Income Tax Appellate Tribunal - Kolkata
The Bengal Hosiery Manufacturer'S ... vs Assessee on 3 September, 2010
आयकर अपीलीय अधीकरण, Ûयायपीठ - "B", कोलकाता,
IN THE INCOME TAX APPELLATE TRIBUNAL, BENCH- B , KOLKATA
[सम¢ ौी बी. आर. मीƣल,् Ûयायीक सदःय एवं ौी सी.
बी. आर. सी. डȣ.
डȣ. राव,
राव, लेखा सदःय ]
Before Shri B.R.Mittal, Judicial Member & Sri C.D. Rao, Accountant Member
आयकर अपील संÉया / ITA No. 2098 (Kol) of 2010
The Bengal Hosiery -वनाम- Director of Income-tax (Exemp.),
Manufacturer's Association, -Versus-. Kolkata..
Kolkata. (PAN-AAAAT0347E)
(अपीलाथȸ/APPELLANT) (ू×यथȸ/RESPONDENT)
अपीलाथȸ कȧ ओर से/ For the Appellant: ौी/Sri Somnath Ghosh
ू×यथȸ कȧ ओर से/For the Respondent: ौी/Sri P.C. Nayak
आदे श/ORDER
सी.
सी.डȣ.
(सी डȣ.राव), राव लेखा सदःय (C.D. Rao), Accountant Member :
The appeal of the assessee is directed against the order dated 03.09.2010 of Director of Income-tax (Exemption), Kolkata. The assessee has raised several grounds which are all directed against the rejection of the application for renewal of exemption certificate u/s. 80G(5)(vi) of the Act. The grounds raised in this appeal by the assessee read as under :-
"1. FOR THAT none of the conditions precedent existed and/or has been complied with and/or fulfilled in the instant case for rejection of application of the appellant for renewal of exemption u/s. 80G(5)(vi) of the Income Tax Act, 1961 and the impugned finding of the Ld. Director of Income Tax (Exemption), Kolkata on that behalf is ab initio void, ultra vires and null in law.
2. FOR THAT the Ld. Director of Income Tax (Exemption), Kolkata gravely erred in passing the impugned order u/s. 80G(5)(vi) of the Income Tax Act, 1961 rejecting the application seeking renewal of exemption without considering that the appellant had been carrying on genuine activities of charitable purpose and his purported findings on that behalf are altogether arbitrary, baseless, unwarranted and perverse.
3. FOR THAT the Ld. Director of Income Tax (Exemption), Kolkata misread the objects of the appellant and considered issues which are not germane to the scope and ambit of the statutory provisions contained in s. 80G(5)(vi)of the 1 Income Tax Act, 1961 and his purported action of rejection of the application for renewal of exemption dated 03-09-2010 is highly unfair, unreasonable and unwarranted on the facts and in the circumstances of the instant case."
2. The facts of the case are that the assessee is a society which is registered under the Societies Registration Act, 1860 on 16/7/1945. It was granted registration u/s. 12A of the Act by an order dated 22/6/2001 with retrospective effect from 01/4/1997, which is still subsisting. It was also granted exemption certificate u/s. 80G(5)(vi) of the Act by an order dated 27/7/2001 for the period 08/7/2001 to 31/3/2006, which was further renewed by an order dated 16/1/2007 for the assessment years 2007-08 to 2009-10. The assessee thus filed an application in Form 10G on 10.3.2010 before the D.I.T. (Exemption) for renewal of exemption certificate u/s. 80G(5)(vi) of I.T. Act, 1961. The D.I.T. (Exemption) vide his order dated 03.09.2010 rejected the said application by holding as under :-
"On perusal of the application it was observed that authorities below did not recommend the case. Subsequently, in order to give the applicant another opportuniry this office had issued letter dated 19.08.2010 fixing hearing on
03.09.2010. In compliance AR Honorary Secretary S.K. Bhatter appeared. On discussion it was found that the activities are beneficial to manufactures only. It will not be covered u/s. 2(15) under public utility. It is governed by principle of mutuality.
