Case Law Details
Bhartiya Kisan Sangh Sewa Niketan Vs. CIT (ITAT Delhi)
Though assessee society essentially involved in upliftment of farmers by way of providing them various facilities and protecting their interests at the national level, however, necessary details were very much submitted vide submission in response to query of CIT(E).
At the stage of granting registration under section 12A the learned Commissioner (Exemptions) has required to see the objects of society and not required to examine on the application of income which will have to be undertaken by the assessing officer (AO) on a year to year basis after assessee files return of income claiming exemption under section 11. This position is now well settled by several authoritative pronouncements on the subject. On the facts of present case there cannot be even an iota of doubt that the objectives of assessee society are charitable in nature being an objective of general public utility within the meaning of section 2(15) of the Act as detailed herein above.
Keeping in view of the facts and circumstances of the case as explained above and respectfully following the legal position as discussed above, we are of the considered opinion that the assessee is entitled for registration under section 12A of the Act.
Full Text of the ITAT Order is as follows:-
The Assessee has filed the present appeal against the impugned order dated 16-6-2015 passed by the learned Commissioner (Exemptions), Lucknow on the following grounds:-
1. That on the facts and circumstances of the case and in the law, the Commissioner (Exemptions) has grossly erred in denying registration to the assessee society under section 12A(a) of the Income Tax Act, 1961 as claimed.
2. That on the facts and circumstances of the case and in the law, the Commissioner (Exemptions) has grossly erred in denying registration to the assessee society under section 12A(a) of the Income Tax Act, 1961 as claimed being in gross violation to the principles of natural justice and fairness. That the appellant craves leave to add to and/or amend, modify or withdraw the grounds outlined above before or at the time of hearing of the appeal.
2. The brief facts of the case are that the assessee filed an Application for registration under section 12A(a) of the Income Tax Act, 1961 (hereinafter referred as the Act) on 7-4-2015 before the learned Commissioner (Exemptions), Lucknow. Accordingly, the assessee was served the notice dated 1-6-2015 by the said learned Commissioner (Exemptions) for furnishing the information/details on 16-6-2015. On 16-6-2015 the A.R. of the Applicant/assessee attended and filed written submissions. Learned Commissioner (Exemptions) perused the records which was available with him, has observed that assessee society is not carrying out any charitable activities. He further observed that as per the provisions of section 12AA(1)(b) of the Act, two factors namely the object of charitable purpose and the genuineness of activities have to be proved before granting the registration and applicant failed to prove the same and therefore, learned Commissioner (Exemptions) was not satisfied for granting the registration under section 12A(a) of the Act. Learned Commissioner (Exemptions) also relied upon various case laws mentioned at page no. 1 and 2 of the impugned order dated 16-6-2015.
