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TMI Blog2022 (4) TMI 162X X X X Extracts X X X X X X X X Extracts X X X X ..... e, the issue in hand is debatable and two views are possible. The Hon ble Apex court [ 2016 (2) TMI 672 - SC ORDER] however affirmed the decision of the Hon ble Division Bench of Allahabad High Court in the case of Society for Promotion of Education Adventure Sports and Conservation of Environment [ 2008 (4) TMI 700 - ALLAHABAD HIGH COURT] by declaring that the registration of the application under section 12AA of the Act shall be with effect from 24.08.2003. Case of the assessee stands at better footing as in the present case the Revenue itself has been treating the income of the assessee as exempt treating the assessee as a charitable society. Under these peculiarity of facts and circumstances hereby hold that action of the Assessing Officer for not treating the assessee society eligible for exemption is not justified under the facts and circumstances of the present case. Therefore, direct the Assessing Officer to give benefit available u/s 11 and 12 - Decided in favour of assessee. - ITA No. 5273 to 5277/DEL/2019 And ITA No. 291/DEL/2020 - - - Dated:- 23-3-2022 - Shri Kul Bharat, Judicial Member For the Appellant : Sh. Pulkit Saini, CA For the Respondent : ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d to such authority by or under the Act. Since in the instant case the decision of holding public charitable society being exempted or not exempted only vests with CIT(exemption) only for that reason also the impugned orders of the authorities below i.e. CIT (A) and that of A.O. ITO (exemption) Rohtak deserves to be annulled. 6. That the Ld. CIT (A) was also wrong in sustaining wrongly the self assumed authority jurisdiction for holding deemed exempted society as an non exempted one, since such authority vests with CIT (exemption) only for that reason also the order deserves to be annulled and the appellant society requires to be assessed as a deemed exempted society as before since AY 2000-01 till AY 2009-10 and consistency requires to be maintained by all means. 7. That the authorities below Ld. CIT (A) HISAR/LDH and A.O. ITO (exemption) Rohtak were absolutely wrong is not appreciating that the appellant society performed all which were required and prescribed to obtain registration/ exemptions u/s 12A/12AA of the Act. that is filing of form no 10 within the time prescribed under the Act and furnishing all relevant papers through AO, before concerned CIT (S)/ Panchk ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... per the wishes of the donners and so on from which even the Electric expenses are not met. 11. That the Ld. CIT (A) Hisar was wrong in sustaining the action of A.O. ITO (exemption) Rohtak in holding that the purpose of society being not a charitable purpose, in spite of the fact that maintaining Dharamshala/ Inn/ Sarai for any public ceremonial purpose like Condolence meetings (RassamPagdi, ShokSabhas) and other social ceremonies etc. for the public at large which in itself certainly is a charitable purpose. The A.O. ITO (exemption) has no authority to interpret the purpose of the registered society in its own arbitrary way as such the impugned order being bad in law deserves to be modified being without jurisdiction. 12. That the authority below CIT (A) Hisar further erred in sustaining the arbitrary reassessment and wrongly determined additions, excess over receipt and expenses as income of the deemed charitable society at ₹ 654890/- for the AY 2008-09 against the originally returned and assessed income of the said society at nil contrary to the law and facts of the case. 13. That the Authorities below CIT(A) as well as ITO(exemption) were also wrong i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in appeal before this Tribunal. 5. The only effective ground in this appeal is regarding disallowance of claim of exemption u/s 11 12 of the Act and thereby sustaining the addition of ₹ 6,54,889/-. 6. The learned counsel for the assessee reiterated the submissions as made in the synopsis and submissions dated 23.10.2021. For the sake of convenience the synopsis and submissions filed by the assessee are reproduced herein below: SYNOPSIS The Appellant, a charitable society, is registered under the provisions of the Societies Registration Act, 1860 vide certificate no. 2 of 1988-89 and is engaged in charitable work including maintaining and running a Dharamshala for the benefit of the general public. The assessee is in appeal against the Id. CIT(A) s orders under section 250(6) upholding the assessment order(s). Ground of Appeal No. 1, 2, 4-9 Deeming the assessee as non-registered u/s 12A contrary to the provisions of the Act The primary issue in all the appeals pertains to wrongful denial of claim of exemption under section 11/12 of the Act by deeming the assessee as nonregistered u/s 12A on the ground that the assessee has not be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d authority did not reject the application which further proves that the concerned authority had consciously taken the decision to not reject the application of the assessee. There has been a dereliction of duty or lapse on the part of the concerned authority to not issue a registration certificate in physical form. On the other hand, there is no lapse on the part of the assessee. Therefore, if the department was to be allowed to deem the society as non-registered u/s 12A and deny the associated exemption u/s 11 and 12, for a failure on its part to carry out its duty to explicitly accept or reject the application, would not only tantamount to going against the intent of the legislature and object of the provisions of the Act but also would be synonymous to making the assessee