M/S SHRI VAISH AGGARWAL PANCHYAT,KURUKSHETRA vs. CIT,(E), CHANDIGARH

This appeal is preferred by the assessee against order dated 29.09.2017 passed by the Ld. Commissioner of Income Tax (Exemptions), Chandigarh [hereinafter referred to as ‘CIT(E)’], wherein, the assessee’s application in Form No. 10A seeking registration u/s 12A of the Income Tax Act, 1961 (in short 'the Act') was rejected.

The grounds raised by the assessee are as under:-

The Ld. Authorised Representative (AR) submitted that the assessee’s application for registration u/s 12A of the Act was wrongly refused by the Ld. CIT (E). He drew our attention to paragraph 7 of the impugned order to submit that the reasons, as specified in the said paragraph by the Ld. CIT(E), for refusal to grant registration is that the assessee had failed to provide copy of the Memorandum of Association (MOA) to the Trust as well as it had also failed to provide copy of Receipt and Payment account for three years which had been specifically called for by the Ld. CIT(E). The Ld. AR, referring to the paper book filed by the assessee, pointed out that the copy of Form 10A along with covering letter had copy of Memorandum of Association as well as bye laws annexed at pages 15 to 40 in the said paper book. It was also submitted that consolidated financial statement as well as stand-alone financial statement of financial year 2016-17 were also submitted along with application filed by the assessee. It was further submitted that it was a wrong contention on the part of the Ld. CIT(E) that these papers had not been filed. On the issue of non-filing of Receipt and Payment Account, it was submitted that the Receipt and Payment account was not prepared because the assessee is a Society which is exempt from applicability of Accounting Standard – 3 (Cash -c-2017 Sh. Vaish Aggarwal, Kurukshetra 3 Flow statement), which has been issued by the Institute of Chartered Accountants, wherein, it has been specified that where the turnover and borrowings of an entity is less than Rs. 10 crores and 2 crores respectively, such statement is not required to be drawn up. It was also submitted that the Ld. CIT(E) has taken adverse view on collection of School fee and the corresponding expenditure without calling for any further explanation, evidences or details from the assessee society, and therefore, there was a gross violation of principles of natural justice. It was also submitted that the Registering Authority, at the time of granting of registration has to be only satisfied towards the charitable nature of the objects of the assessee society and be assured of the genuineness of those activities and that the Registering Authority cannot go beyond the objects at the stage of Registration. It was submitted that the Ld. CIT(E), on the facts of the case, be directed to

Per contra, the Ld. Departmental Representative (DR) submitted that the Ld. CIT(E) had made very pertinent and relevant observations regarding the activity of the society. It was also submitted that the assessee had not provided a copy of the amended Memorandum of Association and, therefore, it was a valid ground for rejection of the assessee’s application.

We have heard the rival contentions and have also perused the material on record. The Ld. AR has argued vehemently for the assessee being granted the registration u/s 12A of the Act. As per the records, it -c-2017 Sh. Vaish Aggarwal, Kurukshetra 4 is evident that the assessee had provided copy of the Memorandum of Association as well as bye-laws along with Form No. 10A vide letter dated 28.02.2017. This Memorandum of Association, which was filed along with form No. 10A, was the amended MOA and the MOA which existed prior to its amendment (which was made in 2016) was not filed.

In the final result, the appeal of the assessee stands allowed for statistical purposes.