Case Law Details

Case Name : Sukhmani Society For Citizen Services Vs Commissioner of Income-tax, Bathinda (ITAT Amritsar)
Appeal Number : IT Appeal No. 551 (ASR.) OF 2011
Date of Judgement/Order : 26/09/2012
Related Assessment Year :
Courts : All ITAT (5308) ITAT Amritsar (52)

IN THE ITAT AMRITSAR BENCH

Sukhmani Society For Citizen Services

Versus

Commissioner of Income-tax, Bathinda

IT APPEAL NO. 551 (ASR.) OF 2011

SEPTEMBER 26, 2012

ORDER

1. The Sukhmani Society for Citizen Services (Suwidha Centre) D.C. Office, Distt. Administrative Complex Mansa (hereinafter called the ‘Society’) filed an application for registration under section 12AA of the Income-tax Act, 1961 (In short the ‘Act’), on 30.03.2011 in the prescribed form to the Ld. Commissioner of Income Tax, Bathinda. In order to verify the genuineness of the activities of the assessee-society, the ld. CIT, Bathinda called the Society along with complete set of books of account and other relevant documents for the last three years for 21.04.2011. In compliance of the same, the authorised representative of the Society attended the proceedings and furnished the requisite information. The application of the Society was referred to the ITO Ward 1(4), Mansa, to verify the genuineness of the activities of the Society, in compliance of the same, the Assessing Office vide his report dated 05.09.2011 stated that the Society has failed to produce the books of account in absence of which, it is not possible to verify the genuineness of activities of the Society and keeping in view all these facts, the AO did not recommend the case of the assessee for registration under section 12AA of the Act. The Jt. C.I.T. Range-1, also endorsed the findings of the A.O. The Ld. CIT Bathinda fixed the case for hearing in his office on 27.03.2011 and authorised representative of the Society attended the proceedings and also filed the requisite information alongwith the details of activities and other documents.

2. The Society is registered with the Additional Registrar of Societies, Mansa vide No.44 of 22.03.2004. The aims and objects of the Societies are contained in Memorandum of Association of the Society. After perusing the objects and functions of the Society, the Ld. CIT Bathinda is of the view that the activities of the Society are in commercial nature rather than charitable in nature. The Ld. CIT, Bathinda has also perused the income and expenditure of the society which reveals that the Society has been earning huge profit and, therefore, he was of the view that the activities of the Society are of commercial in nature and aimed at deriving profit and not for charitable purpose.

3. The Ld. CIT, Bathinda confronted the above said facts to the Society and the Society contended that the main object of the Society is to provide citizen’s services to the common people for their convenience and the Society also explained that the Society receives application from the common citizen for various services on behalf of the departments of State Govt, forwards the same to the concerned department and deliver back the same to the citizen within a specified time frame. The Society is charging prescribed fee from the citizen for providing services. The Ld. CIT, Bathinda perused the chart produced by the Society showing charges received by the Society and he is of the view that the Society charges as much as Rs.1000/- for issuing NOC for petrol pump, Rs.500 for registration of marriage, Rs.500 for NOC on building plan and so on. He is also of the view that these charges are in addition to the statutory fees charged by the State Govt. Departments. These charges/fees are charged by the Society for providing alleged citizen services. The Ld. CIT, Bathinda finally held that the activity of the Society is in the nature of trading, commerce or business and activity of rendering service in relation to the trade, commerce or business for a fee. The Society provides certain services to the common man and charges fee for the same and this act of the Society hardly go to establish any charitable purpose. Finally, the Ld. CIT also held that the Society is doing all work and rendering services to the citizens which the State Govt. was supposed to perform without charging any such additional fees. Therefore, he is satisfied that the activities of the Society/Institutions not charitable in nature within the meaning of proviso to section 2(15) of the Act and it does not qualify to be treated as a charitable institution. Hence, he rejected the request of the assessee for grant of registration under section 12AA of the Act, vide impugned order dated 26.09.2011.

4. The assessee is aggrieved by the impugned order dated 26.09.2011 passed by the ld. CIT, Bathinda and filed the present appeal.