pay for the lapse on the part of the department. Section 12A was amended by the Finance (No. 2) Act, 1996 which substituted the words whichever is later with the words whichever is later and such trust or institution is registered under section 12AA . Further, the Finance (No. 2) Act, 1996 added a new section 12AA w.e.f. 01.04.1997 prescribing the procedure for registration. Section 12AA provi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pur [2017] 396 ITR 46 (Rajasthan High Court) Bhagwad Swarup Shri Shri Devraha Baba Memorial Shri Hari Parmarth Dham Trust v. CIT [2007] 111 TTJ (Delhi) (SB) 424/17 SOT 281 (Delhi) (SB) In regard thereof, it is humbly submitted that the application for registration u/s 12A dated 03.11.1989 which was pending before the concerned authority, as evidenced by the continuation of proceedings by the department (refer pg. no. 29-39 of paper book), and stood transferred under the jurisdiction of section 12AA as per its provisions ought to have been decided, in writing by 30.09.1999. Without prejudice to the above, the assessee has been regularly filing its return of income declaring total income of Rs. Nil as a deemed registered charitable society for many decades and had been originally assessed as a registered charitable society eligible for exemption/s 11 up to AY 2009-10. The assessee has complied with all the requirements prescribed under section 11, 12, 12A of the Act and the rules framed there under applicable to registered charitable society u/s 12A including filing of Form 10B, audited account reports, financial statements, resolutions etc. The issue ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nce meeting etc. Further, the CIT(A) holds that the rules of the society, proclaiming that dharamshala will be provided free of charge for short duration meetings and for others some charge might be made towards electricity, cleaning and maintenance charges, are suggestive that a business activity is being run. It is necessary to point out that all the donations are made voluntarily there is no compulsion to pay any booking charge for the dharamshala. The rules clearly provide that no charge shall be taken for short duration meetings or condolence meetings. However, people on their own accord pay a nominal amount as voluntary donations towards the electricity supply charges, diesel charges for running generator to provide electricity, cleaning charges, etc. for marriages, social ceremonies and sometimes for Rasam pagdi (shok sabha). Sometimes the donation receipt is also taken to prove the booking is genuine and not frivolous. The Ld. CIT(A) and the AO have made these allegations based on donation receipt which are as low as ₹ 51 in some cases and mostly is between ₹ 100 to ₹ 2000. In today s time and age one cannot even find someone for one time cle ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er placed on the decision of the hon ble Supreme Court in the case of Sole Trustee, Loka Shikshana Trust v. CIT [1975] 101 ITR 234 (SC) wherein it has been held that: The difficult question, however, still remains: What is the meaning of charitable purpose which is only indicated but not defined by section 2(15) of the Act? It seems to me that a common concept or element of charity is shared by each of the four different categories of charity. It is true that charity does not necessarily exclude carrying on an activity which yields profit, provided that profit has to be used up for what is recognised as charity. The very concept of charity denotes altruistic thought and action. Its object must necessarily be to benefit others rather than one's self. Its essence is selflessness. In a truly charitable activity any possible benefit to the person who does the charitable act is merely incidental or even accidental and immaterial. The action which flows from charitable thinking is not directed towards benefiting one's self. It is always directed at benefiting others. It is this direction of thought and effort and not the result of what is done, in terms offinancially ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nture and the order of the CIT(A) ought to be set aside. Ground of Appeal no. 3 : Notice issued u/s 148 and the reassessment proceedings u/s 147 for the AY 2008-09 and 2009-10 are without jurisdiction, void and bad in law Without prejudice to the above, for the AY 2008-09 and AY 2009-10, reassessment proceedings have been initiated u/s 147 which provides for reopening of assessment as per procedure prescribed where the Assessing Officer has reason to believe that income has escaped assessment. In this regard, it is submitted that the accepted position of the department, as demonstrated supra, had been that the assessee is deemed registered u/s 12A/12AA and therefore, the reasons to believe supplied by the AO that assessee shall be deemed non registered are nothing but mere change of opinion. The hon ble Supreme Court in the case of CIT v. Kelvinator of India Ltd [2010] 320 ITR 561 (SC) has held that mere change of opinion cannot per se be reason to reopen assessment. Therefore, the impugned assessment orders are without jurisdiction and ought to be set aside. Further, the procedure laid out for issue o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n for booking of dharamshala for marriages, condolence meetings, rasam pagdi, shok sabhas, etc. The Id. CIT(A) s orders under section 250(6) upholding the assessment order(s) and the consequent additions/disallowances in the aforesaid orders have been challenged in appeal before your Honour. Our submissions in relation to the common grounds of appeal(s) raised are as hereunder: Ground of Appeal No. 1, 2, 4-9: Deeming the assessee as non-registered u/s 12A contrary to the provisions of the Act The primary issue in all