In view of the above discussion, application for renewal of exemption u/s 80G(5)(vi) of the Income Tax Act, 1961 is hereby rejected."
3. At the time of hearing before us, the ld. counsel for the assessee referring to several object clauses of the assessee-trust has submitted that the assessee has been granted registration u/s. 12A of the Act since 01/4/1997 and exemption certificate u/s. 80G(5)(vi) of the Act by an order dated 27/7/2001 for the period 08/7/2001 to 31/3/2006. Thereafter the exemption certificate was being renewed and last renewal was for the period covering assessment years 2007-08 to 2009-10. The assessee, therefore, applied for renewal of exemption certificate u/s. 80G(5)(vi) of the Act on 10/3/2001, which was rejected by the D.I.T. (Exemption) without appreciating the object clause of the assessee-society and wrongly interpreting the provisions of sec. 2(15) of the Act. The ld. counsel for the assessee further submitted that the assessee has 2 been created with the main objects to provide assistance and support services to entrepreneurs and investors in hosiery industry and for promotion of this industry adopted several measures including setting up of training institute for supplying skilled hands in the industry, which is within the expression of 'advancement of general public utility' and thus falls within the ambit of the definition 'charitable purpose' conceived in the provisions of sec. 2(15) of the Act. He further submitted that the department has also not disputed that there is no profit element in such activities which are rendered to a section of the people, who are entrepreneurs in hosiery industry inasmuch as the assessee is not providing assistance to any specified individual but to the entrepreneurs in hosiery industry who constitute a class of people. According to him further it is settled that charitable purpose includes not only relief to the poor, education and medical relief alone, but advancement of other objects of general public utility as well. Referring to the decision of Hon'ble Supreme Court in the case of CIT vs. Andhra Chamber of Commerce [55 ITR 722 (SC)], the ld. counsel for the assessee submitted that to serve a charitable purpose, it is not necessary that the object should be to benefit the whole of mankind of even all persons living in a particular country or province. It is sufficient if the intention is to benefit a section of the public as specified from specified individuals. He further submitted that the assessee has been granted registration u/s. 12A, which is still in operation, by treating it as an institution established for charitable purpose and this reality by itself is sufficient proof of the fact that the assessee is established for charitable purposes. The D.I.T.(Exemption) while rejecting exemption certificate u/s. 80G(5)(vi) of the Act has not stated that the objects as set out in the memorandum of association are not for charitable purposes and exemption certificate granted in earlier two occasions under similar objects and circumstances were in any way perverse. He, therefore, submitted that as the activity of the assessee to provide various facilities in the field of hosiery trade and making available assistance to that industry in the shape of support services to entrepreneurs and investors in carrying on such business was definitely charitable within the meaning of the expression 'advancement of general public utility', the rejection of renewal of exemption certificate u/s. 80G(5)(vi) of the Act by the D.I.T. (Exemption) holding the assessee's activities to 3 be beneficial to manufacturers only and not covered u/s. 2(15) of the Act under public utility was wholly in conflict with the settled legal position and unjust. The assessee also filed copies of certificate for exemption u/s. 80G(5)(vi) of the Act granted in earlier two consecutive occasions and copy of certificate of registration u/s. 12A dated 22/6/2001 in the paper book. He, therefore, submitted that the assessee should be granted renewal of exemption certificate u/s. 80G(5)(vi) of the Act.
4. The ld. Departmental Representative, on the other hand, relied on the order of D.I.T. (Exemption).
5. We have heard the parties and perused the material placed on record. The sole reason adopted by the D.I.T. (Exemption) in rejecting the application made by the assessee for renewal of exemption certificate u/s. 80G(5)(vi) of the Act is that the activities of the assessee are beneficial to manufacturers only and the same will not be covered u/s. 2(15) of the Act under public utility.
6. In the paper book at pages 39 to 50, the assessee has filed copy of Rules & Regulation of the assessee-association. The assessee has also filed copy of Memorandum of Association on pages 34 to 38 of the paper book, indicating the objects for which the association is established, which are as under :-
III. The Objects for which the Association is established are:-
(a) To advance scientific, commercial and technical education in the Hosiery trade and manufacture and to found and support Establishments and Institutions for such purposes.
