TaxTMI 
TaxTMI 
2022 (3) TMI 670
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.... of Covid-19 Pandemic. 3. The ld. DR during the course of hearing objected to the assessee's application for condonation of delay merely on the general reason of Covid-19. 3.1 We have heard both the parties and perused the materials available on record. We find that there is national wide Covid 19 Pandemic situation which is beyond the control of the human being. It is observed that the assessee is prevented by sufficient cause in not filing the appeal in time. The assessee also relied on the extension of limitation granted by the Taxation and other Laws (Relaxation of Certain Provisions) Ordinance, 2020. 3.2 In respect of condonation of delay, the Hon'ble Supreme Court in the case of Collector, Land Acquisition vs. Mst. Katiji, 167 ITR 471 observed as under:- ''The Legislature has conferred power to condone delay by enacting section 5 of the Limitation Act, 1963, in order to enable the courts to do substantial justice to parties by disposing of matters on merits. The expression " sufficient cause " in section 5 is adequately elastic to enable the courts to apply the law in a meaningful manner which subserves the ends of justice--that being the life-purpos....
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....s. The assessee society creates awareness amongst the people and work on the ground level for implementing the welfare schemes. It is noted that on 13-09-2019, the assessee society under a bonafide belief filed an application u/s 12A(1)(ab) of the Act in Form No. 10A, as the section has been amended and therefore, to comply with the amended provision w.e.f. 01-04-2018. The application dated 13-09-2019 was filed to place on record the amendment made on 04-05-2013 in the objects of the society. 7. On realizing the fact that there was no need of making an application u/s 12A(1)(ab) which came subsequently but the amendment was made in 2013. Therefore, the assessee society filed a letter dated 06-03-2020 seeking permission to withdraw application made by the assessee society. 8.1 Even though the assessee society has withdrawn its application, ld. CIT(E) went on to examine the facts of the case and ultimately rejected the registration u/s 12AA of the Act vide order dated 20-09-2020 wherein he has observed that :- (a) The applicant society is already in receipt of 12AA certificate dated 20-03- 2001. Later on, the applicant society modified its objects on 04-05-2013. ....
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....e pre-dominant or primary activity by itself. 8.5 On examination of the I&E accounts for F.Y. 2016-17, 2017-18 and 2018-19 wherein the assessee society has primarily carried out activities under the category of General Public Utility (GPU) only and is in receipt of contractual payments from various payers which forms integral and substantial part of income in I/E Accounts of the applicant society for different FYs. 8.6 Accordingly, information u/s 133(6) of the I.T. Act was sought from various deductors/ payers. The deductors furnished bill/ vouchers, MOU/Contract Agreement which are placed on records. In most of the cases, tenders were invited and thereafter agreements/MOUs were made and work orders were executed. The MOUs agreements specifically states about the work to be performed by the assessee society for which payments at a certain rate to be made by the deductors. It is an evident that the payers had made payments due to work performed by the assessee society as per conditions laid down in MOUs/ Agreements. Further, the Payers have also deducted TDS on such payments under section 194C of the I.T. Act which reveals that the payments are contractual payments after comp....
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....d as follows:- ''The sub-contract of the assessee cannot considered to be a charitable activity especially since the supply of food is with the funds of the State Government, received by the assessee as contract amounts. The activity of the assessee confined to such sub-contracts cannot be deemed to be a charitable activity and hence the Trust is not entitled to Registration u/s 12AA... The assessee, as rightly found is engaged in a business and there can be no registration as a charitable institution.'' 8.9 Similar issue came up before ITAT, Jaipur Bench in the case of M/s. Eternal Foundation vs CIT (Exemptions), Jaipur in ITA No. 1504 & 1505/JP/2018 wherein the ITAT, Jaipur Bench has observed as under:- ''Thus the ld. CIT (Exemptions) has followed the decision of Hon'ble Kerala High Court in the case of CIT vs Annadan Trust (supra) which in our view is squarely applicable in the facts of the present case where the assessee is engaged in the activities which are sponsored by the Pharmaceutical Companies (MNCs) in their regular business activity. Accordingly, in view of the above facts, we do not find any error or illegality in the impugned order of the CIT....
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.... contentions are as under:- ''1.Proviso to section 2(15) not applicable 1. Ld. CIT(E) without appreciating the facts in entirety and without looking into the contents of Income & Expenditure A/c and Form 26AS for F.Y. 2016-17 to F.Y. 18-19 (pages 6 to 32 of CIT(E) order) held that the assessee society was carrying out charitable activities under the limb of General Public Utility (GPU). 1.2 On further observing that for most of the work, which the assessee society was doing, tenders were invited, MOU/Agreements were entered into, assessee society was performing works as specifically stated in the MOU/Agreements and TDS u/s 194C was deducted, ld. CIT(E) opined that the assessee society was carrying out activities of commercial nature i.e. activities in the nature of trade, commerce and business for consideration and with profit motive. 1.3 Income in Income and Expenditure Account from such commercial activities was calculated and it was observed that from F.Y. 2016-17 to F.Y. 2018-19 aggregate receipts from such activities exceeded 20% and, hence, as per the proviso to section 2(15) the activity of the assessee society were treated to be not for c....