the appeals pertains to wrongful denial of claim of exemption under section 11/12 of the Act by deeming the assessee as nonregistered u/s 12 A on the ground that the assessee has not been able to produce any registration document in physical form u/s 12A of the Act. The appellant, a charitable society, was registered in the year 1988-89 with the Registrar of Firms Societies, Haryana with the aim and object of carrying out charitable work including maintain and running a dharamshala for the benefit of the general public. The legislature with the intention of promoting the charitable work has provided for exemption of income fr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . The provisions of section 11 and section 12 shall not apply in relation to the income of any trust or institution unless the following conditions are fulfilled, namely:- (a) the person in receipt of the income has made an application for registration of the trust or institution in the prescribed form and in the prescribed manner to the [Chief Commissioner or Commissioner] before the 1st day of July, 1973, or before the expiry of a period of one year from the date of the creation of the trust or the establishment of the institution, [ whichever is later and such trust or institution is registered under section 12AA]: [Provided that where an application for registration of the trust or institution is made after the expiry of the period aforesaid, the provisions of sections 11 and 12 shall apply in relation to the income of such trust or institution,- (i) from the date of the creation of the trust or the establishment of the institution if the Chief Commissioner or Commissioner is, for reasons to be recorded in writing, satisfied that the person in receipt of the income was prevented from making the application before the expiry of the period aforesaid for suffi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... laced on the decision of hon ble Supreme Court in the case of Sanjeev Lai vs. CIT [2014] 365 ITR 389 wherein the court in addition to the afore stated made the following observation: In the case of Oxford University Press v. CIT [2001] 247 ITR 658/115 Taxman 69 this Court has observed that a purposive interpretation of the provisions of the Act should be given while considering a claim for exemption from tax. It has also been said that harmonious construction of the provisions which subserve the object and purpose should also be made while construing any of the provisions of the Act and more particularly when one is concerned with exemption from payment of tax. Therefore, in our humble submissions, considering the aforesaid mandate of section 12A, facts of the case and the principles with regard to the interpretation of Statute pertaining to the tax laws, a deeming principle was inherent in section 12A at the time of filing the application, that is before the amendment made by the Finance(No. 2) Act, 1996, by the conspicuous absence of words and such trust or institution is registered that the society should be deemed to be registered u/s 12A when the assessee o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... law and on facts of the case to upheld the assessment order deeming the appellant society as non-registered u/s 12A of the Act and thereby, denying the benefit of exemption u/s 11 and 12 of the Act. Accordingly, it is respectfully submitted that the CIT(A) s order being contrary to the provisions of law and against the intent of the legislature ought to be set aside. Without prejudice to the above, as stated supra that vide Finance (No. 2) Act, 1996 section 12A was amended to provide that the provisions of section 11 and section 12 shall not apply in relation to the income of any trust or institution unless the person in receipt of the income has made an application for registration of the trust or institution in the pre-scribed form and in the prescribed manner to the Chief Commissioner or Commissioner and such trust or institution is registered under section 12AA. Further, the Finance (No. 2) Act, 1996 added a new section 12AA w.e.f. 01.04.1997 prescribing the procedure for registration. Section 12AA provided that the concerned authority on receipt of application u/s 12A shall call for such documents and make such inquiries as he may deem necessary but shall ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er clause (b) of sub-section (1) before the 1st day of June, 1999, shall stand transferred on that day to the Commissioner and the Commissioner may proceed with such applications under that subsection from the stage at which they were on that day.] (2) Every order granting or refusing registration under clause (b ) of subsection (1) shall be passed before the expiry of six months from the end of the month in which the application was received under clause (a) of section 12A.] Section 12AA(2) unambiguously states that the order granting or refusing the registration shall be passed in writing before the expiry of six months from the end of month in which application is received. The expression used is shall as against may, which makes the provision mandatory for the concerned authority. Further, CBDT vide Instruction No.16/2015 [F.No.l97/38/2015-Ita.l], dated 06.11.2015 prescribes that the aforesaid time limit of six months is to be strictly followed by the Commissioner of Income Tax (Exemptions) while passing order under section 12AA and in case of any laxity suitable administrative action may be initiated by the CCIT(Exemptions). In regard thereof, it i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der Section 12AA of the Income Tax Act in the case of the respondent shall take effect from 24.08.2003. The Hon'ble Supreme Court in the case of Society for the Promotion of Education case {supra) in a