5. The Ld. counsel for the assessee stated that the Society was registered on 22.0.30004 with the Additional Registrar Office, Mansa and formation of the Society was on initiation and instructions of Government of Punjab to implement ‘Suwidha’ (Single User’s Friendly Window Disposal helpline for Applicants) and is a project of the State Government. The State Govt. had instructed all the District Offices to form Societies on a similar pattern, with official website SUWIDHA.nic.in. The main object of the Society is to provide Single Window Services to the Citizens against a minimum fees for their services and to provide services within scheduled time. He further stated that the organisation of the Society was framed and Deputy Commissioner, Mansa is an Ex-officio member along with various other Additional Commissioners as well as Sub-Divisional Magistrates and other Officers of the District Mansa, as the office bearers for the completion of the Society. He further stated that the D.C. Mansa is the Chairman of the present Society and the Additional Deputy Commissioner (General) is a Member/Secretary, Additional Deputy Commissioner (Development) Member, SDM, Mansa and Executive Engineer, PWD, B&R, Mansa, are the Members of the Society. He stated that the motive of the society is to provide services from a single window, taking up minimum possible charges as per chart of facilitation charges, which are fixed by the State Government. He has also produced copy of chart showing service-wise charges taken by the Society from the Citizens for rendering its services. He has also drew our attention towards the object of the Society which are mentioned in the Memorandum of Association i.e. about 29 objects. He has also drew our attention towards present Board of Governors and stated that almost all the Board Members are high officials of the Punjab Government. Finally, he stated that the Society is working for charitable purposes as well as for public utility purposes and he requested that the Society deserves registration under section 12AA of the Act. But the Ld. CIT, Bhatinda has wrongly rejected the request of the assessee vide impugned order dated 26.09.2011. In support of his contention he has placed reliance on the following decisions:

 (iCIT v. Haryana Warehousing Corpn. [2011] 196 Taxman 260.

(iiCIT v. Haryana Building & Other Construction Works Welfare Board [2011] 196 Taxman 255

(iii)  CIT v. Gujarat Maritime Board [2007] 289 ITR 139 (Guj.)

 (iv)  CIT v. Aggarwal Sabha Maharaja Aggarsain Bhawan [2011] 198 Taxmann 172

(v)  Sanjeevamma Hanuman the Gowda Charitable Trust v. DIT (Exemptions) [2006] 285 ITR 327

(viBar Council of Maharashtra v. CIT [1980] 126 ITR 27 (Bom.)

(vii)  CIT v. Dredging Corpn. of India [1988] 174 ITR 682

6. On the contrary, the Ld. DR, Sh. Amrik Chand, relied upon the order passed by the Ld. CIT, Bathinda and stated that the Society has not done any charitable as well as public utility work till date. The Ld. DR further stated that the assessee is charging a very huge fees from the public for rendering its services to the Society, which is in addition to the charges levied by the Punjab Government and is additional burden upon the common man. Lastly, he stated that the activities of the Society are not charitable in nature within the meaning of proviso to section 2(15) of the Act, because the assessee is doing its business and gaining a huge profit by doing the work of public and has not done any single charitable work till date. Therefore, the request of the assessee for registration of the Society u/s 12AA of the Act, has rightly been rejected by the Ld. CIT, Bathinda.

7. We have heard both the parties and perused the relevant records available with us. The Ld. counsel for the assessee filed a chart of services and charges against the services rendered by the Society that are about 36 in number. For the sake of convenience, we reproduce the 17 services rendered by the Society and the charges taken by the Society, which are as under:

Sukhmani Society for Citizen Services

v.

CIT Bathinda

I.T.A. No. 551/ASR-2011

Service

Facili. Charges

Time Frame

Financial Year 2008-09

Financial Year 2009-10

Financial Year 2010-11

(Rs.)