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....hunger and malnutrition Medical, Education and Relief of the Poor Deductor 7 - page 14, Deductor 6 - page 20, Rajasthan Forest Biodivercity Project Deputy Conservator of Forests, Jhunjhunu Conserving biodiversity by undertaking afforestation Preservation of Environment Deductor 8 - page 15, Deductor 3 - page 26 GPF Jhunjhunu Deputy Director- State Insuarance & Provident Fund Department, Jhunjhunu Proper functioning of General Provident Fund Any other object of general public utility Deductor 9 - page 16, Deductor 7 - page 21, Deductor 4 - page 27 Mahila Suraksha Salah Kendra Jhunjhunu and Ajmer Programme Officer Women Empowerment (DWDA) Ensuring safety and security of the aggrieved women Any other object of general public utility Deductor 11 - page 16, Mahila Adhikarita Churu and Amrita Haat Mahila Adhikarita Churu Zila Mahila Vikas Abhikaran Jhunjhunu Running Beti Bacho Beti Padhao, etc programmes Education Deductor 13 - page 17, Deductor 13 - page 23 ICICI Commission ICICI Bank Limited Encouraging Micro Finance initiative by developing Self Help Groups and providing financial services to the unreached and ....
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.... function in similar combination with local NGOs as in the case of assessee society. Hence, ld. CIT(E) should not have viewed the case of assessee company adversely when it has approval of Government itself. 1.9 It is submitted that after introduction of mandatory Corporate Social Responsibility spending under the Companies Act, 2013 similar pattern is adopted by Corporate Entities also for their charitable spending. This collaborative approach is also recognized by Companies Act, 2013 where spending through other specialized NGOs is encouraged. Similar MOU/Agreements are entered into and amount is handed over to local NGOs for applying the same for charity in accordance with the terms of MOU/Agreement. 1.10 It is submitted that it is not the case of ld. CIT(E) that the receipt of amounts from the parties mentioned in Income & Expenditure A/c or Form 26AS were utilized elsewhere and not for the purpose of advancement of object of general public utility as per MOU/Agreements i.e. for the welfare schemes. 1.11 Ld. CIT(E), prejudiced his mind, without looking at the actual activities carried out, because the payer deducted TDS. It is submitted that the fact ....
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....schools. Also, admittedly, the total receipts of the assessee were below the limit of Rs. 10,00,000/- as stipulated under the second proviso to Section 2(15) of the Act. 31. In that view of the matter, the Tribunal has rightly concluded that the restriction created by the first proviso to Section 2(15) of the Act did not operate against the assessee and therefore the activity of the assessee, even though it may have involved an activity in the nature of trade, commerce or business, etc., it would fall within the ambit of general public utility and therefore be a charitable purpose under Section 2(15) of the Act..." 1.13 Ld. CIT(E) has misplaced his reliance on judgments of Hon'ble Kerala High Court in the case of CIT vs Annadan Trust [2018] 96 taxmann.com 207 (Kerala) which is distinguishable as under: In the said case Naandi Foundation and not the Government outsourced the work of Preparation of Food for Mid-Day meals to Annadan Trust. Meaning thereby Annadan Trust was not the NGO which was selected by the Government whereas in the case of the assessee society it is the NGO which has been selected by the Government itself for acting as its agent/ extende....
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....ch in the case of Rajasthan Housing Board vs CIT [2012] 21 taxmann.com 77 (Jp.) (iii) Hon'ble ITAT Cochin Bench in the case of Mahatma Gandhi Charitable Society vs CIT [2013] 142 ITD 565 (Cochin) (iv) Hon'ble ITAT Chennai Bench in the case of Madras Motor Sports Club vs DIT [2013] 90 DTR 197 (Chennai) (v) Hon'ble ITAT Ahmedabad Bench in the case of Gujarat Cricket Association vs DIT [2012] 19 ITR 520 (Ahd.) 2.4 Attention is drawn towards provisions of section 13(8) inserted by Finance Act, 2012 w.r.e.f. 1st April, 2009 which makes it clear that existing registration cannot be withdrawn on account of applicability of proviso to section 2(15). 3. Action of ld. CIT(E) is without jurisdiction and contrary to principles of natural justice 3.1 The order of ld. CIT(E) is without jurisdiction. The proceedings were initiated on the basis of application filed by the assessee society. This application was withdrawn by the assessee society. Not allowing withdrawal of such application is not within the powers of ld. CIT(E). No law confers such authority to ld. CIT(E). This application is not like appeal before CIT(A) or ITAT which cannot be ....
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....e Tribunal considered the question elaborately. The specific objects as available in the MoA of the Trust was extracted by the Tribunal. The reliance placed by the assessee was also on sub-clause (17) which reads as "giving employment at least for one member in a family, which is needy and deserving". The Tribunal first considered the question as to whether taking a contract from the Indian Railways and carrying out the contract work by employing poor people as claimed by the assessee would amount to a charitable purpose or not. The Tribunal, according to us, correctly found that execution of a contract as awarded by the Indian Railways for the purpose of cleaning train coaches and railway stations is a purely commercial and business activity. The Tribunal also noticed that when there is employment given in pursuance of a contract work, there are many labour friendly legislations which had to be complied with by the employer. Mere employment of people from the weaker sections of Society would not absolve the contractor from the labour legislations and such work is one carried out with a clear intention at making profit. The assessee having bid in a competitive tender had been award....
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.... assist the Govt. of India as well as Govt. of Rajasthan in implementation of various welfare projects/ schemes and also enjoys the benefit of registration u/s 12AA of the Act. The assessee society creates awareness amongst people and work on the ground level implementation of schemes. Thus, there is no profit motive on the activities carried out by the assessee society. The amended objects are charitable in nature and were all approved since 2013 by the action of the Department. The changes were inserted in the deed after approval under the Societies Act. The amended objects are within the scope of charitable purpose and the fundamental character of the society was not altered or changed in any manner. There was no provision in the Act to obtain any prior permission for any amendment of the object of the society nor is there any specific provision requiring the assessee to intimate the Department about the amendment in the object of the society at relevant point of time. It is important to note that Finance Act 2017 has brought an amendment in Section 12A, effective from A.Y. 2018-19 by inserting a new sub-clause (ab) in sub-section(1) of Section 12A requiring the trust/ instituti....