Civil Appeal, upheld the judgment of the Allahabad High Court in the case of Society for the Promotion of Education, Adventure Sport Conservation of Environment v. CIT [2015] 372 ITR 222 where it was held that the purpose of providing six months time-limit to the CIT would become meaningless if there is no cause of action or outcome at the end of six months. Therefore, after the expiry of six months the registration will be deemed to have been granted. The judgment of the High Court merges in the judgment of the Hon'ble Supreme Court and the declaration by the High Court assumes the authority of a precedent by the Hon'ble Supreme Court on the principles of doctrine of merger. The relevant extract of the decision is as under: 13. Moreover, the view we are inclined to take as above furthers the object and purpose of the aforesaid statutory provision. In our view for the interpretation of a statute 'purposive construction' of the enactment which gi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The hon ble High Court while deciding this issue held that given the mandatory provision requiring order to be passed on application under section 12A within six months has not been complied with and therefore, registration under section 12A should be deemed to have taken effect after six months from date of presentation of application. The relevant extract of the decision is as under: 7. We have considered the submissions made on both the sides and have perused the record. Admittedly, an application under Section 12A of the Act on 17.09.1999 and order on the aforesaid application has been passed beyond a period of six months i.e., on30.10.2001. Therefore, in view of law laid down by Supreme Court, the registration under Section 12A of the Act shall be deemed to have taken effect after six months from the date of presentation of the application i.e., 18.03.2000. Decision of the hon ble Rajasthan High Court in the case of CIT vs. Sahitya Sadawart Samiti Jaipur [2017] 396 ITR 46 wherein it has been held that in all the circumstances either due to defect in the application or on merits of it the Commissioner, under sub-section (2) of section 12AA is supposed to grant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7/38/2015-ita-l) DATED 06.11.2015 which we extract hereunder :- Sub-section (2) of Section 12AA of the Income-Tax Act, 1961 prescribes that every order granting or refusing registration under clause (b) ofsub-section (1) of that section shall be passed before the expiry of six months from the end of the month in which the application was received under clause(a) or clause(aa) of the sub-section (1) thereof. Thus while processing the application under Section 12 AA of the Act, the time limit of six months has to be adhered to by the Commissioner of Income Tax (Exemptions). However, it has been brought to the notice of the Board that the said time limit has not been observed in some cases. 2. The undersigned is directed to convey that the aforesaid time limit of six months is to be strictly followed by the Commissioner of Income Tax (Exemptions) while passing order under section 12AA. The CCIT(Exemptions) may monitor the adherence of prescribed time limit and initiate suitable administrative action in case any laxity in adhering to the same is noticed. 7. The CBDT has thought it Jit, obviously from experience of dealing with delayed applications, that the mand ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Solicitor General specifically informed the Hon'ble Supreme Court that the only apprehension of the Department was regarding the date on which the said deemed registration, would be effected; whether it is on the date of application or on the expiry of six months. The Civil Appeal before the Hon'ble Supreme Court was disposed of expressing the apprehension to be unfounded, but all the same clarifying that the registration of the application under Section 12AA would only take effect from the date of expiry of six months from the date of application. The effect of disposal of a Civil Appeal as has been laid down in Kunhayammed v. State of Kerala [2000] 113 Taxman 470/245 ITR 360 (SC) hence assumes significance. The Hon'ble Supreme Court in Society for the Promotion of Education case (supra) in a Civil Appeal, approved the judgment of the Allahabad High Court allowing deemed registration under Section 12AA; but applicable only from the date of expiry of the six month period as mandated in subsection(2) of Section 12AA. The judgment of the High Court merges in the judgment of the Hon 'ble Supreme Court. The opinion as expressed by the Allahabad High Court, regarding de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the case of: Sardari Lai Oberai Memorial Charitable Trust v. ITO [2005] 3 SOT 229 Sambandh Organisation v. CIT [2006] 156 Taxman 183 (Delhi) (Mag.) In regard thereof, it is respectfully submitted that on account of law laid down by the hon ble Supreme Court, various High Courts, and the special bench IT AT Delhi, the applicant society ought to be deemed registered with effect from expiry of six months from the introduction of section 12AA, that is from 30.09.1999 and in the worst case with effect from 30.11.1999, the date on which period of six months expired from the insertion of subsection (1A) to section 12AA. Accordingly, it is respectfully submitted that appeal of the assessee may kindly be allowed and the CIT(A) s order being bad in law ought to be set aside. Without prejudice to the above, the assessee has been regularly filing its return of income declaring total income of Rs. Nil as a deemed registered charitable society for many decades and had been originally assessed as a registered charitable society eligible for exemption/s 11 upto AY 2009-10. The assessee has complied with all