Case Law Details
Brief of the case:
In the case of Pune District Security Guards Board vs CIT, ITAT Pune held that welfare bodies formed under Maharashtra Private Security Guards (Regulation of Employment and Welfare) Act, 1981 were eligible for registration under section 12AA even though they charge fee for their services.
Facts of the case:
The assessee is a Board established with the main object of regulating employment of Private Security Guards employed in factories and other establishments. Further, it endeavors to make better provisions for their terms and conditions of employment and welfare. The assessee Board has been established under the Maharashtra Private Security Guards (Regulation of Employment and Welfare) Act, 1981. The assessee made an application for grant of registration u/s. 12AA of the Act. The same was rejected by the Commissioner of Income Tax as he held that the objects of the assessee fall under the category of ‘general public utility’. The assessee is charging fee in lieu of services rendered. In view of the amended provisions of section 2(15), the activities of the assessee/Board are not in the nature of charity.
Contention of the revenue:
The Department prayed for dismissing the appeal of the assesse as the assessee has been established for charitable purpose and the nature of activities carried out fall under the category ‘general public utility’. The Commissioner of Income Tax declined to grant registration u/s. 12AA of the Act on the ground that the assessee is providing services in lieu of fee. Since, the activities carried out by the assessee fall under the last limb i.e. ‘advancement of general public utility’ of ‘charitable purpose’ as defined u/s. 2(15) of the Act, the assessee ceases to be a charitable organization.
Contention of the Assessee:
The assessee submitted that the case of the assessee is identical to the case decided by the Co-ordinate Bench of the Tribunal in ITA No. 1379/PN/2010 in the case of Nashik District Security Guards Board Vs. CIT decided on 20-02-2015. The Tribunal in the said case directed Commissioner of Income Tax to grant registration to the assessee-appellant.
In the said case it was held that,
It is abundantly clear as per the provisions of the Maharashtra Private Security Guards (Regulation of Employment and Welfare) Act, 1981 that the said legislation is intended to regulate the employment of private security guards employed in factories and establishments in the State of Maharashtra for making better provisions in the terms and conditions of their employment and welfare through the establishment of the Boards. The Maharashtra Private Security Guards (Regulation of Employment and Welfare) Act, 1981 further prescribes that the State Government by means of a scheme provide for the registration of the employers and security guards. The said statue also provides for deciding the rate of services, payment, overtime payment, leave with wages, gratuity, etc. The statute also provides for deciding the time within which should be registered principal employer are to remit the wages payable to the registered security guards………
We are enumerating the aforesaid clauses of the Maharashtra Private Security Guards (Regulation of Employment and Welfare) Act, 1981 only to point out that the legislature has enacted the aforesaid 5 ITA No. 712/PN/2011 statute not with the purpose of carrying out of any trade, commerce or business or any activity of rendering any services in relation to any trade, commerce or business. Ostensibly, the said objectives are for regulating the employment of private security guards employed in factories and establishments in the State of Maharashtra and for making better provision for terms and conditions of their employment and welfare. Clearly, it is a welfare measure of the Government of Maharashtra and in our view, the activities of the Board cannot be said to be falling foul of the proviso to section 2(15) of the Act.
Held BY ITAT:
The Department has not been able to controvert the decision of the Tribunal rendered in the case of Nashik District Security Guards Board Vs. CIT (supra).
Respectfully following the same, we set aside the impugned order and direct the Commissioner to grant registration to the assessee u/s. 12AA of the Act on the application already filed by it.
The appeal of the assessee is allowed.