3. Aggrieved with the aforesaid impugned order dated 16-6-2015 assessee is in appeal before the Tribunal.
4. During the hearing, learned Counsel of the assessee filed two Paper Books, one is containing pages 1 to 48 in which he has attached the copy of submission dated 16-2-2015 before the Commissioner; copy of Application in Form 10A for registration along with list of Management Committee; Audited accounts for financial year 2011-12, 2012-13 and 2013-14; submission dated 15-6-2015 before the Commissioner; Registration Certificate under Societies Registration Act, 1860; Memorandum & Articles of Association together with English translated version of objects clause as per Memorandum; Details of Charitable works undertaken with respect to protection of interest of farmers; correspondences with the offices of Hon’ble President of India & PMO with respect of protection of interest of farmers and letter dated 3-6-2015 before the Parliamentary Committee with respect to protection of interests of farmers. In another Paper Book which is containing pages 1 to 48 the learned Counsel of the assessee has attached the copies of various decisions and relied on the same with regard to submissions that Objet beneficial for a section of public (protection of interest of farmers in the present case) is an object of general public utility i.e., Decision of Hon’ble Supreme Court in the case of Ahmedabad Rana Caste Association v. CIT 82 ITR 704 SC; Decision of Supreme Court in the case of CIT v. Andhra Chamber of Commerce 55 ITR 722 SC. He also attached the copy of decisions holding that at the stage of grant of registration under section 12A the objects are to be seen and it is not appropriate on part of Commissioner to examine the aspect of application of income i.e., the decision of Hon’ble Rajasthan High Court in the case of CIT v. Gopi Ram Goyal Charitable Trust (2017) 392 ITR 285 (Raj); Decision of Kerala High Court in the case of Shree Anjaneya Medical Trust v. CIT (2012) 382 ITR 399 (Ker.); Decision of Allahabad High Court in the case of Fifth Generation Education Society v. CIT 185 ITR 634 (All.); Decision of Punjab & Haryana High Court in the case of CIT v. BKK Memorial Trust (2013) 213 Taxmann 1; Decision of Karnataka High Court in the case of CIT v. AS Kupparaju Brothers Charitable Foundation Trust (2012) 205 Taxman 9 and decision of Madhya Pradesh High C ourt in the case of CIT v. DTR Charitable Trust 61 DTR 410. He further stated that as per Memorandum of assessee society at page no. 36 & 37B of the PB and also as per the submission made before the learned Commissioner (Exemptions) dated 15-6-2015 relevant page 38 & 39 of the Paper Book, the assessee society is essentially involved in the upliftment of farmers by way of providing them various facilities and protecting their interests at the national level and undertakings operations on the country wide basis and focused at protecting the interest of farmers in various manners. He further draw our attention towards page no. 38 & 39 of the PB which is the copy of submission dated 15-6-2015 mentioned therein that charitable activities undertaken by the assessee/society and the same qualify within the preview of “general public utility” being a charitable purpose under section 2(15) of the Act. In view of the above, he requested that the issue in dispute may be decided in favor of the assessee and Appeal filed by the assessee may be allowed by allowing registration under section 12A(a) of the Act.
4.1 On the contrary, Departmental Representative relied upon the orders of the learned Commissioner (Exemptions) and also relied upon the case laws as mentioned in the impugned order. Further, he strongly objected the request of the learned Counsel of the assessee and also stated that assessee remained non-cooperative before the learned Commissioner (Exemptions) and did not file any documentary evidence for substantiating its claim before the learned Commissioner (Exemptions), hence, he requested that the issue in dispute may be set aside to the file of the learned Commissioner (Exemptions) to decide the same afresh.
5. From the records, we find that Registry has issued Defect Notice pointing out that the appeal is time barred by 106 days. In this behalf the assessee has filed the Application dated 16-12-2015 for condonation of delay which is placed on record. We have perused the Application for condonation of delay and we are of the view that the reasons mentioned in the application for condonation of delay is quite genuine, hence, the delay in dispute is condoned.
6. We have heard the both parties and perused and considered the relevant records available with us especially the impugned order passed by the learned Commissioner (Exemptions), the Paper Books filed by the assessee’s counsel i.e., containing pages 1 to 48 in which he has attached the copy of submission dated 16-2-2015 before the Commissioner; copy of Application in Form 10A for registration along with list of Management Committee; Audited accounts for financial year 2011-12, 2012-13 and 2013-14; submission dated 15-6-2015 before the Commissioner; Registration Certificate under Societies Registration Act, 1860; Memorandum & Articles of Association together with English translated version of objects clause as per Memorandum; Details of Charitable works undertaken with respect to protection of interest of farmers; correspondences with the offices of Hon’ble President of India & PMO with respect of protection of interest of farmers and letter dated 3-6-2015 before the Parliamentary Committee with respect to protection of interests of farmers and also the second Paper Book which is containing pages 1 to 48 in which the assessee’s counsel has attached the copies of various decisions and relied on the same with regard to submissions that Object beneficial for a section of public (protection of interest of farmers in the present case) is an object of general public utility i.e., Decision of Hon’ble Supreme Court in the case of Ahmedabad Rana Caste Association v. CIT 82 ITR 704 SC; Decision of Supreme Court in the case of CIT v. Andhra Chamber of Commerce 55 ITR 722 SC and also attached the copy of decisions holding that at the stage of grant of registration under section 12A the objects are to be seen and it is not appropriate on part of Commissioner to examine the aspect of application of income at the stage of granting registration under section 12AA i.e., Decision of Rajasthan High Court in the case of CIT v. Gopi Ram Goyal Charitable Trust (2017) 392 ITR 285 (Raj); Decision of Kerala High Court in the case of Shree Anjaneya Medical Trust v. CIT (2012) 382 ITR 399 (Ker.); Decision of Allahabad High Court in the case of Fifth Generation Education Society v. CIT 185 ITR 634 (All.); Decision of Punjab & Haryana High Court in the case of CIT v. BKK Memorial Trust (2013) 213 Taxmann 1; Decision of Karnataka High Court in the case of CIT v. AS Kupparaju Brothers Charitable Foundation Trust (2012) 205 Taxman 9 and decision of Madhya Pradesh High Court in the case of CIT v. DTR Charitable Trust 61 DTR 410.
