IN THE ITAT HYDERABAD BENCH ‘A’
Hyderabad Runners Society
Versus
Director of Income-tax (Exemptions) Hyderabad
IT APPEAL NO. 974 (HYD.) OF 2012
[ASSESSMENT YEAR 2012-13]
OCTOBER 12, 2012
ORDER
Chandra Poojari, Accountant Member
This appeal by the assessee is directed against the order of the Director of Income-tax (Exemptions) [DIT(E) for short], Hyderabad dated 30.4.2012.
2. The assessee’s raised the following grounds of appeal:
(a) The DIT(E) erred in law and facts of the case in not granting the approval under section 12A of the Income-tax Act, 1961.
(b) Your appellant submits that having accepted that the Society activities are fully in the nature of ‘advancement of any other object of general public utility’, wrongly applied the proviso to section 2(15), as this activity of running does not fall under “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”, DIT(E) ought to have granted approval.
(c) DIT(E) ought to have appreciated the fact that there are no sales and the collection is only by way of participation fee only by Members of the Society and public at large, erred in rejecting the application.
(d) Your appellant object for the denial of the approval on the ground that wrong address was given without affording an opportunity to explain the same or gather the correct particulars. Your appellant submits that the present address as on the date of application was given.
3. Brief facts of the issue are that the assessee filed an application for registration u/s. 12AA of the Act on 19.10.2011. The DIT(E) called for details of specific points and documents and books of account and bills and vouchers for verification. On verification of the documents the DIT(E) found that in Form No. 10A and bye-laws of the society, registered office of the society is mentioned that it is situated at 4th Floor, Plot Nos. 6/2 and 6/3, Huda Techno Enclave, Hightec City, Madhapur, Hyderabad-81. However, as per the certificate issued by the Registrar of Societies, the address of the society was mentioned as Vijaypuri, ECIL Post, Hyderabad-61.
4. Further it was observed by the DIT(E) that in the By-Laws, under the Membership, it was clarified that the Membership of the society shall be of four categories viz., Core Members, Runners, Corporate Members and Honorary Members. Though the fee amount in respect of Core Member is mentioned at Rs. 5000, in clause 3.4 such fees in respect of the other two members i.e, Runners and Corporate Members have not been indicated. In clause 5.1, relating to corporate members, it is mentioned that the Corporate Membership shall be open to corporate organizations and shall comprise of membership for a group of its employees on payment of a onetime corporate fees at the time of induction and thereafter an annual membership fees from 1st April of the subsequent year. Further, in clause 5.2 relating to criteria for corporate membership, it is mentioned that “The qualifying criteria for Corporate Membership, the number of Runners per Corporate, the quantum of One Time Corporate fee and the Annual Membership Fee shall be decided and fixed by the Managing Committee from time to time at its Regular Meeting.”
5. In absence of such induction fees and annual fees amount in respect of the above two categories of members, mentioned therein, it clearly shows that the assessee society has not furnished complete and full information in its said By-Laws and it is up to the discretion of the managing committee of the above society for deciding on such memberships and fixing those fees. Under these circumstances, the above society cannot be treated as a public charitable organization. Further, during the proceedings, the above society has filed a profit & loss account for the period from 01.04.2011 to 31.03.2012 i.e., financial year 2011-12 determining first-of-all gross profit at Rs. 27,53,538/- and net profit at Rs. 3,69,648.60. Such account up to the point of determination of gross profit as furnished in that statement, is as under:
