INSTITUTE OF ROAD SAFETY & FLEET MANAGEMET SOCIETY,DELHI vs. DIT (EXEMPTION), NEW DELHI

Date of hearing : 01/08/2016. Date of order : 02/09/2016. O R D E R PER S.V. MEHROTRA, A.M:

This is assessee’s appeal against the order dated 28.11.2013 passed by the Director of Income Tax (E), u/s 12AA(1)(b) r.w.s. 12A of the Income Tax Act, 1961.

“a) Institute of Road Safety and Fleet Management Society Promote safety and the prevention of accidents in all areas of life at work at leisure on the road, in the home and through safety education in schools, institutions work places and all other locations. b) Institute of Road Safety and Fleet Management Society aim is to sensitize masses by raising awareness about road traffic deaths, cripples and grievous injuries their grave consequences and thus building community involvement around the issue of Road Safety. c) Institute of Road Safety and Fleet Management society campaigns to bring in change in attitudes and behaviors and inculcate sense of courtesy and concern among road users.

2.1. Ld. DIT(E) examined the note on activity filed by the assessee during the course of proceedings and after considering the same, examined the accounts submitted by the assessee from which she noticed that assessee had received in AY 2013-14 service charges aggregating to Rs. 27,09,275/- and misc. receipts at Rs. 8,57,713/-. In support of these receipts the assessee filed bank statement for the entire one year showing deposits mostly exceeding Rs. 20,000/- in the account.

The assessee’s AR was required to state the nature of deposits or credits in the bank account. The assessee’s AR filed letter dated 15.10.2013, signed by the President of the Society, stating therein that “we hereby certify that amount above Rs. 20,000/- receipts/ credits into our bank account are against Road Safety Education-Training Services rendered by us”. Ld. DIT(E) also noticed that assessee, inter alia, submitted that it was providing knowledge of safe driving on the roads to the professional drivers through various modes. Ld. DIT(E) after going through these details concluded that assessee was involved in rendering its professional/ technical services to the people/ desirous persons in lieu of money.

She required the assessee to elaborate on the training programme conducted by it or the training courses being run by it. In response, it was stated that it did not render any regular/ structured training programme or courses. It structures the training programme as per the needs of the organization for which the training programme is being conducted. Ld. DIT(E), however, has observed that assessee was unable to file any further details about contents/ name/ target group etc. of the training programme conducted by it for various organization from whom it claimed to have received Rs. 27.09 lacs. Ld. DIT(E) observed in para 6 of her order that the applicant’s activities fell within the ambit of advancement of any other object of general public utility and the applicant was charging fees for its professional and technical services. She observed that since the nature of the activities carried out by the assessee were found to be in the nature of business, the assessee was afforded an opportunity to explain as to why its application be not rejected in view of the proviso to section 2(15) of the Income-tax Act.

2.2. The assessee submitted that the activities being carried out by the organizations were not in nature of business but a genuine charitable activity and proviso to section 2(15) was not attracted. It was further contended that the activities fell within the ambit of education as it was running a training institute to cater to the needs of professional drivers.

2.3. Ld. DIT(E) rejected the assessee’s claim of registration u/s 12A observing in para 8 of her order as under: 8. I have carefully considered the submissions made by the applicant and gone through the details filed by it. It is clear that the institute primarily claims to be conducting training for road safety by holding training programmes which are structured as per the needs of the recipient organization. First of all it is mentioned that during the course of proceedings AR of the applicant was specifically asked vide. order sheet entry dated 16/7/2013 to give details of services charges and Misc. receipt as, per account filed for A.Y. 2013-14 amounting to Rs. 35,66,988/- However, it did not furnish party-wise details of services charges and misc. receipt. From the details filed, it could not be ascertained as to how applicant is providing training to the commercial entities from whom service charges/misc. receipt have been shown. No, evidence has been filed in respect of nature/content of training and the target group drivers, commuters, management staff etc. to whom it is imparted. In its reply dated 28/11/2013 applicant has filed only names of organizations for AY. 2011-12 and 2012-13 wherein, it claims to have trained the staff of these organizations. All organizations are either Pvt. Ltd companies or Ltd companies and no general public or people are the beneficiaries of its activities. In the absence of nature of training to the people/person and party-wise details of service rendered or money charged from the commercial organizations for imparting training to their employees, the applicant has failed to justify its claim of charitable organization. Therefore, assessee's claim of registration u/s 12A fails on this account alone.

