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Income Tax Appellate Tribunal, CUTTACK BENCH, CUTTACK
Before: S/SHRI N.S SAINI & PAVAN KUMAR GADALE
IN THE INCOME TAX APPELLATE TRIBUNAL, CUTTACK BENCH, CUTTACK
BEFORE S/SHRI N.S SAINI, ACCOUNTANT MEMBER AND PAVAN KUMAR GADALE, JUDICIAL MEMBER
ITA No. 179/CTK/2016
Orissa General Centre,, at: Vs. CIT (Exemption), Plot No.11, Akhandalamani Hyderabad. Temple Lane, Mahanadi Vihar, Cuttack. PAN/GIR No. AAAAO 2330 A (Appellant) .. ( Respondent)
Assessee by : Shri Sandeep Kumar Jena, AR Revenue by : Shri Kunal Singh, CIT DR
Date of Hearing : 25/10/ 2017 Date of Pronouncement : 25 /10/ 2017
O R D E R Per N.S.Saini, AM This is an appeal filed by the assessee against the order of
CIT(Exemptions), Hyderabad, dated 29.1.2016.
The assessee has raised the following grounds of appeal:
“1. For that, the impugned rejection order passed by the Learned C.I.T. (Exemptions) is not just and proper under the facts and in the circumstances of the case as such the impugned order needs to be quashed in the interest of justice.
For that, the learned C.I.T. (Exemptions) should not have rejected the Application for grant of registration U/S.12AA on the ground that, the amendment clause does not specifically stipulates that, the Amendment shall be carried out only with the prior approval of the C.I.T.(Exemptions).
For that, the learned C.I.T. (Exemptions) should not have rejected the application on the ground that, appellant has not mentioned that, on winding up the Society, the remaining Assets shall be transferred to an institution having registration
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U/S.12AA and approval U/s.80G(5) of the Act, in spite of the same has been clearly stipulated in para-10 of the MoA of the appellant.
For that, learned C.I.T. (Exemptions) is failed to adjudicate the basic ingredients for granting or rejecting the registration, which has been decided in many judicial pronouncements and the grounds advanced by him cannot be a reason at all to deny the grant of registration to the appellant.
For that, the observation of the C.I.T. (Exemptions) that, the objective clause of the MoA has not specifically mentioned the Investment clause, irrevocable clause and utilization clause which is mandatory for grant of registration is not in accordance with the provisions of the Act, as such the impugned allegation needs to be rejected in the interest of justice.
For that, the reason assigned by the learned C.I.T. (Exemptions) in Paragraph No.2 and 3 of his order is not only illegal but also contrary to the facts on record, as such the impugned observation needs to be rejected in the interest of justice.
For that, since the appellant has qualified for all the requisite requirements, the application for grant of registration U/S.12AA and 80G of the Act needs to be allowed in the interest of justice.
For that, the learned C.I.T. (Exemptions) should not have ignored the application filed u/s. 12AA & U/s. 80G of the Act and should have passed an order in the interest of justice.
For that, the appellant craves leave of this Hon'ble Tribunal to urge other grounds of appeal, if so arises, at the time of hearing.”
The brief facts of the case are that the assessee filed
application in Form No.10A 27.7.2015 for grant of registration
u/s.12AA of the Act. The assessee was required to produce its
original Memorandum of Association (MoA)for verification and
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detailed reply on specific points. Ld A.R. appeared and filed the
same.
Thereafter, the CIT (Exemption) refused registration u/s.12AA of the
Act on the ground that on verification of MoA, it is found that “Amendment
clause” does not specifically stipulate that the amendments shall be carried
out only with the prior approval of the CIT(E). Similarly, the “Winding Up
clause” does not specifically stipulate that on winding up of the society, the
remaining assets shall be transferred/paid to an institution having
registration u/s.12AA and approval u/s.80G(5) of the I.T.Act, 1961.
Before us, ld A.R. of the assessee submitted that on similar facts of
the case, this Bench of the Tribunal in the case of Modern English School
Education Society vs CIT (Exemption) in ITA No.03/CTK/2016 order dated
25.7.2017 has held that regarding objection of the CIT (Exemption) that
amendment clause” of the MoA of the assessee society does not provide
for prior approval of the CIT(E) there is no such provision u/s.12AA of the
Act and hence, the CIT (E ) is not justified in rejecting the application
for registration of the assessee society on this ground.
With regard to second objection of the CIT(E) that “Winding up
clause” of the assessee society does not provide for transfer of asset to
another society, it is observed that the “Dissolution clause” exists and,
therefore, the order of the CIT(E) was set aside and the assessee society
was granted u/s.12AA of the Act.
He argued that the facts in the present appeal are identical to the
facts which were in the case of Modern English School Education
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Society(supra) and hence prayed that following the same, the appeal of the
assessee should be allowed.
On the other hand, ld D.R. agreed with the submission of ld A.R. of
the assessee.