Days

No. of Cases

%age of Total

No. of Cases

%age of Total

No. of Cases

 %age of Total

1

Issuance of Nationality Certificate

 20

15

0

0

0

0.00%

11856

24.70%

2

Issuance of Birth Certificate

20

7

5001

32.46%

5419

11.62%

7462

15.55%

3

Driving Licences related services

20

7

0

0.00%

20041

42.96%

7326

15.26%

4

Arm Licences related Services

500

45

4282

27.79%

5855

12.55%

5173

10.78%

5

Issuance of Affidavits

20

Same Day

1036

6.72%

4258

9.13%

5011

10.44%

6

Registration of Vehicle Services

100

5

0

0.00%

6096

13.07%

4675

9.74%

7

Issuance of Copy of a Document

30

7

1473

9.56%

1257

2.69%

1904

3.97%

8

Issuance of Death Certificate

20

7

975

6.33%

951

2.04%

1577

3.29%

9

Submission of Passport Applications

100

20

2101

13.63%

1654

3.55%

1282

2.67%

10

Agriculture related

100

30

274

1.78%

779

1.67%

614

1.28%

11

Non-Encumberence Certificate

20

0

0

0.00%

0

0.00%

374

0.78%

12

Form seeling

0

0

0

0.00%

0

0.00%

160

0.33%

13

Issuance of Surety Bonds

50

Same Day

5

0.03%

29

0.06%

151

0.31%

14

Registration of Marriage

500

Same Day

60

0.39%

88

0.19%

63

0.13%

15

Others

0

0

202

1.31%

218

0.47%

373

0.78%

16

NOC of Petrol Pump

1000

40

0

0.00%

0

0.00%

0

0.00%

17

NOC for Building Plan

500

30

0

0.00%

0

0.00%

0

0.00%

TOTAL

15409

46645

48001

(COUNSEL FOR THE ASSESSEE (APPELLANT)

7.1 The Ld. CIT, Bathinda has also mentioned in para 3.3 at page 3 & 4 in the impugned order that the applicant has furnished a chart showing fee chargeable for providing various services to the citizens. A perusal of the chart shows that the applicant charges as much as Rs.1000/- for issuing NOC for petrol pump, Rs.500 for registration of marriage, Rs.500 for NOC on building plan and so on. It is pertinent to mention here that these charges are in addition to the statutory fees charged by the State Govt. Departments. These charges/fees are charged by the applicant for providing the alleged citizens services.

7.2 The Ld. counsel for the assessee has filed balance sheet as on 31.03.2009 in which the Society has shown liabilities and assets as well as Income & Expenditure account for the year ended 31.3.2009. For the sake of convenience, the balance sheet as on 31.03.2009 as well as Income & Expenditure for the period ended 31.03.2009 of the Society are reproduced as under:

Sukhmani Society for Citizen Services (D.C. Office), Mansa

Balance Sheet as on 31.03.2009

Liabilities Amount

Amount (Rs)

Assets

General Funds
O. Balance-

3389932.99

Fixed Assets (Details Attached)

1452088.00

Less: Old Dep

1028849.00

Add : Tfd from

1344307.50

Telephone Security

500.00

I & E A/C

3705391.49

Loan to Distt.Nazar

143150.00

State Govt.

500000.00

Receivable from Ex.

77860.00

Clerk cum Accountant
Sh. Ashok Kumar.
Security from Computer

10000.00

Bank Balances:
S.B.O.P., Mansa

1573840.99

Amount More deposited in Bank Account

270.0

SBOP, Mansa ( I/A)

371818.00

PNB, Budhlada

334408.50

SBOP, Sardulgarh

257726.00

Cash in Head

4270.00

4215661.49

4215661.49

Report :-  Subject to our Separate Audited for Report of Even Date
For Sanjeev Amar & Associates Chartered Accountants
Place : Mansa

(Sanjeev Kumar)

Dated : 18.08.2009

M. No. 500277

Sukhmani Society for Citizen Services (D.C. Office),Mansa

Income & Expenditure Account For The Period Ending 31.03.2009

Expenditure Amount (Rs)

Amount (Rs)

Income

Amount

To Pb. State e-goverance Society, CHD

381533.50

By Receipts

2592150.00

By Bank Interest

48843.00

To Printing & Stationery

29907.00

To Salary

539204.00

To Bank Exp.

490.00

To Computer Repair

27735.00

To Audit Fee

11000.00

To Electricity Bill

34028.00

To Telephone

5727.00

To SMS Exp.

945.00

To Photostate

1035.00

To Electric Repair

225.00

To Travelling

5150.00

To Depreciation

259706.00

To Income over Exp.