2.4. Relying on the decision of Hon’ble Supreme Court in the case of Sole Trustee Lok Shikshana Trust Vs. CIT (1975) 10 ITR 234 (SC), ld. DIT(E) did not accept the assessee’s contention that it was providing education. She also relied on the decision of Hon’ble Gujarat High Court in the case of Sorabji Nusserwanji Parekh 66 Taxmanh 411 for rejecting the assessee’s claim that it was imparting education. However, she accepted that the activities carried out by the assessee fell within the last limb, “ advancement of any other object of General Public Utility” of definition of Charitable purpose as given in section 2(15) of the I.T. Act. However, this claim was also rejected as she concluded that provisio to section 2(15) was attracted.

She, accordingly, rejected the assessee’s application for grant of registration u/s 12A and also application in form no. 10G seeking exemption u/s 80G.

3. Ld. counsel for the assessee submitted that at the time of granting registration ld. DIT(E) was required to examine the genuineness of the activities which has not been doubted by ld. DIT(E). He referred to page 8 of PB wherein memorandum of association of assessee society is contained and referred to aims and objects of society and pointed out that the activities carried out by assessee were charitable in nature. He submitted that all these activities were carried out for the benefit of public at large by sensitizing masses by raising awareness about accidents which results into enormous losses to human lives.

3.1. Ld. counsel further submitted that education cannot be ascribed narrow meaning. He relied on the decision of Hon’ble Bombay High Court in the case of DIT(e) Vs. M/s Khar Gymkhana rendered in vide order dated 6.6.2010, a copy of which was filed at the time of hearing.

5.1. Thus, from a bare perusal of section it is evident that ld. DIT(E) has to satisfy himself about the object of the trust and the genuineness of its activities. From the order passed by ld. DIT(E) it is evident that she is not disputing that objects of the society are charitable in nature as she herself has said that the activities carried out by assessee were covered under fourth limb of section 2(15) viz. advancement of any other object of general public utility. At this juncture we may observe that we are not recording any findings as to under which limb of section 2(15) the assessee’s activities fell, because at this juncture we have only to examine whether the activities carried on by assessee are charitable in nature or not. This is not disputed by ld. DIT(Exemption).

5.2. We may also clarify that as far as ld. DIT(E)’s finding regarding applicability of proviso to section 2(15) is concerned, we are not inclined to accept the same for the simple reason that assessee had received service charges from various organizations for conducting the programme and this cannot par take the character of business by any stretch of reasoning. Be that as it may, this cannot be basis for denying registration as it is nowhere so contemplated in the Act.

5.3. Now the second aspect, which is to be considered at the time of grant of registration, is regarding the genuineness of its activities. In this regard ld. DIT(E) has observed, as noted in para 8 of her order, reproduced earlier, that assessee had filed only names of organizations for AYs 2011-12 and 2012- 13, wherein it claimed to have trained the staff of these organizations and she pointed out that all organizations were either Pvt. Ltd. companies or Ld. companies and not general public or public were the beneficiaries of these activities. She further observed that in the absence of nature of training to the people and party-wise details of services rendered or money charged from the commercial organizations for imparting training to their employees the assessee failed to justify its claim for charitable organization. In this regard we find that at pages 94-95 of paper book the assessee has filed copy of ledger account of service charges received. These service charges were mainly from following companies: - ACC Limited. - E.I. Dupont India Pvt. Ltd. - Hindustan Coca-Cola Beverages Pvt. Ltd. - Diversey India Pvt. Ltd. - Cairn Energy India Pvt. Ltd. 5.4. All these are big companies and, therefore, when these companies have contributed towards the programme carried out by assessee, it cannot be said that activities of assessee-society were not genuine. These companies must have sponsored only after considering their social responsibilities towards public at large. Further, we find that in paper book, assessee has also annexed various reports on its activities, which have not adversely been commented by ld. DIT(E). Photographs annexed in paper book show that various programmes were being conducted and people were listening to various speakers. Therefore, the assessee-society was carrying out the activities for which it was incorporated. Hence, genuineness of activities stands established. Thus, twin ingredients of section 12AA being satisfied, we do not find any basis for denying registration to the society and, therefore, we direct ld. DIT(E) to grant registration as the assessee fulfills the basic requirements for grant of registration u/s 12AA of the Act.

5.5. As we have directed for grant of exemption u/s 12AA, we also direct for grant of registration u/s 80G as the sole basis for denying the exemption u/s 80G was not granting of registration u/s 12AA.