9911796707
TMI Blog2014 (5) TMI 113X X X X Extracts X X X X X X X X Extracts X X X X ..... omplied with - It has not been shown otherwise - the assessee company stands granted registration u/s 12A of the Act and approval u/s 80G (5) of the Act was granted to it - Relying upon N.N. Desai Charitable Trust vs. CIT [1999 (5) TMI 11 - GUJARAT High Court] and Sonepat Hindu Educational Charitable Trust vs. CIT [2005 (5) TMI 52 - PUNJAB AND HARYANA High Court] - while dealing with an application u/s 80G (5) of the Act, the scope of inquiry extends to eligibility to exemption and that registration u/s 12AA of the Act by itself is sufficient proof that the institution is created or established for charitable purposes – thus, the assessee’s application is allowed – Decided in favour of Assessee. - ITA No.3498/Del/2008 - - - Dated:- 13-12-2013 - SHRI S.V. MEHROTRA AND SHRI A.D. JAIN, JJ. For the Appellant : Shri R.S. Adlakha, Advocate For the Respondent : Shri Shameer Sharma, DR ORDER Per: A D Jain: This is Assessee s appeal against the order dated 05.09.2008, passed by the Ld. DIT (E), Delhi, u/s 80G(5)(vi) of the IT Act read with Rule 11AA of the IT Rules. The following grounds have been taken:- 1. That the Order No. DIT (E) 2008-2009/P595/161 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... audited accounts since inception of organization as the pre-condition before applying under section 80G. Based on these facts exemption under section 80G was granted to us. 7. The allegation raised in the order is grossly wrong and unframed adequacy as the facts are against the ruling. 2. The facts as per the impugned order are that the assessee filed an application dated 07.03.2008 in Form No.10G, seeking exemption u/s 80G of the IT Act. The Ld. DIT (E), vide letter dated 02.05.2008, asked the assessee to file certain documents/explanations to justify its claim. 3. Vide the impugned order, the ld. DIT (E) dismissed the assessee s application, observing as follows:- 4. Arguments of the applicant have been examined. Financial statements of FY 2006-07 2005-06 have also been examined. Income Expenditure account for FY 2006-07 reveals that the applicant has received income of Rs.5,63,68,492/- from distribution of contraceptive and other products and has claimed expenses on purchases at Rs.4,21,93,847/- and procurement distribution expenses at Rs.1,47,31,456/-. Similarly, in the FY 2005-06, the applicant received income from distribution of contrace ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at Government subsidized prices to control the population as well as the HIV AIDS in the society, for which, partially, promotion expenses incurred are reimbursed by the Ministry of Health and Family Welfare, Government of India, to support the National Family Planning Programme activities. The assessee is receiving grants/donation from Marie Stopes International (UK). It filled FCRA returns filed with the Ministry of Home Affairs towards the social charitable usage of the donations/grants received for the purpose of health and family welfare and running clinics. The major income of the assessee is from donations. The primary objective of the assessee company is to socially market all types of contraceptives, especially condoms in India for family planning and HIV/AIDS prevention, with the objective of making available contraceptives at reasonable prices in the country by pricing contraceptive products and services reasonably the assessee covers only costs of the products, overhead, salaries and IEC campaign. The final prices of the contraceptives to the end users are generally less than half of the commercial prices. As their secondary objective, the assessee makes reproductive he ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aws have been relied on:- 1. N.N. Desai Charitable Trust vs. CIT , 246 ITR 452 (Guj); 2. Sonepat Hindu Educational Charitable Trust vs. CIT , 278 ITR 262 (P H); 3. Gaur Brahmin Vidya Pracharini Sabha vs. CIT , 129 TTJ (Del) 627; 4. Orpat Charitable Trust vs. CIT , 256 ITR 690 (Guj); 5. Sewagram Ashram Prasthan vs. CIT , 129 TTJ (Nag) 506; and 6. CIT Rohtak vs. Gaur Brahmin Vidya Pracharini Trust , 203 Taxman 226 (P H) 10. The Ld. DR, on the other hand, has strongly supported the impugned order. It has been contended that the assessee has not been able to controvert the categorical findings of fact recorded by the ld. DIT (E), to the effect that the activity carried on by the assessee is a commercial activity, inasmuch as the assessee is getting payment from third parties for the sales of contraceptives by it and that the assessee is claiming expenditure pertaining to such sales. It has been submitted that such activity cannot at all be said to be a charitable activity; and that therefore, the ld. DIT (E) has rightly rejected the application filed by the assessee seeking exemption u/s 80G of the IT Act. 11. We have hea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e contraceptive sales made by the assessee company, it is in pursuance of the primary objective of the assessee company (being to socially market contraceptives in India for family planning and for HIV and AIDS prevention) and to increase the availability of contraceptives at reasonable prices in the country, that the assessee makes such sales, at highly subsidized rates as compared to the MRP/across the counter sales in the market. The prices of the contraceptive products and the services of the assessee company cover only the costs of the products, overheads, salaries and IEC campaign costs. The activity of the assessee is aided by the Government of India itself, in the Ministry of Health, in pursuance of its policies and National Family Planning Programme. 13. Therefore, the activity carried on by the assessee cannot at all be said to be a commercial activity. Rather, this activity is squarely covered by the provisions of Section 2 (15) of the IT Act. The conditions of Rule 11AA of the IT Rules, 1962 stand duly complied with. It has not been shown otherwise. Moreover, undisputedly, the assessee company stands granted registration u/s 12A of the Act and approval u/s 80G (5) of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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