INDIAN REFRACTORY MAKERS ASSISIATION,KOLKATA vs. CIT(EXEMPTIONS), KOLKATA, KOLKATA

The facts and circumstances under which these appeals arise for consideration are as follows :- The Assessee is a company incorporated under the provision of the Companies Act, 1956 as a “Sec.25-Company” under the said Act on 23.01.2014. Since the assessee has objects of the nature specified in Section 25 (1)(a) of the Companies Act, 1956 and since it intends to apply its profits or other income in promoting its objects and since it prohibits the payment of any dividend to its members, the registrar of companies of West Bengal has granted registration to the assessee as a company licenced u/s 25 of the Companies Act, 1956 and consequently though the assessee is a limited liability company it need not have an additional word ‘company’ or “limited” to its name.

The main objects of the assessee as per the objects of the Memorandum of Association are (a)To promote, support, protect, maintain, further, aid and stimulate the development of the Refractory industry in India.- (b) To establish research or study centres, laboratories and infrastructure to evolve improved designs, patterns, product range, raw materials for growth of refractory industries or undertake on behalf of the members of the company such analysis as may be required by them to facilitate them in their smooth conduct of business. (c) The Association shall function without any object or purpose of profit, and no moneys or surpluses may be distributed by way of dividends to the members, provided that there shall be no bar to payment of any genuine expenses by way of salary, remuneration, fees, etc· to any stipendiary, employees, legal counsel, Auditors, advisors, etc. in furtherance of the Association's object. (d) To establish, strengthen and up gradation of Human resource Development facilities including skill up gradation, training and like activities, common raw material bank including raw material procurement, Common Tool Room including common Testing Facility, marketing infrastructure and provision of information of all kinds to the industrial units and business centre and organize learning programme for the benefit of industries.

The assessee made an application dated 06.04.2016 to C.I.T.(Exemptions), Kolkata for grant of registration as a charitable institution under clause (aa) of Sub- section (1) of Section 12A of the Act. The assessee also made an application dt. 06.04.2016 for grant of approval u/s 80G(5(vi) of the Act, whereby any person giving donation to the trust would be entitled to avail of tax exemptions on such donations.

There is no evidence on record to show that IRMA(old) which as per the certificate of registration dated 23.06.1983 granted u/s 12A of the Act is stated to be a society registered with the Registrar of Societies as early as 1958 ceased to exist as a society at a later point of time. However, the chairman and other office bearers of IRMA(old) in a meeting of General Committee held on 18.03.2013 resolved that as per legal advice, the activities of IRMA (old) should be carried out by forming and registering as a non- profit company u/s 25 of the Companies Act, 1956. Accordingly the Assessee was formed and incorporated. Further the General Committee of IRMA (Old) also resolved in the meeting held on 18.3.2013 that the liability and assets of IRMA(old) which was formed on 27.01.1958 would be taken over by the assessee which would be registered u/s 25 of the Companies Act, 1956 without dissolving the old association formed on 27.01.1958. This resolution in our view cannot have the effect of putting an end to the 3

It is also not disputed that the directors and members of the assessee were the chairman and executive of IRMA (old). The assessee has obtained PAN which is PAN:AADCI6977J.

With the aforesaid background, the CIT(Exemptions)Kolkata examined the claim of the assessee for grant of registration u/s 12AA of the Act as well as approval u/s 80G(5)(vi) of the Act. The first conclusion of the CIT(Exemption) was that IRMA(old) was not dissolved and that for A.Ys.14-15 to 2016-17 the assessee did not enjoy the benefit of registration u/s 12A of the Act. According to the CIT(E) the benefit of registration granted to IRMA(old) cannot hold good for the assessee and to claim exemption u/s 11 of the Act, the assessee should get registration u/s 12A of the Act in its own name. This is the crux of the impugned order of the CIT(E) in para 1 to 6 of his order.

Thereafter the CIT(E) expressed his opinion that the assessee is not entitled to have registration for the following reasons :- “8. Without prejudice to the above, from the submission dated 19-08-2016, the objectives of the Company, have been submitted as "to promote, support, protect, maintain, further, aid and stimulate the development of the Refractory Industry in India". From the website of the Company (www.irmaindia.org) . this is clear that, the services rendered by the. Company (Annexure D) is restricted to 75 manufacturing & 26 Associate members and the services are:-

As a consequence the approval u/s 80 G was also rejected. Aggrieved by the aforesaid orders the assessee has preferred the present appeals before the Tribunal.

We have heard the rival submissions. The ld. Counsel for the assessee pointed out that the objects of IRMA(old) as well as the assessee are identical and there is no reason that the assessee should be denied grant of registration u/s 12AA of the Act. His next submission was that the objects of the Assessee as listed by CIT(Exemption) in the impugned order are extracted from the website of the assessee. It was submitted that CIT(E) had to examine the Memorandum of Association and Articles of the assessment of the assessee and not the one which is found in the website. It was further submitted by him that the allegation of CIT(A) in the impugned order regarding non-payment of tax by the assessee is without any basis as the assessee was entitled to exemption u/s 11 of the Act. With regard to the conclusion of the CIT(E) the activities of the assessee 5

We have given a very careful consideration to the rival submissions. At the outset, it will be worthwhile to analyse the parity of the objects between IRMA(old) and the assessee and the same is as follows :- AOP COMPANY The object of the Association are the (a) To promote, support, protect, maintain, protection of the interests of refractory further, aid and stimulate the development industry in India, the development of such of the Refractory industry in India. industry, the furtherance of the common (b) To establish research or study centres, interest of those engaged there in laboratories and infrastructure to evolve dissemination of technical information and improved designs, patterns, product range, matters of interest to the members and raw materials for growth of refractory honorary members as a whole or any other industries or undertake on behalf of the groups of members, the promotion and members of the company such analysis as formation of branches and any other may be required by them to facilitate on 6

It is clear from the objects of the IRMA(old) and the assessee that they are identical. It is not disputed that IRMA(old) was considered as an institution existing for charitable purpose of advancement of any other object of general public utility. In such situation we fail to see any reason as to why the assessee cannot be regarded as existing for charitable purpose of advancement of any other object of general public utility. The ld. DR placed emphasis on the profit motive which is the condition introduced in the proviso to section 2(15) of the Act. As rightly contended by the ld. Counsel for the assessee the dominant and the prime objective has to be seen. The dominant and prime objective of the assessee which cannot be denied is not profit making but for advancement of object of general public utility, viz., promotion of refractory industry in 7 8 Indian Refractories Makers Association A.Yr.2014-15 India. In the light of the existence of this primary condition for grant of registration, we fail to see any reason why the assessee should be denied registration u/s 12A of the Act. The fact that there will be only 75 manufacturing and 26 associate persons as members of the Assessee, cannot take away the character of the object of the Assessee being “advancement of objects of general public utility” as the Assessee’s objective was development of refractory industry and over all infrastructural development facilities. In that view of the matter, we hold that the CIT(Exemption), Kolkata was not justified in refusing to grant registration to the assessee u/s 12A of the Act. We hold that the assessee is entitled to grant of registration u/s 12A of the Act. The registration is directed to be allowed. Consequently the approval u/s 80G of the Act is also directed to be allowed.

In the result both the appeals of the assessee are allowed.