the requirements prescribed under section 11, 12, 12A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... against the principles of consistency but also to the members of the society whose personal reputation in the society would take a setback if the society is termed non charitable. Reliance in this regard is placed on the decision of the hon ble Supreme Court in the case of Radhasoami Satsang v. CIT [1992] 193 ITR 321 (SC) and in the case of Godrej Boyce Manufacturing Company Ltd. v. DCIT [2017] 394 ITR 449 (SC). Therefore, on account of being against the Principle of consistency and the principles of natural justice also the CIT(A) s order ought to be quashed and the assessee ought to be granted the status of registered charitable society u/s 12A of the Act. Without prejudice to the above, when despite several reminders/request letters being filed with the concerned authority, the assessee was not given a registration certificate in physical form and simultaneously the assessee was being assessed as non registered institute for several AY(s) in appeal before the hon ble bench, then out of sheer desperation the assessee moved a fresh application on 23.03.2015 acknowledged by letter from the department on 07.07.2015 (refer pg. no. 62 of paper book). Furt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the year of registration caused genuine hardship to charitable organisations. Due to absence of registration, tax liability is fastened even though they may otherwise be eligible for exemption and fulfil other substantive conditions. However, the power of condonation of delay in seeking registration was not available. 8.3 In order to provide relief to such trusts and remove hardship in genuine cases, section 12A of the Income-tax Act has been amended to provide that in a case where a trust or institution has been granted registration under section 12AA of the Income-tax Act, the benefit of sections 11 and 12 of the said Act shall be available in respect of any income derived from property held under trust in any assessment proceeding for an earlier assessment year which is pending before the Assessing Officer as on the date of such registration, if the objects and activities of such trust or institution in the relevant earlier assessment year are the same as those on the basis of which such registration has been granted. 8.4 Further, it has been provided that no action for reopening of an assessment under section 147 of the Income-tax Act shall be taken by the Asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the assessee which obtained registration u/s 12AA of the Act during the pendency of appeal was entitled for exemption claimed u/s 1 lof the Act. [Reliance in this regard is placed upon: CIT v. Mayur Foundation [2005] 274 ITR 562 (Gujarat High Court) SNDP Yogam vs ADIT(Exemptions) [2016] 161 ITD l(Cochin - Trib.)/[2017] 186 TTJ 277 (Cochin - Trib.)] Therefore, in regard to the provisions of proviso(s) to section 12A(2), the deemed registration u/s 12A has to be given effect to retrospectively for all the AYs in appeal before the tribunal and the benefit of section 11 and 12 shall be eligible to the assessee for the relevant AYs . Ground of Appeal no. 10-11: Holding the society as non charitable on the basis of surmises and conjectures The CIT(A) has further upheld the view of the AO that the dharamshala was run on commercial basis by wrongly relating the voluntary donation receipts of nominal amounts varying amount between ₹ 100 to ₹ 1100 with the booking charges for marriages, ring ceremonies, Rasam pagdi, condolence meeting etc. Further, the CIT(A) holds that the rules of the societ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ramshala and daily electricity charges and cleaning charges will be extra. 18. There will be no charges for the meeting which will be held for short time. 19. There will be no charges for the booking of condolence meeting. From the above, it is clear that no charges will be taken for meeting which are held for short time and booking of condolence meeting which naturally means that the society will be charging the sum for other type of functions/ceremonies. It is not a case that the assessee will not charge anything for every type of functions and will receive only the donations. It is explicitly clear that charges will be applicable for all the bookings except for the above two purposes as per point 18 19 above. Thus, from the Rules Regulations itself it is clear that the assessee was running a commercial venture. Under the facts and the circumstances of the case, the action of the AO in disallowing the benefit of section 11 12 of the Act in the absence of any certificate issued under section 12A to the assessee, is found as per law and hence upheld. Accordingly, these grounds of appeal are dismissed. It is necessary to point out that all th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nts or places or objects of artistic or historic interest, and the advancement of any other object of general public utility: Provided that the advancement of any other object of general public utility shall not be a charitable purpose, if it involves the carrying on of any activity in the nature of trade, commerce or business, or any activity of rendering any service in relation to any trade, commerce or business, for a cess or fee or any other consideration, irrespective of the nature of use or application, or retention, of the income from such activity: Provided further that the first proviso shall not apply if the aggregate value of the receipts from the activities referred to therein is twentyfive lakh rupees or less in the previous year; Section 2(15) provides an inclusive definition of the word charitable purposes which includes relief of the poor and advancement of