TaxTMI 
TaxTMI 
2021 (11) TMI 417
X X X X Extracts X X X X
X X X X Extracts X X X X
....charitable purposes. 4. That the Commissioner of Income Tax (Exemptions) erred on facts and in law treating unspent grant in aid received from the state government as income of the appellant and thereby denying registration u/s 12A of the Income tax Act, 1961. 5. That the Commissioner of Income Tax (Exemptions) erred in denying registration u/s 12A on the ground that the appellant had filed its return of income for the AY 18-19 in Form No. ITR-5. 6. The assessee craves leave to add/alter any of the ground of appeal on or before the date of hearing of appeal. From the aforesaid grounds it is gathered that the only grievance of the assessee relates to the rejection of application for grant of Registration under section 12A of the Income Tax Act, 1961 (hereinafter referred to as 'Act'). 3. Facts of the case in brief are that the assessee filed an application in Form No. 10A for registration under section 12A of the Act which was received in the office of the CIT(E) on 29/09/2018. The aims and objects of the assessee are to catalyse agroindustrial growth in different parts of the state based on principles of ecological sustainability, economic efficienc....
X X X X Extracts X X X X
X X X X Extracts X X X X
....nterest/ advancement of any other object of general public utility/ religious activities. 13. Your Trust Deed/ Memorandum of Association does not have a clause that the irrevocability Clause. Please include this clause in your Trust Deed/ Memorandum of Association and file a certified copy of the amended Trust Deed/ Memorandum of Association. 14. Your Trust Deed/ Memorandum of Association does not have a clause that the beneficiaries are a section of the public and not specific individuals. Please include this clause in your Trust Deed/ Memorandum of Association and file a certified copy of the amended Trust Deed/ Memorandum of Association. 15. Details of Names and address of Settler, Trustees and members of the Trust/Trust along with the PANs & Email address. 16. An Affidavit giving clear undertaking that no fees charges etc had been collected for any services referred from the beneficiaries inviolation of provisions of section 2(15) of Income Tax Act. 17. Copies of Audited balance Sheets, Income & Expenditure account along with complete annexure for the last 03 Years or since the beginning of the trust. Receipts and Payment accounts fo....
X X X X Extracts X X X X
X X X X Extracts X X X X
....he assessee observed that the assessee society is a body registered under Haryana Registration of Societies Act, 2012 having general body under the Chairmanship of Administrative Secretary, Department of Agriculture and Executive Committee under the Chairmanship of Director General Horticulture and implementing the central schemes of Government of India namely Venture Capital Assistance Scheme (VCA), Equity Grant and Credit Guarantee Scheme (EGCGS) and economic inclusion of small and marginal farmers in agribusiness activities. 3.2 The assessee submitted to the Ld. CIT(E) that the assessee is involved in organizing small and marginal farmers as Farmers Interest Groups, Farmers Producers Organization (FPO) and Farmers Producers Company for endowing them with bargaining power and economies of scale. It was stated that the assessee society provides a platform for increased accessibility and cheaper availability of agricultural inputs to small and marginal farmers and in establishing forward and backward linkages in supply chain management. It was further stated that the main motive of the assessee society is mobilization of farmers for aggregation across the country with ultimate a....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... 21,63,984/- (15.12%) Consultancy Charges 10,30,045/- (7.2%) Foreign Tour 1,22,018/- Professional Charges 11,70,075/- (8.2%) Management of FPOs 62,20,274/- (43.5%) Salary 17,94,205/- (12.5%) On the basis of the aforesaid details of the expenses, the Ld. CIT(E) observed that the main expenses had been incurred only for Agri Leadership Summit, Consultancy Charges, Foreign tour Expenses, Professional Charges, Salary and Management of FPOs which do not get covered by any limb of section 2(15) of the Act. He also observed that there was no expenses that had been shown which could qualify as utilization for charitable purposes since its inception. The Ld. CIT(E) held that the assessee society was not involved in any charitable work and in fact, it was a business consortium which helps the FPOs by providing subsidy and it intends to avail tax exemption by getting 12AA registration certificate from the department. 3.5 The Ld. CIT(E) also observed that objects of the assessee society were of a nature of research project and technology demonstration which could not be recorded visage of being charitable. Some of them were as under: 1. to sponsor s....
X X X X Extracts X X X X
X X X X Extracts X X X X
..... xv) To pave the way for establishment of integrated producers organizations with forward and backward linkages. 5.1 Ld. Counsel for the assessee stated that the main objective of the assessee society is welfare of the farmers and for that purpose the assessee society implemented the various schemes of the Central Government. A reference was made to page no. 72 and 73 of the assessee's paper book which is the copy of the brief note of the assessee society, on the basis of the said note it was submitted that the assessee society organized retailing in Fruits and Vegetables which brought dramatic changes in horticulture marketing in India and that required dedicated supply chain than the traditional approach of marketing of fresh produce and that the project is aimed on backward and forward integration by creating on farm infrastructure required for organized marketing of FFV. 5.2 It was contended that the Ld. CIT(E) in para 6 of the impugned order also accepted that the main object of the assessee society is mobilizing the farmers for the benefit of the farmers who are the part of the society at large and there is no need that the beneficiary to be a whole world. The....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ti Vs. CIT, Gwalior(MP) 2012 (6) TMI 35(Agra Trib) It was accordingly submitted that the Ld. CIT(E) was not justified in rejecting the application moved by the assessee for registration under section 12AA of the Act. 6. In his rival submissions the Ld. CIT DR strongly supported the impugned order passed by the Ld. CIT(E) and further submitted that the Ld. CIT(E) made the detailed inquiry and find that the activity undertaken by the assessee did not fall in the category of charitable in nature and that there was no direct benefit to the general public at large, therefore, the application moved by the assessee for registration under section 12AA of the Act was rightly rejected. 7. We have considered the submissions of both the parties and perused the material available on the record. In the present case it is not in dispute that the assessee society was formed keeping in view the benefit of the small and marginal farmers. The main objective of the assessee society is involving in organizing small and marginal farmers as Farmers Interest Groups, Farmers Producers Organisation and Farmers Producers Company for endowing them with bargaining power and economies of scale. The ass....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ssessee society is to benefit the small farmers which comes under the category of relief to the poor and is a charitable activity therefore the assessee society fulfills the conditions laid down in Section 2(15) of the Act. 7.3. Similarly, the ITAT Delhi 'D' Bench in the case of Bhartiya Kisan Sangh Sewa Niketan Vs. CIT(E), Lucknow (supra) held as under: "The assessee-society is registered under the provisions of Societies Registration Act, 1860. It is 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. As per the Memorandum of assessee society, the assessee was incorporated to carry out the objectives which were essentially directed at protecting the interests of farmers on the country wide basis." It has further been held as under: "At stage of granting registration under section 12A Commissioner (Exemptions) is required to see the objects of society and not required to examine on application of income which will have to be undertaken by Assessing Of....