1344307.50

2640933.00

2640933.00

Report :- Subject to Our Separate For Report of Even Date
For Sanjeev Amar & Associates Chartered Accountants
Place : Mansa

(Sanjeev Kumar)

Dated : 18.08.2009

M. No. 500277

7.3 Similarly, the balance sheet as on 31.03.2010 as well as the Income & Expenditure account for the period ending 31.03.2010 are also reproduced as under:

Sukhmani Society For Citizen Services (D.C. Office), Mansa

Balance Sheet As On 31.03.2010

Liabilities Amount

Amount (Rs)

Assets

General Funds Fixed Assets

1431952.00

O. Balance-

3705391.49

(Details Attached)
Add : Tfd from

1487573.50

Telephone Security

500.00

I & E A/C

5192964.99

Loan to Distt.Nazar

15000.00

Security from Computer Supplier

10000.00

SDM Budhlada.

3000.00

Ch. Issued not Presented

16356.00

S.B.O.P.(Sweep in)

2784690.00

Bank Balance :
S.B.O.P, Mansa

50281.00

SBOP, Mansa ( I/A)

377866.00

PNB, Budhlada

9349.00

SBOP, Budhlalda

296960.00

SBOP, Sardulgarh

429722.00

5219320.99

5219320.

Report : –

SUBJECT TO OUR SEPARATE AUDITED FOR REPORT OF EVEN DATE
FOR SANJEEV AMAR & ASSOCIATES CHARTERED ACCOUNTANTS
PLACE : MANSA

(SANJEEV KUMAR)

DATED : 22.06.2010

M. No. 500277

Income & Expenditure Account For the Period Ending On 31.3.2010

Expenditure

Amount

Income

Amount

To Pb. State e-governance Society Chd.

486084.50

By Receipts

3420275.00

To Printing & stationery

146145.00

By Bank Interest

86517.00

To Salary

917004.00

By Excess Deposit

250.00

To Bank Exp.

911.00

By Excess credit bank

10.00

To computer repair

64880.00

To Audit fee

7000.00

To electricity bill

49702.00

To Telephone

10590.00

To SMS Exp.

1122.00

To Advertisement

13113.00

To Electric Repair

4969.00

To Travelling

2346.00

To Misc. Exp.

670.00

To Postage

500.00

To Depreciation

314442.00

To Income over Exp.

1487573.00

3507052.00

3507052.00

Report :-

 Subject to Our Separate For Report of Even Date
For Sanjeev Amar & Associates Chartered Accountants
Place : Mansa

(Sanjeev Kumar)

Dated : 22.06.2010

M. No. 500277

7.4 Lastly, the balance sheet as on 31.03.2011 as well as Income & Expenditure account for the period ending 31.03.2011 are reproduced as under:

Balance Sheet as On 31.03.2011

Liabilities Amount Amount (Rs) Assets
General Funds Fixed Assets

1285660.00

O. Balance-

5192964.99

(Details Attached)
Add : Tfd from

901085.93

Telephone Security

500.00

I & E A/C

6094050.92

Loan to Distt.Nazar

15000.00

Security from Computer Supplier

10000.00.

SDM Budhlada.

3000.00

Salary Payable

114120.00

Stamp Paper and stamps

40147.00

PSEGS Payable

63697.00

TDS

45253.00

Ch. Issued not Presented

358996.00

NICI, Delhi

352000.00

S.B.O.P(Sweep in) Bank Balances :

4807579.58

SBOP, Mansa

3088.00

SBOP, Budhlada

8547.50

SBOP, Sardulgarh

3590.00

SBOP, (NCC) Mansa

75589.84

Cash in Hand

909.00

6640863.92

6640863.92

Report :- Subject To Our Separate Audited For Report of Even Date
For Sanjeev Amar & Associates Chartered Accountants
Place : Mansa

(SANJEEV KUMAR)

Dated : 05.09.2011

M. No. 500277

Income & Expenditure Account For the Period Ending On 31.3.2011

Expenditure

Amount

Income

Amount

To Pb. State e-governance Society Chd.

478259.50

By Receipts

3132591.00

To Printing

154873.00

By Bank Interest

327855.43

To Salary

1413932.00

By Excess Deposit

1969.00

To Bank Exp.

350.00

By Excess credit bank

10.00

To Stationery

74842.00

To computer repair

67450.00

To Audit fee

7000.00

To electricity bill

62279.00

To Telephone

14659.00

To SMS Exp.

