, pump-sets and other agricultural machinery and equipment; workshop and foundry equipment and machinery, equipment, spare parts etc. and to find ways and means to develop the trade in the above lines and to all that is necessary in this direction without any restriction of any caste, creed, religion or community. b) To organize, maintain, protect, promote and assist the rights and interest of the association.

The ld. Commissioner, by considering the objects and also the source of funds, observed that all the receipts of the assessee are annual membership subscription paid by the members. The activities of the assessee are restricted to the contribution from the members. No expenditure is incurred towards any charitable activity. The primary object of the society is to promote and encourage unanimity and friendly feeling among the machinery merchants and, therefore, assessee cannot be treated as a charitable association, but is a mutual concern and, rejected for registration under section 12AA of the Act. 3. On being aggrieved, assessee carried the matter in appeal before the Tribunal. 4. Ld. Authorised Representative for the assessee has submitted that The Vijayawada Machinery Merchants Association

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is a charitable association and the ld. Commissioner is not correct in rejecting the registration under section 12AA of the Act. Ld.Authorised Representative further submitted that the case of the assessee is covered by that the advancement of any other object of general public utility. He further submitted that the assessee-society is existed to promote the trade and therefore, assessee is entitled for 12AA registration. He relied on the following case laws in support of his contentions:- 1) CIT vs. A.P. Bankers & Pawnbrokers Association [(1998) 170 ITR 476]. 2) CIT vs. Andhra Chamber of Commerce [(1965) 55 ITR 722)] 3) ACIT vs. Delhi Brick Kiln Owners Association [(1980) 4 Taxman 420 (Delhi)] 4) Andhra Pradesh Grain & Seeds Merchants Association vs. DCIT (E) [ITA No. 1242/Hyderabad/2013, dated 01/04/2014 (Hyderabad Tribunal)]

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Association and is only related to the members of the association and not doing anything towards promotion of trading. Under these facts and circumstances of the case, we are of the opinion that the ld. CIT(A) rightly rejected the registration under section 12AA of the Act to the assessee. Under similar set of facts, the coordinate bench of the tribunal has considered the same issue in the case of The Eluru Jewellers & Bullion Merchants Association vs. CIT in ITA No. 419/Vizag/2012, dated 30/11/2016, wherein it has been held as under:- “9. We have heard both the parties, perused the materials available on record and gone through the orders of the authorities below. The assessee association was formed in the year 1947 with the main objects to protect the interest of the jewellers and bullion merchants. Though some of the objects provide for charity, particularly object no.9 i.e. collecting the donations for the benefit of the poor and under privileged and providing financial help to the poor students for their education. From the details filed by the assessee, we find that since 1947, the assessee has not carried out any charitable activity particularly to help the poor students except some negligible income they have incurred for the purpose of charity. The assessee society is only existed to protect the interests of the jewellers and bullion merchants of Eluru town and to protect their personal interest. Even it is not existed to protect the interest of the trade at large but only it is existed for few members who are doing business in a particular town. We find that the assessee is only existed for the benefit of few members particularly who are carrying business activity in Eluru town and it cannot be said that the assessee is doing charity. Charity means to help the poor who are in need. In this case, assessee has not done anything to the poor people who are in need, who are suffering with ill health, etc., etc. The Commissioner in his order has observed that the society was formed for the welfare of the gold and bullion merchants of Eluru by the members for the benefit of the members. Such society cannot be considered for the purpose of charity. We find that the Ld. Commissioner correctly held that assessee cannot be

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considered as a charitable organization. A society is formed for the benefit of themselves, it can only be said that it is a mutual benefit to each other. It cannot be said that people started an association for the benefit of themselves is a charity. The concept of charity means doing something to others who are in poor and helpless condition. The assessee association existed for the people who are in a trade, they are neither poor nor helpless. All the members of the association existed for the purpose of carrying their business with a profit motive. Charity is an anti- thesis of profit. In view of the above, we find that the assessee society is not eligible for registration u/s 12AA of the Act. So far as case laws relied upon by the Ld. Counsel for the assessee is concerned, we have considered each case carefully and find that facts are entirely different from the case in hand. Therefore, those case laws are not relevant to decide the issue before us.” 8. Keeping in view of the facts and circumstances of the case and also by following the decision of the coordinate bench of the tribunal in the above referred to case, we find no infirmity in the order passed by the ld. Commissioner. So far as case laws relied on by the assessee are concerned, they have no application to the facts of the present case. Thus, this appeal filed by the assessee is dismissed. 9. In the result, appeal filed by the assessee is dismissed. Order Pronounced in open Court on this 26th day of April, 2018.

Sd/- sd/- (D.S. SUNDER SINGH) (V. DURGA RAO) Accountant Member Judicial Member Dated : 26th April, 2018. vr/-

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Copy to: 1. The Assessee - The Vijayawada Machinery Merchants Association, D.No.11-39-11, Katurivari Street, Vijayawada. 2. The Revenue – CIT, Vijayawada. 3. The D.R., Visakhapatnam. 4. Guard file. By order

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