AMTA SOCIAL WELFAR SOCIETY,HOWRAH vs. CIT(EXEMPTIONS), KOLKATA, KOLKATA

The brief facts of the case are that the assessee Society was registered under West Bengal Societies Registration Act, 1961 on 12.10.2012 and had filed an application in Form 10A and 10G for registration u/s. 12A and approval u/s. 80G of the Act on 14.03.2016. The Ld. CIT(E) notes that the matter was fixed several times and the Ld. AR of the assessee was informed about his reservation on the dissolution clause which according to the Ld. CIT(E), was not as per clause (g) of sub-section (2) of section 13 wherein as per the said provision of law, no income or property of the trust or institution is diverted in favour of any person referred to in sub-section (3) of section 13 and in the 2 & 2066/Kol/2016 Amta Social Welfare Society case in hand there was absence of the dissolution clause stating that the assets and income of the applicant society will be used only by a society or institution having the same objectives which are provided in Memorandum of Association of the society. Whereas the Ld. CIT(E) after perusing the dissolution clause of the Memorandum observed that general body meeting of the assessee society was empowered to decide the manner of disbursement of the funds and assets of the association, if any, after dissolution is in violation of the provisions of clause (g) of sub-section (2) of section 13. After finding fault in respect of dissolution clause, the Ld. CIT(E) was of the opinion that he need not have to go into the merits of the case and was not inclined to verify the genuineness of the activities of the organization and was intended for charitable purposes as defined in section 2(15) of the Act and then was pleased to reject the application for registration u/s. 12AA of the Act in limini. Consequent to his rejection u/s. 12AA application he rejected the application for approval u/s. 80G of the Act also. Aggrieved, the assessee is before us.

We have heard rival submissions and gone through facts and circumstances of the case. It was admitted by the assessee society that during the hearing before the Ld. CIT(E), he expressed his dissatisfaction about the dissolution clause in the memorandum of association. So the assessee society made amendment/alteration to the dissolution clause as suggested by the Ld. CIT(E) and made application for that before the concerned authorities. For supporting the said contention, the Ld. AR drew our attention to page 6 which is form IV for filing of alteration of Memorandum of Associations by a society under the West Bengal Societies Registration Act, 1961 wherein the assessee has applied before the Registrar of Firms, Societies and non trading corporation, West Bengal on 30.06.2016 as per the direction of the Ld. CIT(E). However, the said application is pending before the authorities for their approval. The Ld. AR also pointed out that only on the basis of some fault in the dissolution clause in the Memorandum of Association, the Ld. CIT(E) ought not to have rejected the application without looking into the merits and objectives of the society. For the said proposition, he relied on the order of the Coordinate Bench decision in the case of R. P. Sanjiv Goenka Group CSR Trust Vs. CIT(E) in ITA Nos. 1456 & 1457/Kol/2015 dated 04.03.2016 wherein the Tribunal after taking note of the Coordinate Bench decision in Tara Educational & Charitable Trust Vs. DIT(E) in ITA 3 & 2066/Kol/2016 Amta Social Welfare Society No. 1247/Mum/2013 dated 18.07.2014 wherein the order of the ld. DIT(Exemptions) rejecting the application of the assessee for registration under section 12A for the similar reasons as given in the present case was set aside by the Tribunal with a direction to grant registration to the assessee under section 12A for the following reasons given in paragraph no. 4 of the order:- "4. We have heard the argument s of both the sides and also perused the relevant material available on record. It is observed that the application filed by the assessee u/s 12A of the Act h as been rejected by the Id. DIT (Exemptions) mainly on the ground that the relevant Trust Deed does not contain the so-called "dissolution clause". As per the pro visions of section 11 & 12 of the Act, income derived from property held for charitable or religious purposes and income of Trusts or Institutions from contributions are exempt from tax provided such Trusts o r Institutions are registered u/s 12A of the Act . The procedure for registration u/s 12A is prescribed in section 12AA of the Act which provides that the Commissioner, on the receipt of an application for registration of a Trust or Institution made u/s 12A, shall call for such information from the Trust/Institution as he thinks necessary in order to satisfy himself about the genuineness of activities of th e Trust/Institution and may also make such inquiries as deemed necessary on this behalf. It further provide s that after satisfying himself about the objects of the Trust/Institution and the genuineness of its activities, the Commissioner shall pass an order in writing registering the Trust/Institution u/s 12A and if he is not so satisfied, he shall pass an order in writing refusing to register the Trust/Institution. The scope of enquiry contemplated u/s 12AA of the Act thus is limited to the extent of Commissioner getting himself satisfied about object of the Trust and the genuineness of its activities so as to grant o r refuse the registration u/s 12A of the Act. A perusal of the impugned order of the Id. DIT (Exemptions), however, shows that he h as not recorded any adverse comment or dis-satisfaction about the object of the Trust o r genuineness of the T rust activities. He h as refused to grant the registration u/s 12A of the Act on the ground that its Trust Deed does not contain "dissolution clause". In our opinion, the Id. DIT (Exemptions) thus has clearly gone beyond the scope of enquiry contemplated u/s 12A of the Act and h as refused t o grant the registration u/s 12A of the Act to the assessee Trust on a tot ally irrelevant ground without pointing out as to how he was not satisfied either about the object of the Trust or the genuineness of its activities. We therefore set aside the impugned order of the Id. DIT (Exemptions) and direct that the registration u/s 12A of the Act as applied by the assessee Trust be granted" .

We not only find force in the contention of the Ld. AR that the fault in the dissolution clause ought not to have been the ground on which the Ld. CIT(E) should have rejected the application of the assessee for registration u/s. 12AA of the Act. Therefore, we do not subscribe to the said actions of the Ld. CIT(E) on the aforesaid reasoning given by the coordinate bench of this Tribunal. We are of the view that so far as grant of registration u/s. 12AA of the Act is concerned, the Ld. CIT(E)’s jurisdiction is only to 4 & 2066/Kol/2016 Amta Social Welfare Society verify the objectives of the institution and genuinity of the activities, meaning thereby that, he has to satisfy himself that the objects are charitable in nature and the activities being carried on or to be carried on are genuine, meaning thereby that, they are in consonance for achieving of charitable object and nothing else. In the present cases pursuant to the Ld. CIT(E)’s reservation on dissolution clause, the assessee has duly approached the Registrar of Firms and has applied for alteration in the dissolution clause of the Memorandum of Association and the same is pending before the said authority. In the light of the said fact, that the assessee has acted in the line suggested by the Ld. CIT(E) and acceptance of the application for alteration of Memorandum of Association would automatically follow or at any rate must have been done by passage of time, we are of the considered opinion that the assessee society should be given an opportunity to present its case before the Ld. CIT(E) in respect to application for grant of registration u/s. 12AA and approval u/s. 80G of the Act. Since the Ld. CIT(E) himself has admitted that he has not gone into the merits of the applications preferred before him, we deem it fit to restore both applications before him. Therefore, we set aside the order of Ld. CIT(E) and remand the matter back to his file for fresh consideration with a direction to consider the application u/s. 12AA of the Act and pass a speaking order after providing adequate opportunity to the assessee society. The assessee society is directed to cooperate with the Ld. CIT(E). Since we have allowed the appeal of the assessee for statistical purpose in respect to registration u/s. 12AA of the Act consequently, the application for approval u/s. 80G(5)(vi) of the Act is also restored back to the file of the Ld. CIT(E) to pass fresh order in accordance to law.