279.00

To Advertisement

13084.00

To Electric Repair

8806.00

To Travelling

12760.00

To Misc. Exp.

3135.00

To Depreciation

223130.00

To Income over Exp.

901085.93

3462515.43.

3462515.43

Report :-

Subject to Our Separate Report of Even Date

For Sanjeev Amar & Associates Chartered Accountants

PLACE : MANSA

 (SANJEEV KUMAR)

DATED : 05.09.2011

M. No. 500277

7.5 After going through the aforesaid balance sheets as well as Income & Expenditure accounts of the assessee for the last three yeas, we have not found any expenditure incurred by the Society on charitable as well as public utility work. Almost all the expenditure has been incurred by the Society on printing and stationery, salary to their employees, Bank expenditure, Computer repair, Audit fee, Electricity Bill, Telephone, Electric repair, traveling, misc. expenditure, postage etc.

7.6 The present Society has filed an application to the Ld. CIT, Bathinda for registration. As per section 12AA of the Act, the Ld. CIT, Bathinda on receipt of an application for registration can call for such documents or information from the present society as he thinks necessary in order satisfy himself about the genuineness of the activities of the society and may also make such inquiries as he may deem necessary in this behalf. If the Ld. CIT, Bathinda is satisfied himself of the objects of the Trust of this Society and genuineness of its activities, he shall pass an order in writing registering the present society and if he is not satisfied then he shall pass order in writing refusing to register the Society after giving reasonable opportunity of being heard. In the present case also, the Ld. CIT, Bathnda referred the application of the Society to the ITO Ward 1(4), Mansa to verify the genuineness of activities of the present society and in compliance of the same, the AO vide his report dated 05.09.2011 has stated that the assessee has failed to produce books of account before him and in the absence of which, it is not possible to verify the genuineness of the activities of the present society and lastly the AO has not recommended the case of the assessee for registration u/s 12AA of the Act, through the Jt. CIT, Bathinda. After receiving the said report dated 05.09.2011 from the AO, the Ld. CIT, Bathinda fixed the case for hearing on 27.03.2011. After hearing the authorized representative of the assessee, the Ld. CIT examined the documentary evidence available with him and stated that the activities of the society are commercial in nature. He has also reproduced the same objects of the present society at pages 2 & 3 in para 3.1(i) to para 3(iii). For the sake of convenience, the objects of the society are reproduced hereunder:

“3.1. The applicant society is registered with the Addl. Registrar of Societies, Mansa vide No. 44 of 22.03.2004.The aims and objectives of the societies are contained in Memorandum of Association of the society, a copy of which has been obtained and is placed on file. As many as 29 objectives have been mentioned in the list in para 4 under the title Objectives and functions of the society. Some of the objectives are such that activities of the society seem to be of commercial nature rather than of charitable nature. The objectives of such nature are as under:

 (i)  To workout and recommend the service fee or user charge that could be charged from the end customers for the approval of the competent authority and concerned departments/organizations over the above and the prescribed bill amount/fee/statutory fee for providing the services through Sukhmani Centres/Financial Institutions or Franchisees.

(ii)  To buy, sell, let on hire, lease, trade, import, repair or otherwise deal with IT resources, services & support on turkey basis like hardware, software, connectivity, networking, training, stationery, consumables etc. Including operational & managerial manpower, hiring of professionals, consultancy services by following the procedure prescribed. To ensure the other infrastructure requirements including site preparation and timely availability of the necessary resources for the various activities under the project.

(iii)  To establish and maintain any agencies and franchises in the district for the conduct of the business of the society.”

The Ld. CIT also perused the Income and Expenditure accounts, which we have reproduced hereinabove and finally concluded that the above facts clearly reveals that the activities of the Society are of commercial in nature aimed at deriving profit and not for charity.