any other object of general public utility. The purpose of assessee to manage and run dharamshala provided free of cost to the general public can be said to fit into these two specific references. Further the first proviso provides that the advancement of any other object of general ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is not intended that profit must in fact be earned. Nor does the expression cover a mere desire to make some monetary gain out of a transaction or even a series of transactions. It predicates a motive which pervades the whole series of transactions effected by the person in the course of his activity. . The difficult question, however, still remains: What is the meaning of charitable purpose which is only indicated but not defined by section 2(15) of the Act? It seems to me that a common concept or element of charity is shared by each of the four different categories of charity. It is true that charity does not necessarily exclude carrying on an activity which yields profit, provided that profit has to be used up for what is recognized as charity. The very concept of charity denotes altruistic thought and action. Its object must necessarily be to benefit others rather than one s self. Its essence is selflessness. In a truly charitable activity any possible benefit to the person who does the charitable act is merely incidental or even accidental and immaterial. The action which flows from charitable thinking is not directed towards benefiting one's self. It ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Charitable purpose includes relief of the poor, education, medical relief and anyother object of general public utility. These activities are tax exempt, as they should be. However, some entities carrying on regular trade, commerce or business or providing services in relation to any trade, commerce or business and earning incomes have sought to claim that their purposes would also fall under charitable purpose . Obviously, this was not the intention of Parliament and, hence, I propose to amend the law to exclude the aforesaid cases. Genuine charitable organizations will not in any way be affected.' The expressions business , trade or commerce as used in the first proviso must, thus, be interpreted restrictively and where the dominant object of an organisation is charitable any incidental activity for furtherance of the object would not fall within the expressions business , trade or commerce . . . 70. Although in that case the statutory provisions being considered by the Supreme Court were different and the utilisation of income earned is, now, not a relevant consideration in view of the express words of the first proviso to section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 6,56,711 2010-11 ₹ 4,63,144 2012-13 ₹ 4,40,146 2014-15 Not dealt by the AO. Denied exemption only on the basis of absence of registration certificate in physical form. In regard thereof it is respectfully prayed that the Id. CIT(A) erred in holding the assessee to be a commercial venture and the order of the CIT(A) ought to be set aside. Ground of Appeal no. 3 : Notice issued u/s 148 and the reassessment proceedings u/s 147 for the AY 2008-09 and 2009-10 are without jurisdiction, void and bad in law Without prejudice to the above, for the AY 2008-09 and AY 2009-10, reassessment proceedings have been initiated u/s 147 which provides for reopening of assessment as per procedure prescribed where the Assessing Officer has reason to believe that income has escaped assessment. In the present case, the reasons to believe furnished by the AO are that the assessee has not produced any physical registration document u/s 12A/12AA and therefore it is not registered the aforesaid section. In this ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d to produce copy of application and other relevant supporting evidences. Therefore, he submitted that the authorities below were justified in rejecting the claim of the assessee. He further submitted that the case laws as relied by the assessee are distinguishable and as such are not applicable on the facts of the present case. 8. Learned counsel for the assessee in rejoinder pointed out that the application was made way back in the year 1989. He submitted that the assessee had filed correspondence that took place between the Department and assessee. He submitted that the learned CIT(Appeals) recorded this point in the impugned order. He submitted that it is incorrect to state that the case laws as relied by the assessee are not applicable on the facts of the present case. He further contended that return of the assessee was processed and the claim of exemption was accepted by the Revenue itself from assessment year 2000-01 to 2009-10. He further contended that vide letter dated 26.02.2015 the assessee yet again approached the learned CIT(Exemption) requesting him to supply copy of registration as sought vide application dated 3.11.1989, but of no avail. He contended that onc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as made an application for registration of the trust or institution in the prescribed form and in the prescribed manner to the [Chief Commissioner or Commissioner] before the 1st day of July, 1973, or before the expiry of a period of one year from the date of the creation of the trust or the establishment of the institution, whichever is later: Provided that the [Chief Commissioner or Commissioner] may, in his discretion, admit an application for the registration of any trust or institution after the expiry of the period aforesaid; Where the total income of the trust or institution as computed under this Act without giving effect to the provisions of section11 and section 12 exceeds twenty-five thousand rupees in any previous year, the account of the trust or institution for that year have been audited by an accountant as defined in the Explanation below sub-section (2) of section 288 and the person in receipt of the income furnishes along with the return of income for the relevant assessment year the report of such audit in the prescribed form duly signed and verified by such accountant and setting forth such particulars as may be prescribed.] 