We have heard the rival submissions, perused the orders of lower
authorities and materials available on record. In the instant case, we find
that the CIT(E) has refused to grant registration u/s.12AA of the Act to the
assessee society on the following grounds:
(i) Amendment clause does not specifically stipulate that the amendments shall be carried out only with the prior approval of the CIT(E). (ii) Winding up clause does not specifically stipulate that on winding up of the assessee society, the remaining assets shall be transferred/paid to an institution having registration u/s.12AA and approval u/s. 80G(5) of the I.T.Act, 1961. (iii) Investment clause, Irrevocable clause and utilisation clause are not mentioned in the objectives of the assessee society.
We also find that the assessee is a society registered vide Registration
No.23123/130 of 2009-2010 dated 26th day of February, 2010 of Registrar
of Societies, Orissa, Cuttack. The assessee had applied for registration
under section 12AA of the Act in the prescribed Form 10A on 27.7.2015
seeking registration under the Income Tax.
As regards the first objection of the CIT(Exemption) that the
amendment clause of the MOU of the assessee society does not provide for
prior approval of the CIT(Exemption), we find that there is no such
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provision u/s.12AA of the Act and, therefore, in our considered view, the
CIT(Exemption) is not justified in rejecting application for registration of
the assessee society on this ground.
The second objection of the CIT(Exemption) is that winding up clause
in the MOU of the assessee society does not provide for transfer of the
assets to another society having registration u/s.12AA of the Act and
approval u/s.80G of the Act. We find that ld A.R. of the assessee has filed
a copy of the Memorandum of Association and Articles of
Association of the assessee society, wherein, the winding up clause reads
as under:
The society may be dissolved by 3/5th of members upon dissolution of the society its assets will be handed over to a similar registered society.
A reading of above clause shows that the Memorandum of Association
specifically provides for the transfer of assets to similar registered society.
Therefore, in view of above clause in the MOA of the society, in our
considered view, the ld CIT(Exemption) was not justified in refusing
registration to the assessee society on this ground also.
The third objection of the CIT (Exemption) for not granting
registration to the assessee society is that there is no investment clause
which is mandatory for seeking registration u/s.12AA of the Act. In our
considered opinion, at the time of grant of registration u/s.12AA of the Act
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to the society, the CIT(Exemption) is only required to verify whether the
activities of the trust or institution are genuine and that the objects of the
trust or institution are charitable. At the stage of granting registration to
the assessee society, he is not to see whether the society would be able to
claim exemption u/s.11 & 12 of the Act. The question of exemption u/s.11
& 12 of the Act or u/s.80G of the Act would come only when the said
exemptions are claimed by the society at the time when it is assessed to
tax. To consider whether the said society would be entitled to the benefits
of section 11 & 12 of the Act or u/s.80G of the Act would be pre-judging
the issues before grant of certificate. Therefore, if there is any violation of
the conditions of section 13(1(d) of the Act, the Assessing Officer shall at
the time of assessment disallow exemption u/s.11 & 12 of the Act to the
assessee society. Hence, in our considered opinion, the CIT(Exemption)
was not justified in refusing the grant of registration to the assessee society
on this ground also.
Regarding the next objection of the CIT(Exemption) in granting
registration to the assessee society is that it is not clear from the MOA as
to whether the assessee society is revocable or irrevocable. We find that
the assessee is a society registered vide Registration No. No.23123/130 of
2009-2010 dated 26th day of February, 2010 of Registrar of Societies,
Orissa, Cuttack. The mode of dissolution or winding up of the society is
specifically provided in the MOA of the assessee society as quoted above.
In view of the same, the observation of the CIT(Exemption) that the society
is revocable or irrevocable is not correct as that may be required to be seen
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in case of a trust and not in case of any institution registered under the
Society Registration Act where the mode of winding up is clearly spelt out
in the Society Registration Act as well as MOA of the concerned institution.
Hence, in our considered view, the CIT(E) was not right in refusing to grant
registration on this ground also.
For the foregoing reasons, in our considered opinion, the refusal to
grant registration u/s.12AA of the Act to the assessee society is not proper
and justified. Hence, we set aside the order of the CIT(Exemption),
Hyderabad and direct him to grant registration u/s.12AA of the Act to the
assessee society. Thus, the grounds of appeal of the assessee are allowed.
In the result, appeal filed by the assessee is allowed.
Order pronounced on 25 /10/2017.
Sd/- sd/- (Pavan Kumar Gadale) (N.S Saini) JUDICIALMEMBER ACCOUNTANT MEMBER Cuttack; Dated 25 /07/2017 B.K.Parida, SPS Copy of the Order forwarded to : 1. The appellant: Orissa General Centre,, at: Plot No.11, Akhandalamani Temple Lane, Mahanadi Vihar, Cuttack. 2. The Respondent. CI (Exemption), Hyderbad 3. The CIT(A) 4. Pr.CIT, 5. DR, ITAT, Cuttack 6. Guard file. BY ORDER, //True Copy//
SR.PRIVATE SECRETARY ITAT, Cuttack