7.7 We have also perused the Income & Expenditure accounts, which we have reproduced hereinabove as well as the impugned order alongwith relevant provisions of section 12AA of the Act and section 2(15) of the Act. For the sake of convenience, provisions of section 12AA and section 2(15) of the Act are reproduced as under:

“Section 12AA. (1) The Commissioner, on receipt of an application for registration of a trust or institution made under clause (a) [or clause (aa) of sub section (1) of section 12A, shall –

(a)  call for such documents or information from the trust or institution as he thinks necessary in order to satisfy himself about the genuineness of activities of the trust or institution and may also make such inquiries as he may deemed necessary in this behalf; and

(b)  after satisfying himself about the objects of the trust or institution and the genuineness of its activities, he

(i)  shall pass an order in writing registering the trust or institution;

(ii)  shall, if he is not so satisfied, pass an order in writing refusing to register the trust or institution,

and copy of the such order shall be sent to the applicant.”

“Section 2(15): “charitable purpose” includes relief of the poor, education, 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.”

7.8 Keeping in view the aforesaid discussions as per records as well as per documentary evidence given by the assessee, we find that the main project was initiated by the Govt. of Punjab in the month of August, 2002 at Fatehgarh Sahib. It was inaugurated by the Chief Minister of Punjab on 31.10.2002. The project was founded by the Govt. of India, Department of Communication & Information Technology. The Govt. of Punjab has decided to implement this project in all Districts of Punjab alongwith SUWIDHA Back-end Services (SUBS) of the Deputy Commissioner Branches in December, 2004. The project replication started in all districts with technical support of NIC-District Centres. As of now, the project is being executed in all Deputy Commissioner’s offices. The appellant society is registered with the Additional Registrar of Societies, Mansa vide No.44 of 22.03.2004 and its aims and objects are contained in Memorandum of Association of the Society which we have already mentioned in the foregoing paragraphs. After perusing the objects of the Society, we find that the Ld. CIT, Bathinda, has reproduced some important objects of the Society in para 3.1 (pages 2 & 3) of the impugned order which shows that this society has been established for maintaining the agencies and franchises in the district for the conduct of the business of the society, which clearly establishes that the present society is doing business with other agencies and franchises in the district for the conduct of the business. We have not seen any object of the society which shows that the present society is doing any charitable activities for the general public utility. The Ld. CIT, Bathinda has also referred the matter to the ITO Ward 1(4), Mansa to verify the genuineness of the activities of the present society who vide his reported dated 05.09.2011 has stated that the assessee has failed to produce books of account in the absence of which it is not possible to verify the genuineness of the activities of the society and the AO has not recommended the case of the assessee for registration u/s 12AA of the Act. Even otherwise, the assessee has failed to establish before the ld. CIT(A) that the society is doing any charitable work keeping in view its objects. Merely, mentioning about various objects in the nature of charitable activities in the Memorandum of Association, does not mean that the Society is doing any charitable activities for the general public utility and is entitled for registration under section 12AA of the Act. According to section 12AA of the Act, the Commissioner on receipt of application for registration of a trust or institution has to satisfy himself about the genuineness of activities of the trust or institution. In the present case, the Ld. CIT, Bathinda has made the inquiry from the concerned ITO, who has not recommended the case of the Society for registration. Even otherwise, the assessee has also failed to establish that the objects of the society are charitable in nature.

7.9 Keeping in view the aforesaid discussions, we are of the considered view that the activities of the assessee-society are not charitable in nature within the meaning of provisions of section 2(15) of the Act and it does not qualify to treat as charitable institution. Since the assessee has not established that its society is formed with objects of any charitable purpose, then the question of discussion of citations relied upon by the Society does not arise, even otherwise these judgments are different from the facts of present case and are not helpful the Society. The present society is doing its business and charging huge fees from the public which is in addition to the prescribed fee of the Punjab Govt. Even otherwise, the fees charged by the present society is in addition to the burden forced upon the common-man. Because of this service has to be rendered by the Punjab Govt. free of cost to the public against the fee prescribed in the chart as reproduced in the foregoing paragraphs. We are of the considered opinion that no interference is called for in the well reasoned order passed by the ld. CIT, Bathinda. Therefore, we uphold the impugned order dated 26.09.2011 by dismissing the present appeal filed by the assessee-society.

8. In the result, the appeal filed by the assessee-society is dismissed.

Download Judgment/Order

More Under Income Tax

Posted Under

Category : Income Tax (27877)
Type : Judiciary (12060)
Tags : ITAT Judgments (5490)

Leave a Reply

Your email address will not be published. Required fields are marked *

Featured Posts