(b) To collect, classify and circulate information relating to trade, commerce and manufacture for the interest of its members or in short to do everything possible for the spread of scientific, commercial and economic knowledge relating to the Hosiery Industry.
(c) To maintain a reading room and other recreation rooms to afford accommodation for meetings and gatherings of all descriptions whether social, commercial or otherwise and to let upon lease or otherwise the whole or any part of the property of the Association for any of the above named purposes or otherwise.
(d) To subscribe to any local or other charities and to grant donation for any public purpose and to provide a superannuation fund for the servants of the Association or otherwise assist such servants, their widows and children.4
(e) To foster and develop friendly relations, mutual help and common understanding among all who are directly or indirectly interested in or concerned with the manufacture of Hosieries in India and particularly in Bengal.
(f) To take all steps which may be necessary for promoting, supporting or opposing legislative and other actions affecting the aforesaid interests by any Government, or by any local body or bodies and in general to take the initiative to secure the welfare of the trade, commerce and manufacturer in which its members are interested as such.
(g) To protect the interest of the members of the Association as employers and to take steps for improving the relationship between the employers and the employees.
(h) To make representations to Local, Central or Imperial Authorities, Executive or Legislative on any matter affecting trade and commerce in general and the Hosiery trade and manufacture in particular.
(i) To arbitrate in the settlement of disputes arising out of transactions in Hosiery and other goods between the parties willing or agreeing to submit to arbitration in accordance with the Arbitration Rules of the Association for the time being in force.
(j) To undertake special enquiries and support any action for arbitrating in or setting disputes between rival parties and to secure the services of expert technical and other men to that end if necessary or desirable provided such disputes are referred to the Association by both the parties concerned.
(k) To undertake special enquiries and initiate and support any action for securing redress of legitimate grievances connected with the trade or commerce in which its members are engaged.
(l) To provide a central and convenient place for friendly gatherings of its members.
(m) To purchase, or otherwise acquire land in the Name of the Association and build upon, maintain, pull down, re-build, add to, alter, repair any buildings or premises necessary or convenient for the purpose of the Association.
(n) To sell manage, lease, mortgage, dispose of or otherwise deal with all or any part of the property of the Association.
(o) To borrow and raise money in such manner as the Association may think fit.
(p) To invest any money of the Association not immediately required for any of its objects in such a manner as may from time to time be determined and to transpose or very such investments.
(q) To undertake and execute any Trust or any agency work which may seem directly or indirectly conducive to any of the objects of the Association.
(r) To amalgamate with any Association or Society having object altogether or in part similar to those of this Association.5
(s) To take any action which may be conducive to the extension of trade and commerce of its members or incidental to the attainment of the objects of the Association.
(t) To subscribe, to become a member or to co-operate with any other Association, whether registered or not whose objects are altogether or in part similar to those of this Association and to procure from or communicate to any such Association such information as may be likely to forward the objects of this Association.
(u) To take over the assets and liabilities and the rights and privileges of the present unregistered Association known as The Bengal Hosiery Manufacturers' Association and to function in all respects in continuation of the unregistered Association under the same Name and Style.
(v) To do all such things as may be directly or indirectly conducive or incidental to the carrying out or attainment of the above objects or any one of them, and it is hereby declared that in the interpretation of this clause, the meaning of any of the objects shall not except where otherwise expressed in such paragraph, be in any way limited or restricted by reference to any other objects or paragraph or by the juxtaposition of two or more objects and that in the event of any ambiguity, the clause shall be construed in such a way as to widen and not to restrict the power of the Association."
