CONFEDERATION OF REAL ESTATE DEVELOPERS ASSOCIATION OF INDIA CHHATTISGARH,RAIPUR vs. COMMISSIONER OF INCOME-TAX, EXEMPTION, BHOPAL

This appeal of the assessee is directed against the order passed by the Commissioner of Income Tax (Exemption), Bhopal, dated 31.12.2019. In this appeal following grounds are raised:- “1. That, on the facts and in the circumstances of the case, the learned CIT grossly erred to deny registration to the appellant u/s 12AA.

The brief facts of the case are that the assessee is a society, namely Confederation of Real Estate Developers Association of India, Chhattisgarh. The main object of the society is to coordinate among the real estate builder and to provide information regarding new technology in the field of building construction and to set better quality standards in building construction. Assessee had filed an application for registration u/s 12AA on 15th June, 2019. The application submitted by the assessee was rejected by the ld. CIT(E), Bhopal vide order dated 31st December, 2019. The reasons assigned for the rejection were that the assessee trust has failed to furnish the self-attested copy of registered bylaws, also the assessee has failed to furnish the detail note on its activities hence the conditions of rule 17A(1)(c) were not complied by the assesse. The 2nd reason mentioned by the ld. CIT(E) was that the activities of the assessee were treated as working for the benefit of its members or working for the benefit of a particular group of classes i.e. Real Estate Builder and Developers, it was the observation of ld. CIT(E) that the assessee trust is primarily and substantially engaged in the field of Real Estate Construction by providing better information, new technology etc. to builders and developers. The ld. CIT(E) has further observed that the society is also charging fee from its members, rather the fees charge of the membership is the main source of income of the society and in return it provides services which helps its members to enhance their commercial activities in real estate, in other words, the society is helping and working for commercial activities of its members. The services rendered are definitely commercial in nature and the definitely hit proviso to section 2(15) of the Act. Therefore, the society is considered as engaged for the benefit of one group or class of the people i.e. Builders and Developers and Real Estate but not for the benefit of public at large. In conclusion, the application filed by the assessee for registration u/s 12AA was treated as not eligible for approval u/s 12AA of the Act and accordingly, the registration requested was denied.

Aggrieved with the decision of the ld. CIT(E), wherein the application for registration for granting of approval u/s 12AA was denied by the ld. CIT(E), the ld. AR submitted that the order of the ld. CIT(E) is misplaced on the facts, the assessee has submitted all the required information before ld. CIT(E)-online mode, ITO (E) – physically and again before the ld. CIT(E)- uploaded online on portal i.e. 3 times, however, the observation of the ld. CIT(E) that the assessee has failed to provide the copy of registered bylaws of the society was a absolutely false observations.

In support of the contention, ld. AR drew our attention to page 1 to 4 of the paper book wherein copy of form 10A submitted online by the assessee on 15th June, 2019 was placed. On perusal of the referred form 10A (page 1-4), at page 3 of the form at bottom specific entries showing that attachments were also uploaded is evident, such attachment files are named as TRUST_CREATION.pdf, TRUST_ACCOUNTS.pdf, PUBLIC_TRUST.pdf and ACTIVITIES_NOTE.pdf. The ld. AR further submitted that the attachments were consisting of by-laws of the society, accounts, activities and all the information required along with the Form 10A as mandated by the statute. As per, ld. AR, subsequently a query letter dated 30th August 2019 was issued by ITO(Exemption)-1, Raipur, advising the assessee to submit certain information, with respect to assessee’s application for grating of registration u/s 12AA, the list of the information sought by the ITO(E) includes copy of by-laws of trust /institutions and about brief note on activities of the assessee trust. The copy of the letter of ITO(E) was placed at page 12 of the paper book, all the requisite information sought by the AO were submitted by the assessee, a letter showing such compliance by the assessee was placed at page 13 to 16 of paper book.

The ld. AR further drew our attention to page 41 of the paper book which is an online notice / letter issued by ld. CIT(E) dated 11.12.2019, directing the assessee to furnish certain documents / clarifications / information, in compliance, the assessee has submitted required information through the online portal of the Income Tax Department. Copy of acknowledgment for online submission of documents dated 12.12.2019 on the portal of department is available at page 44 of the paper book.

Carrying the argument further Ld AR assailing the solitary controversy raised in this appeal before us, has submitted that the ld. CIT(E), Bhopal has completely lost the sight of the fact that all the requisite information was thrice furnished by the assessee, time and again as and when directed by the department. It was the contention of the appellant that the required information was submitted by the assessee 3 times, however, no cognizance or consideration was given in the observation by the ld. CIT(E), on the contrary, it is observed that the assessee was failed to furnish self-attested copy of registered by-laws and also failed to furnish the details note on its activities. It was the submission of ld. AR that assessee has fully complied at all times as and when the information was sought by 12AA was denied is unjustified and uncalled-for. It was therefore, the prayer that the application of the assessee should be examined with the proper facts and evidence submitted by the assessee and after appreciating the facts in its entirety the registration u/s 12AA has to be granted to the assessee.

The ld. CIT-DR on other hand vehemently supported the order of ld. CIT(E).

We have considered the rival submissions, admittedly, as per documents furnished before us, on perusal of copies of those documents, it is an undisputed fact that the assessee has submitted the information as sought by the department from time to time, but content of the information shared is not discernible from the copies of acknowledgment of online submission by the assessee having name of files attached therein, however, hard copies of the documents and information submitted before ITO(E), it is clearly imminent that the assessee has complied with all the required information as requisitioned by the department. Since, the observation of the ld. CIT(E) was based on the wrong assumption that the information sought was not furnished by the assessee was a totally misconceived belief, thus, the same is bereft of merits and needs to be re- visited and the application of the assessee shall be considered again in the light of all the available information, consequently, in all fairness, in the interest of principle of natural justice, with a thoughtful consideration of the facts submitted, we are of the considered view that the issue raised under the present appeal, should be back to the files of ld. CIT(E) to re-visit and dispose off the application of the assessee for grant of registration U/s 12AA as per provisions of the Act, considering all the available material evidence, information, facts and circumstances of the matter. Reasonable opportunity of being heard shall be granted to the assessee to represent its case. In the result, appeal of the assessee is partly allowed for statistical purposes.