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Income Tax Appellate Tribunal, CHANDIGARH BENCH “A”, CHANDIGARH
Before: SMT. DIVA SINGH, JM & Dr. B.R.R. KUMAR , AM
आदेश/Order PER DR. B.R.R. KUMAR:
The present appeal has been filed by the Assessee against the order of
the Ld. CIT(E), Chandigarh dt. 29/06/2017.
In the present appeal Assessee has raised the following grounds: 1. That the Ld. CIT has erred in law as well as on facts in rejecting registration under section 12AA of the Act which is arbitrary & unjustified. 2. That the Ld. CIT has rejected the claim only for the reason that registration is being sought after a lapse of 17 years since its creation and further there is no dissolution clause in the MOA which is not the requirement for claiming registration under section 12AA and as such the order is arbitrary and unjustified. 3. That the registration has been refused only on the basis of suspicion, conjectures and surmises as is evident from the various unfounded findings as enumerated in the body of the order which is not permitted under the Law and as such the order refusing registration is illegal, arbitrary and unjustified.
As per the order of the Ld. CIT(E), an application in Form No. 10A was
received in this office on 23.12.2016 seeking registration u/s 12A of the Income
Tax Act, 1961. The application reveals that the society is an ongoing entity that
has been in operation since 20.09.2000.
The stated aims and objects of the society are to construct, maintain and
run the Aphaj Gaue Ashram at Bamala or any other place in India; to take care
of disabled, aged, ill and handicapped cows and the alike; to construct,
open/run hospital, dispensary, Eye Bank, Blood Bank, educational institution,
institutions, including department of scientific research for the reception and the
treatment of persons suffering from illness or otherwise needing medical aid or to
hire on rent building or hospital for reception and treatment or persons suffering
from illness or otherwise in need of medical aid for reception, rehabilitation or to
render financial assistance to the institutions established for the achievement of
the above objects in India; to build immoveable properties for carrying on
above mentioned activities and other promotional pursuits, also for creating
regular sources of income and set up special funds and trusts to manage such
properties and funds; to construct building for rental purpose for the
maintenance of the trust; to seek and receive donations, state grants, funds and
other financial assistance for fulfilling the above objects; to provide financial aid
to the needy, poor families for the fulfilment of their social obligations like
marriage of daughter etc.
The provisions necessitated examination of two basic conditions for grant
of registration u/s 12AA. The same include, apart from the examination of
objects of the society, satisfaction of the competent authority in respect of
genuineness of activities as well particularly when the applicant is an ongoing
entity.
The financial statements submitted by the applicant reflect the following:-
F.Y. Gross Receipt Net Surplus (%) Fixed Assets C ash & Bank Additions 2013-14 Rs. 29,39,275/- Rs. 4,28,626/- (14.6%) Rs. 35,44,332/- Fs 9,75,475/- Rs. 34,925/- 2014-15 Rs. 28,06,553/- Rs. 2,92,160/- (10.4%) Rs. 52,44,109/- Rs. 15,89,257/- Rs. 20,61,947/- 2015-16 Rs. 30,19,567/- (-) 1,31,122 Rs. 57,45,866/- Rs. 9,10,961/- Rs. 8,23340/- 2016-17 Rs. 35,69,216/- (-) 4,45,425 Rs, 55,30,226/- Rs. 9,99,677/- Rs. 74,305/-
Ld. CIT(E) held that major source of the receipt is through sale of milk and
manure while major expenditure is on fodder & feed. Financial statements of the
F.Y. 2016-17 reveals that the society has incurred expenditure of Rs. 9,54,619/-
towards purchase of milk which do not corroborate with that of the aims &
object of the society. The major source of receipts has been shown from sale of
milk which clearly point out that the activities are of commercial nature and not
of charity as claimed. The issue of both purchase and sale of milk clearly
establishes that this is an enterprise that predominantly aims at sale/commerce
of/in milk. The activities do not partake the character of 'charitable purpose' as
envisaged in section 2(15) of the Act. It is also clear from the documents on
record that the main objects of the society i.e. taking care of disabled, aged, ill
and hand capped cows have not been pursued. Moreover, there is no
evidence of activities carried out towards fulfilment of other objects of the
society mentioned in the MoA.
He further held that, in the absence of the Dissolution clause, the
presumption of the law is that the assets and liabilities of the society will be
distributed amongst the members of the society in case the society closes its
operations or is disbanded. The provision} of Section 13(l)(c) of the Act are
clearly attracted without this dissolution clause. Lack of dissolution clause is also
in contravention to the necessary conditions laid down by the Society's
Registration Act, 1360.
Giving the above rationale, Ld. CIT(E) held that society cannot be termed
to fall under the category of "charitable purpose" and the application for grant
of registration u/s 12 AA was rejected.
Before us, Ld. DR submitted Aims and Objects of the Trust alongwith details
of the Trustees and office bearers. Copies of the Audit Report under section 12A
(b) in Form 10B alongwith balance sheet and income and expenditure account
have been filed. During the course of hearing in response to the Court query as
to number of cows farming part of Gaushala, Area , Record of Vaccination and
the medicines, the assessee has submitted the details from page no. 1 to 99 of
the Paper Book. These additional evidences since required for adjudication of
the case have been accepted under Rule 29 of ITAT Rules.
Ld. AR has also argued that all the cows in the Ashram are handicapped
cows and not able to produce milk on a commercial basis. The assessee has
also submitted an affidavit from Shri. Baljinder Singh claiming that the milk sold
by the Trust is from the cows maintained by him and the society has only helped
him in selling the milk. However no evidence of receipt of the money by Shri
Baljinder Singh has been submitted.
He relied on the orders in the case of DIT(E) Vs. Sabarmati Ashram
Gaushala Trust in ITA No. 1162 of 2013, DIT(E) Vs. Shree Nashik Panchvati
Panjrapole 397 ITR 501 (Bombay), CIT(E) Vs. Tara Educational & Charitable Trust
in ITA No. 247 of 2015 and CIT-II Vs. Surya Educational & Charitable Trust 355 ITR
280 (P&H). Based on the above evidences it was argued that the exemption
needs to be considered by the Authorities.
Ld. DR on the other hand argued that it was not very clear on the records
and census as to how many animals are crippled and how many were milch
yieldy and argued that physical verification is required to determine the
eligibility under section 12AA.
We have heard Ld. Representatives of both the parties and perused the
material available on record and we find that interest of justice would be met
by sending the file back to the file of the DIT(E) to examine the issue afresh
regarding the dissolution clause, existence of animals, physical verification of
health status and to verify the evidences regarding the purchase and sale of
milk by conducting enquiries as deem fit and to take a decision in accordance
with the provisions of the Income Tax Act,1961, and keeping in view the
established judgments quoted above.
Order pronounced in the open Court.
Sd/- Sd/- �दवा �संह डा. बी.आर.आर. कुमार, (DIVA SINGH) (Dr. B.R.R. KUMAR) �याय�क सद�य/ Judicial Member लेखा सद�य/ Accountant Member AG Date: 25/09/2018
आदेश क� ��त�ल�प अ�े�षत/ Copy of the order forwarded to : 1. अपीलाथ�/ The Appellant 2. ��यथ�/ The Respondent 3. आयकर आयु�त/ CIT 4. आयकर आयु�त (अपील)/ The CIT(A) 5. �वभागीय ��त�न�ध, आयकर अपील�य आ�धकरण, च�डीगढ़/ DR, ITAT, CHANDIGARH 6. गाड� फाईल/ Guard File
आदेशानुसार/ By order, सहायक पंजीकार/ Assistant Registrar