10. It is no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t of time. As per sub-section (1A) of Section 12AA, all applications pending before the Competent Authority at relevant time stood transferred to CIT(Exemption), who was required to pass a formal order of refusal or granting of registration within six months. However, in the case in hand, no such action is brought to my notice. 12. Learned counsel for the assessee insisted that in the absence of any order of refusal of registration by the Competent Authority, the assessee trust may be treated as deemed to have been registered u/s 12AA of the Act. In support of this deposition learned counsel relied on various case laws. 13. Learned counsel for the assessee relied on the judgment of Hon ble Supreme Court rendered in the case of CIT Vs. Society for Promotion of Education Adventure Sports and Conservation of Environment (2016) 382 ITR 6 (SC). Reliance was made on the judgment of Hon ble Allahabad High Court in the case of Society for Promotion of Education Adventure Sports and Conservation of Environment Vs. CIT (2015) 372 ITR 222. 14. Further, learned counsel for the assessee placed reliance on the following case laws: a) Director of Income Tax (Exemptions) Vs. St ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing the provision of section 11 of the Act. Accordingly, a formal certificate of approval will be issued forthwith to the petitioner by respondent No. 2 17. It is pertinent to note here that the decision of the Division Bench in the case of Promotion of Education Adventure Sports and Conservation of Environment (supra) was overruled by the judgment of the Full Bench of the same Hon ble Allahabad High Court rendered in the case of CIT Vs. Muzafar Nagar Development Authority (2015) 372 ITR 209 (FB) by observing that the Division Bench in the case of Promotion of Education Adventure Sports and Conservation of Environment (supra) had not laid down the correct law position. 18. However, the Hon ble Supreme Court in the case of CIT Vs. Society for Promotion of Education Adventure Sports and Conservation of Environment (2016) 382 ITR 6 (supra) approved the decision of the Division Bench of the Hon ble Allahabad High Court in the case of Society for Promotion of Education Adventure Sports and Conservation of Environment (supra), by observing as under: There is no appearance on behalf of the sole respondent despite service of notice and adjournment sought for on a couple ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e the Revenue itself has been treating the income of the assessee as exempt treating the assessee as a charitable society. Under these peculiarity of facts and circumstances and respectfully following the judgment of Hon ble Supreme Court rendered in the case of Society for Promotion of Education Adventure Sports and Conservation of Environment (supra), I hereby hold that action of the Assessing Officer for not treating the assessee society eligible for exemption is not justified under the facts and circumstances of the present case. Therefore, I direct the Assessing Officer to give benefit available u/s 11 and 12 of the Act. Before parting, it is clarified that this order would not preclude the Revenue Authorities from tracing the order, if any, passed in respect of application dated 3.11.1989 and take necessary action as prescribed under the law. The grounds raised in the appeal are allowed. 20. Hence, the appeal of the assessee is allowed in the terms indicated hereinabove. ITA No. 5274/Del/2019 (A.Y. 2009-10): 21. In ITA no. 5274/Del/2019 for A.Y. 2009-10, the assessee has taken following grounds of appeal: 1. That the orders of the Authorities below CIT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... also the order deserves to be annulled and the appellant society requires to be assessed as a deemed exempted society as before since AY 2000-01 till AY 2009-10 and consistency requires to be maintained by all means. 7. That the authorities below Ld. CIT (A) HISAR/LDH and A.O. ITO (exemption) Rohtak were absolutely wrong is not appreciating that the appellant society performed all which were required and prescribed to obtain registration/ exemptions u/s 12A/12AA of the Act. that is filing of form no 10 within the time prescribed under the Act and furnishing all relevant papers through AO, before concerned CIT(S)/ Panchkula as well as CIT (exemption) Chandigarh as prescribed and as directed from time to time and also by sending repeated reminders to procure the exemption certificate in physical form, but surprisingly the same was not received till date, nor any order of rejection of the application was ever communicated or sent to the appellant assessee, though the same is mandatory to be sent/served on the appellant assessee within six months from the date of application and not thereafter under the provisions of section 12AA of the Act. Accordingly, as such, the appellant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to interpret the purpose of the registered society in its own arbitrary way as such the impugned order being bad in law deserves to be modified being without jurisdiction. 