6.1 We find that the assessee is a society registered under the provisions of Societies Registration Act, 1860. As detailed before the learned Commissioner vide submission dated 15-6-2015 relevant at pages 38 & 39 PB the assessee society is essentially involved in the upliftment of farmers by way of providing them various facilities and protecting their interests at the national level. It is undertaking operations on the country wide basis and focused at protecting the interests of farmers in various manners. We also note that as per the Memorandum of assessee society duly on record (pages 36 & 37PB), the assessee is incorporated to carry out the following objectives all of which are essentially directed at protecting the interests of farmers on the country wide basis :–
(i) “To provide help in national development projects by helping and supporting every farmer who is ready to help in overall development of the nation and instead of group struggle, create co-ordination and family feelings. To provide security of farmers and make arrangements for availability of seeds, manure, water, electricity and construction of roads connecting villages. To work for development of the farmers by taking support from the government.
(ii) To form non political organization of farmers for the national interest of the country. To form and run organizations working for financial, social, cultural and educational development. of the farmers.
(iii) To develop Indian farmers by introducing them to advanced agricultural science and methods and by providing knowledge of appropriate advanced resources to the farmers, encouraging them for their direct use so that advantages of large scale production can be achieved.
(iv) To make research and development in the field of ancient agriculture shastra.
(v) To collect information about farmers’ problems and make arrangements for organizing conferences, training classes, discussion, seminar, agricultural research; travel, exhibition and program for the farmers.
(vi) To establish contacts with agricultural organizations, providing and taking help from them.
(vii) To provide and take suitable help from labor unions, educational organizations, various governments, social organization, public organization; etc.
(viii) To working for protection of cattle, agricultural subsidized livestock, vegetation, etc.
(ix) To guide, assist and form processing organization.
(x) To make agricultural produce available to the markets and establish worthwhile methods for getting best value according to the cost of the agricultural produce.
(xi) To plan and work for financial and social development of farmer, farm owners, agricultural labor, blacksmith, carpenter, potter and those communities whose financial livelihood is dependent on agriculture.
(xii) To establish, guide and assist in health education and other essential arrangement of village life.
(xiii) To work for achieving goals like self supporting farmers, developed villages, competent India.
(xiv) To work for collection and conservation of water and promotion of water.
(xv) To work for protection of the environment.
(xvi) To make affiliation with organizations who work for the above mentioned objects of the organization and guide them & work together to fulfill the above mentioned objects.
(xvii) To work for fulfillment of above objects and to do all such acts which are of national interest and are not against Society Registration Act, 1860.”
6.2 After perusing the aforesaid objectives, we find that the assessee’s main objective are carrying out charitable activities. On perusal of page no. 38 & 39 of the Paper Book which is a submission dated 15-6-2015, assessee has directed several activities all of which are directed towards protection of interests of farmers at a national level and some of the significant achievements of assessee in this regard are as under :–
(i) With the efforts of assessee the Government has sanctioned Rs. 6,000 crores to sugar mill owners as loan to make payments to the farmers growing sugarcane and this amount will be directly remitted into the bank account of the farmers;
(ii) It has been resolved by the Government that farmers will be provided relief by the government if the loss incurred due to natural calamities is in excess of 33% instead of earlier being 50%;
(iii) The Government has agreed for purchasing the wheat which has been destroyed due to rainfall which would again benefit the farmers.