The admitted facts are that the assessee-association was registered under the Societies Registration Act since 16/7/1945. Further, considering the objects for which the assessee-association came into existence, as stated above, the ld. D.I.T. (Exemption) vide an order dated 22/6/2001 granted registration u/s. 12A of the I.T. Act to the assessee-association with retrospective effect from 01/4/1997 and the same is still subsisting. It is also undisputed that the assessee-association was granted exemption certificate u/s. 80G(5)(vi) of the Act by an order dated 27/7/2001 of ld. D.I.T. (Exemption), which was further renewed for another term covering the period of assessment year 2009-10, considering the same objects contained in the Memorandum of Association. In our considered opinion, registration of an institution u/s. 12A by itself is a sufficient proof of the fact that the trust or the institution concerned is created or established for charitable/general public utility purposes and it enjoys approval u/s. 80G of the Act. This view of ours is fortified by the decision of Hon'ble Punjab & Haryana High Court in the case of Sonepat Hindu Educational & Charitable Society vs. CIT [278 ITR 262 (P&H)], wherein their Lordships applying the ratio of decision of Hon'ble Supreme Court in the case of Radhasoami Satsang vs. CIT [193 ITR 321 (SC)] has held as under :-
6"Res judicata can be applied in income-tax proceedings when a fundamental aspect has prevailed through different assessment years without being challenged one way or the other. In such cases it is not appropriate to change the position in a subsequent year."
Therefore, when on the same set of facts and circumstances of the case, renewal of registration u/s. 80G(5)(vi) has been granted for earlier years and there being no change in the facts and circumstances of the years for which renewal is sought for, we do not find any justification to reject the assessee's application for renewal of exemption certificate u/s. 80G(5)(vi) for assessment year 2010-11 onwards.
7. In this connection we may refer to the order of this Tribunal dated 23/4/2009 in the case of Vipassana Kendra vs. DIT(E) [I.T.A.No.16/Kol/2009], wherein the Tribunal has expressed the following view :-
"4. ......Further, it is also not disputed that the assessee-trust was granted registration u/s. 12AA and exemption u/s. 80G vide order dated 9/12/1985 and till assessment year 2008-09 renewal of exemption certificate u/s. 80G(5)(vi) has been granted. For the assessment year 2009-10 onwards, the assessee has filed application for renewal of exemption certificate. Therefore, when on the same set of facts and circumstances of the case, renewal of registration u/s. 80G(5)(vi) has been granted for earlier years and there being no change in the facts and circumstances of the years for which renewal is sought for, we do not find any justification to reject the assessee's application for renewal of exemption certificate u/s. 80G(5)(vi) for assessment year 2009-10 onwards. In view of the above, D.I.T.(Exemption)'s order rejecting the assessee's application u/s. 80G (5)(vi) is quashed. We direct the D.I.T. (Exemption) to grant renewal of exemption certificate to the assessee for the period for which the application was filed. Hence the grounds of appeal taken by the assessee are allowed."
Respectfully following the above decision of the Tribunal, we find no justification on the part of the D.I.T. (Exemption) to reject the assessee's application for renewal of exemption u/s. 80G(5)(vi) of the Act. He is, therefore, directed to allow the same.
8. In the result, the appeal of the assessee is allowed.
यह आदे श खुले Ûयायालय मɅ सुनाया गया है This order is pronounced in open Court on 28.02.2011.
Sd/- Sd/-
ौी बी.
(ौी बी. आर.
आर. मीƣल)् Ûयायीक सदःय सी.
सी.डȣ.
(सी डȣ.राव)
राव लेखा सदःय
(B.R.Mittal), Judicial Member (C.D.Rao), Accountant Member
(तारȣख)
तारȣख) Date: 28-02-2011
7
आदे श कȧ ूितिलǒप अमेǒषतः-
Copy of the order forwarded to:
1. अपीलाथȸ / The Appellant : .The Bengal
Hosiery Manufacturer's Association, 219,
st
Bipin Behari Ganguli Lane, 1 Floor, Kolkata-700 012.
2 ू×यथȸ / The Respondent : D.I.T. (Exemption), Kolkata.
3. आयकर किमशनर/The CIT, Kol-
4. वभािगय ूितनीधी / DR, ITAT, Kolkata Benches, Kolkata
5. Guard file.
स×याǒपत ूित/True Copy, आदे शानुसार/ By order,
(dkp)
उप पंजीकार/Dy/Asstt. Registrar.
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