12. That the authority below CIT (A) Hisar further erred in sustaining the arbitrary reassessment and wrongly determined additions, excess over receipt and expenses as income of the deemed charitable society at ₹ 767320/- for the AY 2009-10 against the originally returned and assessed income of the said society at nil contrary to the law and facts of the case. 13. That the Authorities below CIT(A) as well as ITO(exemption) were also wrong in assessing the deemed exempted society at the maximum marginal rate as an AOP without appreciating that excess receipt over expenses were never distributed among the members and was always used for charitable purposes of the society as prescribed under the provisions of the Act. 14. That the authorities below were also grossly erred in opining and directing for initiation of penal proceedings u/s 271 (1)(c) of the Act against the appellant, action being bad in law requires to be set aside. 15. The order of the authorities below are also liable ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (A) and that of A.O. ITO (exemption) Rohtak deserves to be annulled. 4. That the Ld. CIT (A) was also wrong in sustaining wrongly the self assumed jurisdiction for holding deemed exempted society as an non exempted one, since such authority vests with CIT (exemption) only for that reason also the order deserves to be annulled and the appellant society requires to be assessed as a deemed exempted society as before since AY 2000-01 till AY 2009-10 and consistency requires to be maintained by all means. 5. That the authorities below Ld. CIT (A) HISAR and A.O. ITO (exemption) Rohtak were absolutely wrong is not appreciating that the appellant society performed all which were required and prescribed to obtain registration/ exemptions u/s 12A/12AA of the Act. that is filing of form no 10 within the time prescribed under the Act and furnishing all relevant papers through AO, before concerned CIT(S)/ Panchkula as well as CIT (exemption) Chandigarh as prescribed and as directed from time to time and also by sending repeated reminders to procure the exemption certificate in physical form, but surprisingly the same was not received till date, nor any order of rejection of the ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the fact that maintaining Dharamshala/ Inn/ Sarai for any public ceremonial purpose like Condolence meetings (RassamPagdi, Shok Sabhas) and other social ceremonies etc. for the public at large which in itself certainly is a charitable purpose. The A.O. ITO (exemption) has no authority to interpret the purpose of the registered society in its own arbitrary way as such the impugned order being bad in law deserves to be modified being without jurisdiction. 10. That the authority below CIT (A) Hisar further erred in sustaining the arbitrary reassessment and wrongly determined additions, excess over receipt and expenses as income of the deemed charitable society at ₹ 1127795/- for the AY 2010-11 against the originally returned and assessed income of the said society at nil contrary to the law and facts of the case. 11. That the Authorities below CIT(A) as well as ITO(exemption) were also wrong in assessing the deemed exempted society at the maximum marginal rate as an AOP without appreciating that excess receipt over expenses were never distributed among the members and was always used for charitable purposes of the society as prescribed under the provisions of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d and the appellant society requires to be assessed as a deemed exempted society as before since AY 2000-01 till AY 2009-10 and thereafter, as such the consistency requires to be maintained by all means. 5. That the authorities below Ld. CIT (A) HISAR/LDH and A.O. ITO (exemption) Rohtak were absolutely wrong is not appreciating that the appellant society performed all which were required and prescribed to obtain registration/ exemptions u/s 12A/12AA of the Act. that is filing of form no 10 within the time prescribed under the Act and furnishing all relevant papers through AO, before concerned CIT(S)/ Panchkula as well as CIT (exemption) Chandigarh as prescribed and as directed from time to time and also by sending repeated reminders to procure the exemption certificate in physical form, but surprisingly the same was not received till date, nor any order of rejection of the application was ever communicated or sent to the appellant assessee, though the same is mandatory to be sent/served on the appellant assessee within six months from the date of application and not thereafter under the provisions of section 12AA of the Act. Accordingly, as such, the appellant society deserv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 71 (1)(c) of the Act against the appellant, action being bad in law requires to be set aside. 13. The order of the authorities below are also liable to be quashed being conjectural and not being a speaking order. 24. It is not disputed that the sole effective ground involved in all these appeals is whether for the assessment years in question the assessee is eligible for exemption U/s 11 and 12 of the Act. The learned representatives of the parties have also taken the same arguments as raised in ITA no. 5273/Del/2019 (A.Y. 2008-09). In ITA no. 5273/Del/2019, I have directed the Assessing Officer to give benefit available u/s 11 and 12 of the Act to the assessee. Facts and circumstances of the case being identical in all the appeals, for the detailed reasons given in ITA no. 5273/Del/2019, I hold that the Assessing Officer was not justified in not giving benefit of 11 12 of the Act. Hence, orders of the authorities below for all these assessment years are set aside. I direct the Assessing Officer to give benefit available u/s 11 and 12 of the Act to the assessee. 25. In the result, all the appeals stand allowed in terms as indicated in para 19 above. - - Ta ..... X X X X Extracts X X X X X X X X Extracts X X X X
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