6.3 We further find that from time to time the assessee society has been making representations before the highest level i.e., before the Hon’ble President of India & the PMO in furtherance of objectives of assessee society. Some of such representations made are annexed in the paper book from page no. 40 to 48 i.e., Representation dated 29-4-2013 before the Hon’ble President of India in connection with demand of farmers, inter alia, in connection with prices of agricultural produce; land acquisition etc.; Representation dated 28-2-2015 before the Hon’ble Prime Minister in connection with demand of farmers pertaining to land acquisition etc.; Representation dated 11-5-2015 before the Hon’ble Prime Minister in connection with demand of farmers pertaining to land acquisition etc.; Representation dated 12-9-2013 before the Hon’ble President of India in connection with demand of farmers; Representation dated 3-6-2015 before the Joint Parliamentary Committee in connection with demand of farmers. We further note that the assessee from time to time appeared before the learned Commissioner (Exemptions) and submitted the details as under :–
Firstly vide submission dated 16-2-2015 (pg 1 PB) the assessee has submitted, inter alia, the following documents :–
(i) List of management committee (page 3 PB);
(ii) Copy of Memorandum & Articles of Association (pages 22-37 PB);
(iii) Copies of audited accounts for financial year 2011-12; financial year 2012-13 & financial year 2013-14 (pages 4-18 PB).
Thereafter vide submission dated 15-6-2015 the assessee has submitted, inter alia, the following documents :–
(i) Audited accounts for financial year 2011-12; financial year 2012-13 & financial year 2013-14 were re-submitted.
(ii) Copies of bank statements for last three years were submitted;
(iii) Detailed note on charitable activities carried out by assessee society together with various representations submitted for protection of interests of farmers (supra) were submitted (pages 38-49 PB); &
(iv) Importantly the books of accounts were also submitted vide the said submission in response to query no. 11 of the Commissioner (Exemptions) letter dated 1-6-2015.
6.4 We also find that learned Commissioner (Exemptions) by way of his order rejected assessee’s application for registration under section 12A of the Act. The Commissioner (E.) has made an allegation to the effect that the assessee has not submitted books of accounts. However, the necessary details were very much submitted vide submission dated 15-6-2015 in response to query no. 11 of Commissioner (Exemptions)) (supra). Apart from the same the assessee has again submitted its submission dated 16-2-2015 (supra) & another submission dated 15-6-2015 (supra). All details are very much a part of record and the Commissioner (Exemptions)) could not point any sort of discrepancy in the same. Hence, the decisions relied upon by learned Commissioner (Exemptions) are not applicable on the facts and circumstances of present case.
6.5 In view of the above, in our considered view Assessee’s objectives duly qualify within the purview of “general public utility” being a charitable purpose under section 2(15) of the Act. Section 2(15) of the Act defines charitable purpose in an inclusive manner as under :–
“(15) “charitable purpose” includes relief of the poor, education, yoga, medical relief, preservation of environment (including watersheds, forests and wildlife) and preservation of monuments or places or objects of artistic or historic interest, and the advancement of any other object of general public utility.”
