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TMI Blog2023 (9) TMI 836X X X X Extracts X X X X X X X X Extracts X X X X ..... um of association and no profit or part of their shall be paid or transferred directly or indirectly by way of dividend, bonus, profits or in any manner whatsoever to the present or past members of the association. No member shall have any personal claim or any movable or immovable properties of the association or make any profits whatsoever by virtue of his membership. We also find that the memorandum of association and its rules and regulations contained a clause on dissolution wherein it is provided that the dissolution of the association and disposal of the property on dissolution will be done in accordance with provisions of section 13 and 14 of the Societies Registration Act, 1860. As per the bye laws of the assessee society, the membership is open to all state government officers, officers of All India Services serving in Uttarakhand and officers of central government serving and residing in Uttarakhand. Hence we hold that the ld. CIT(E) is wrong in stating that the assessee society is meant only for the purposes to cater to the needs of particular section of the society. We are not for a moment trying to state that since the assessee society had not made any surplus and hen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ase, action of Ld. CIT(E) in rejecting the registration under section 12AA(1XbX) is bad in law and against the facts and circumstances of the case and is contrary to the principles of natural justice as the impugned order has been passed without granting adequate opportunity of hearing. by recording incorrect facts and findings and the appellant ought to have been granted benefit of registration under the law. 3. That the appellant craves the leave to add, modify, amend or delete any of the grounds of appeal at the time of hearing and all the above grounds are without prejudice to each other." 3. We have heard the rival submissions and perused the materials available on record. The assessee is a registered society granted certificate of registration by the Registrar of Societies, Uttarakhand on 03.05.2013. The main objects of the assessee society are as under:- 4) Aims and Objectives of Association (a) To promote the welfare of the officers of Civil Services and to bring them together in order to secure complete integration of the services and to build a corps of officers Imbibed with the spirit of cooperation in all aspects of Civil Service. b) To hold, organize, arrange a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l be solely utilized and applied towards the promotion of its aims and objects only as set forth in the Memorandum of Association and no profit or part of there shall be paid or transferred directly or indirectly by way if dividends, bonus, profit or in any manner whatsoever to the present or pair Members of Association. No members shall have any personal claim on any moveable or immovable properties the association or make any profits, whatsoever by virtue of his membership. All the above mentioned aims and objectives of the Association would be charitable and non-profit, as per section 1 and 20 of Society Registration Act 1860. 4. The assessee society filed an application in Form No 10A o 31.03.2018 for obtaining registration u/s 12A(1)(aa) of the Act before the ld. CIT(E). In order to process the application, the ld. CIT(E) issued a detailed questionnaire dated 27.08.2018 seeking details and clarifications on 25 questions. From the perusal of the contents of the Paper Book, we find that the assessee had given replies vide letter dated 09.09.2018 for each of the questions raised by the ld. CIT(E) in his questionnaire. This letter had enclosures of 12 annexures together with th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ivities conducted through third party vendors. This does not make any difference as long as the activities are genuine and they are in pursuance of objects of the institute. (vi) The funds of the society are channelized for the benefit of persons i.e., the members of society itself, covered u/s 13(3) and thus, provisions of section 13(1)(c) are violated. This statement is not correct. Clause (m) of the aims and objects provides that all income, earning, movable and immovable properties shall solely be utilized and applied towards its aims and objects. Promotion of welfare of officers of civil services and to bring them together in order to secure integration is one of the main objects of the institute. The activities were primarily geared towards attainment of this object. (vi) The institute has failed to place on record any evidence to prove that it exists solely for the purpose of serving people. It has been stated earlier that "charitable purpose" inter-alia includes advancement of any object of general public utility. We have also seen that public does not mean the whole of mankind. It has also been stated earlier that the institute has conducted a number of a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce the vouchers and in view of huge volume, the same could not be furnished before the ld. CIT(E) on 20.09.2018, on which date the order rejecting the registration was passed by the ld. CIT(E). In our considered opinion, what is required to be seen at the time of grant of registration is that whether the objects mentioned in the bye laws are charitable in nature and whether the activities carried out are genuine. It is not in dispute that the assessee had duly furnished the complete list of activities carried out by it together with the audited financial statements for the years ended 31.3.2014 to 31.3.2018. The list of activities carried out by the assessee society on sample basis are also enclosed in Pages 169 to 170 of the Paper Book. The genuineness of the activities were not even commented by the ld. CIT(E) and hence it could be safely presumed that the ld. CIT(E) does not have any objection on the genuineness of the activities. He only says that the objects are not charitable in nature from the objects. Hence non production of vouchers would in any way not hamper the decision making process of ld. CIT(E) on the aspect of objects not being charitable in nature. 8. We find tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd expedient , provided that, in the event of any dispute arising among the said governing body or the members of the society, the adjustment of its affairs shall be referred to the principal court of original civil jurisdiction of the district in which the chief building of the society is situate ; and the court shall make such order in the matter as it shall deem requisite. Assent required: Provided that no societies shall be dissolved unless three-fifths of the members shall have expressed a wish for dissolution by their votes delivered in person, or by proxy, at a general meeting convened for the purpose. Government consent: Provided that whenever any Government is a member of, or a contributor to, or otherwise interested in any society registered under this Act, such society shall not be dissolved without the consent of the Government of the State or registration. Section 14 : Upon a dissolution no member to receive profit If upon the dissolution of any society registered under this Act there shall remain, after the satisfaction of all its debts and liabilities, any property whatsoever, the same shall not be paid to or distributed among the members of the said society ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... icipate in the activities of the association. On a broader reading and understanding of the aims and objects of the assessee society, we find that that the objects mentioned therein are purely charitable in nature and are not meant for the benefit of any individual or any select persons. The predominant purpose is only to benefit the nation at large and since civil servants play a crucial role in that task, the assessee society is created to bring on record the congregation of various civil servants and use their individual skill sets by better co-operation and co-ordination. In our considered opinion, the objects carried out by the assessee fall within the residuary limb of the definition of charitable purpose as per section 2(15) of the Act i.e advancement of any other object of general public utility. As stated earlier, no profit motive is involved in the carrying out of these objects as there is no scope for private distribution of profits , surplus, dividends, etc or in any manner whatsoever to the members of the society either during the subsistence of the society or on its dissolution, both under the byelaws of the society as well as under the Societies Registration Act, 186 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to a particular community or caste, the customs or usage prevailing in that community must play a decisive and vital part. That cannot be regarded as an element which would detract from the impersonal nature of the common quality. The appeals were accordingly allowed. 11. From the perusal of the audited accounts of the assessee society for various years, we find as under:- a) For the year ended 31.03.2014, the assessee had not actually started its functioning. b) For the year ended 31.03.2015, the assessee had a deficit of Rs 46.62 lakhs c) For the year ended 31.03.2016, the assessee had a deficit of Rs 136.37 lakhs after showing club receipts of Rs 8.88 lakhs and after meeting various expenses d) For the year ended 31.03.2017, the assessee had a deficit of Rs 160.94 lakhs. e) For the year ended 31.03.2018, the assessee had a deficit of Rs 171.73 lakhs. 11.1 We are not for a moment trying to state that since the assessee society had not made any surplus and hence there is no profit motive at all. What is required to be seen for a charitable trust or a charitable society is that even in the event of earning profits or surplus, such profits or surplus remain with the so ..... X X X X Extracts X X X X X X X X Extracts X X X X
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