Income Tax Appellate Tribunal - Mumbai
Janseva Foundation, Mumbai vs Assessee
ITA No. 6119/Mum/2009 Page 1 of 6 IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI I BENCH, MUMBAI Bef ore Shri R V Easwar (Hon'ble President) and Shri Pramod Kumar ( Accountant Member) ITA No. 6119/Mum/2009 Janseva Foundation ....................Appellant Building No. 1, Flat No. 22, 8 th floor Kamana Cooperative Housing Society Near Siddhivinayak, Prabhadevi, Mumbai 400052 PAN : AAATJ1613L Vs. Director of Income Tax (Exemptions) Mumbai ............... Respondent Appellant by : Shri P M Parulekar Respondent by : Shri Sumeet Kumar O R D E R Per Pramod Kumar:
1. The short issue that we are required to adjudicate in this appeal is whether or not the Director of Income was justified in declining registration, under section 12AA of the Income Tax Act, 1961, to the assessee appellant.
2. The material facts giving rise to this appeal before us are as follows.ITA No. 6119/Mum/2009 Page 2 of 6
The assessee trust was constituted on 25.12.1995 by way of a trust deed. While examining assessee's application for grant of registration as 'a charitable institution', the Director of Income Tax (Exemptions) [ DI, in short] was of the view that the following objects, set out in the trust deed, were prima facie not charitable in nature :
5(1) To help, encourage and promote growth of secular democratic political system in the country, and, f or that purpose, encourage thinkers, social workers, philosphers...... who have worked f or such secular democratic political system and f or the welf are of society in the country.
5(2) To help create awareness of people's rights and responsibilities in a secular democratic political system through education, lectures, dissemination of knowledge through various media and help them fight f or social justice through all practical, legal and rational available ways and means.
5(3) To construct building f or library, office, conference room, guest room, residential quarters, f or and to help the needy social workers who are working to achieve the aims of the trust and other charitable trusts and institutions.
5(12) To publish literature - supporting aims and objectives.
3. It was submitted by the assessee the India is a democratic country and object of developing democratic political system cannot but be a an object of general public utility. The DIT, however, relied upon Hon'ble Delhi High Court's judgment in the case of CIT Vs All India Hindu ITA No. 6119/Mum/2009 Page 3 of 6 Mahasabha (140 ITR 748) to hold that a political purpose cannot be said to be an object of general public utility. The DIT also observed that object of promoting secular democratic system is a "vague object and non charitable", and that providing houses for those working for aims and objectives of the trust, is giving benefits to a section of people and not to general public. It was also observed that beneficiary should be 'poor' and 'needy', whereas trust deed only mentions about 'needy'. Reliance was placed on Hon'ble Supreme Court judgment in the case of CIT Vs Kamla Town Trust ( 217 ITR 699). On the basis of this analysis, DIT came to the conclusion that the objects of the trust are not of charitable nature. The DIT further referred to the judgment of Hon'ble Supreme Court in the case of Yogiraj Charitable Trust Vs CIT (103 ITR 777) in support of the proposition that when one of the objects is non charitable, the assessee cannot be treated as a charitable institution even if other objectives are charitable objectives in nature. It was in this backdrop, and by concluding as follows, that the DIT rejected the petition for registration as a charitable institution:
As per the provisions of Section 12AA(1)(b), a Trust is to be registered if the Commissioner is satisfied about the objects of the trust and the genuineness of its activities. The aforesaid objectives of the trust prima facie and not charitable in nature, (and) it is a cardinal rule that the objects of the institution to qualify the trust should be charitable in nature.
In the light of the above discussion, the application for registration by the applicant is, therefore, rejected.
4. The assessee is aggrieved of the stand so taken by the DIT, and is in appeal before us.
ITA No. 6119/Mum/2009 Page 4 of 65. We have heard the rival contentions, perused the material on record and duly considered factual matrix of the case as also the applicable legal position.
6. We have noted that the main object of the assessee trust is development of secular democratic political system and strengthening the same, and this object is sought to be achieved by creating awareness of people's rights and responsibilities in a secular democratic political system through education, lectures, dissemination of knowledge through various media and help them fight for social justice through all practical, legal and rational available ways and means. This object is clearly in furtherance to the fundamental constitutional framework of India polity. As evident from a plain reading of preamble to the Constitution of India, constituting India into a sovereign, socialist, secular, democratic republic has been the basic resolve leading to enactment and adoption of Indian Constitution. The development of secular democratic political system is, therefore, very much an object of general public utility. Setting up of this institution is quite different in scope and character vis-à-vis setting up of a political party inasmuch as this institution aims at spreading awareness about the secular democratic political system, and thus strengthening the same, as against aiming at assumption of political power by contesting elections to political office. It is, therefore, not appropriate to equate the assessee organization with a political party. The comparison of an organization spreading secular political awareness to educate the public at large, and thus strengthen the secular political system, with a an organization seeking political power by way of contesting elections, is, in any case, not appropriate. As held by Hon'ble Allahbad High Court in the case of Ganga Prasad Verma Memorial Society Vs CIT (134 ITR 421), raising of moral, intellectual, economic, social and political conditions of ITA No. 6119/Mum/2009 Page 5 of 6 people is an object of general public utility. As regards the object of constructing building for library, office, conference room, guest room, residential quarters, for and to help the needy social workers who are working to achieve the aims of the trust, this object is only an object incidental to the main object of strengthening the secular democratic political system, and, cannot be viewed on a standalone basis. In any event, this object seeks to assist and help, if needed, social workers engaged in the task of for promoting the basic aim of strengthening the secular democratic political system, and, to that extent, this object is a necessary extension of the main object of strengthening the secular democratic political system. We also do not share learned DIT's perception that these objects are vague and general. The objects of the assessee trust are objects of general public utility, and, as such, covered by the scope of Section 2(15) of the Act. As regards learned DIT's reference to Hon'ble Supreme Court's judgement in the case of Kamala Town Trust (supra), undoubtedly Their Lordships have declined to concur with the general proposition that "construction of residential colonies of workmen in general cannot, by itself, be regarded as an object of public charity", as far as the facts of the present case are concerned, the object of "constructing building for library, office, conference room, guest room, residential quarters, for and to help the needy social works who are working to achieve the aims of the trust" are concerned, such an activity is only for the needy social workers engaged in the main objects of the assessee trust. Neither, as we have noted earlier, is it possible to view this object in isolation with the main object of the Trust, nor can it be said that this object is a vague or non charitable object. In view of this analysis, in our considered view, the learned DIT was clearly in error in coming to the conclusion that the objects of the institution are prima facie not objects of general public utility. We, therefore, direct the learned DIT to grant the ITA No. 6119/Mum/2009 Page 6 of 6 registration under section 12 AA of the Act. The assessee gets the relief accordingly.
7. In the result, the appeal is allowed in the terms indicated above. Pronounced in the open court today on 13 th day of October, 2010.
Sd/- sd/- (R V Easwar) (Pramod Kumar) President Accountant Member Mumbai; 13 th day of October, 2010. Copy forwarded to : 1. The appellant 2. The respondent 3. The CIT , Mumbai 4. The DIT (Exemption) , Mumbai
5. Departmental Representative - 'I' bench, Mumbai
6. Guard File True Copy By Order Assistant Registrar Income Tax Appellate Tribunal Mumbai benches, Mumbai