6.6 We further find that the expression “general public utility” has been well established from authoritative pronouncements from the Hon’ble Supreme Court. The Hon’ble Supreme Court in its significant decisions in the case of Ahmedabad Rana Caste Association v. CIT 82 ITR 704 SC & CIT v. Andhra Chamber of Commerce 55 ITR 722 SC has held that an object beneficial to a section of public is an object of general public utility. It would be pertinent to quote the following from the said decisions of Hon’ble Supreme Court :–
“That the expression “object of general public utility” was not restricted to objects beneficial to the whole of mankind. An object beneficial to a section of the public was an object of general public utility. To serve as a charitable purpose, it was not necessary that the object should be to benefit the whole of mankind or even all persons living in a particular country or province. It was sufficient if the intention was to benefit a section of the public as distinguished from specified individuals”,
6.7 On the facts of the present case, the section of public to whom benefit is intended is farmers constituting approx. 60%–70% of population of country and the protection of interests of farmers will invariably confer several benefits. These points were clearly highlighted vide submission dated 15-6-2015 before the Commissioner (Exemptions)) which establishes beyond any doubt that the object of assessee is of general public utility within the meaning of section 2(15), which reads as under :–
(i) Upliftment of farmers by way of providing them facilities like better seeds, fertilisers, availability of water and electricity; connecting villages with roads etc;
(ii) Assessee society works in the field of improving financial; cultural; social and educational upliftment of farmers;
(iii) Providing farmers with the knowledge of modern agricultural techniques and equipments;
(iv) Implementation of latest techniques in farming;
(v) Organizing meetings, trainings, sessions, exhibitions etc for the benefit of farmers;
(vi) Providing a market for agricultural produces produced by the farmers at reasonable prices;
(vii) With the efforts of assessee the Government has sanctioned Rs. 6,000 crores to sugar mill owners as loan to make payments to the farmers growing sugarcane and this amount will be directly remitted into the bank account of the farmers;
(viii) It has been resolved by the Government that farmers will be provided relief by the government if the loss incurred due to natural calamities is in excess of 33% instead of earlier being 50%;
(ix) The Government has agreed for purchasing the wheat which has been destroyed due to rainfall which would again benefit the farmers.
6.8 Besides above, we find that the decisions relied upon by the Commissioner (Exemptions) vide paras 4-7 of his order are not at all applicable on the facts and circumstances of present case in view of following reasons :–
(i) In the cases of Charitable Society v. DIT (Exemption) 232 ITR 11 & Self Employers Service Society v. CIT 247 ITR 18 (Ker.) as referred by the Commissioner (Exemptions)) vide para 4 of its order the findings on the facts of those cases were that there has been a mis-utilisation of donations received for charitable purposes and the only activity carried on by society was earning income for members. No such situation exists on the facts of present case;
(ii) In the case of CIT v. National institute of Aeronautical Engineering Education Society 181 Taxman 205 (Uttarakhand) the reasoning framed in denying exemption was that the objective of society was to earn profits under the garb of education. No such situation exists on the facts of present case and in any case this decision from Uttarakhand High Court has been reversed by Supreme Court in the case of Queens Educational Society v. CIT (2015) 372 ITR 699 (SC) as noted in various cases for instance In the decision of coordinate bench of Delhi ITAT in the case of Shree Balaji Educational Trust v. CIT (2016) 47 ITR (Trib.) 595 etc;
(iii) In the decision in case of CIT v. Jamuna Lal Bajaj Seva Trust 171 ITR 568 as relied by Commissioner (Exemptions)) vide para 6 of its order there was a finding that income is applied for the benefit of interested persons whereas no such situation exists on the facts of present case. To similar effect were the facts of case relied by the Commissioner vide para 7 of its order. No such situation exists on the facts of present case.
6.9 We further of the view that at the stage of granting registration under section 12A the learned Commissioner (Exemptions) has required to see the objects of society and not required to examine on the application of income which will have to be undertaken by the assessing officer (AO) on a year to year basis after assessee files return of income claiming exemption under section 11. This position is now well settled by several authoritative pronouncements on the subject. On the facts of present case there cannot be even an iota of doubt that the objectives of assessee society are charitable in nature being an objective of general public utility within the meaning of section 2(15) of the Act as detailed herein above.
7. Keeping in view of the facts and circumstances of the case as explained above and respectfully following the legal position as discussed above, we are of the considered opinion that the assessee is entitled for registration under section 12A of the Act. Therefore, we set aside the impugned order passed by the learned Commissioner (Exemptions), Lucknow and accordingly, direct the learned Commissioner (Exemptions), Lucknow to grant registration under section 12A of the Act to the applicant.
8. In the result, the appeal of the assessee is allowed.
