ITA No.3924/Del/2011
IN THE INCOME TAX APPELLATE TRIBUNAL
DELHI BENCHES : E : NEW DELHI
BEFORE SHRI G.D. AGRAWAL, HON'BLE VICE PRESIDENT
AND
SHRI A.D. JAIN, JUDICIAL MEMBER
ITA No.3924/Del/2011
Assessment Year : NA
Maharishi Dayanand Vs. DIT (Exemptions),
Gosamardhan Kendra, New Delhi.
Gazipur,
Near Central Ware House,
New Delhi.
PAN : AABTM8680K
(Appellant) (Respondent)
Assessee By : Smt. Sweety Kothari, CA
Department By : Shri Gunjan Prasad, CIT, DR
ORDER
PER A.D. JAIN, JUDICIAL MEMBER:
This is assessee's appeal against the order dated 23.06.2011, passed
by the ld. DIT (Exemptions), Delhi, passed u/s 80G(5) (vi) of the IT Act read
with Rule 11AA of the IT Rules, 1962, rejecting the assessee's application for
renewal of registration u/s 80G of the IT Act. The ld. DIT (E) has observed in
the impugned order as follows:-
"4. From the perusal of income and expenditure account submitted
for the period ending 31.3.2010, it is noted that assessee has declared
income mainly from sale of milk of Rs.71,87,511/- and sale of organic
Fertilizer of Rs.6,28,454/- in addition to donation receipt. Similarly, in
the year ending 31.3.2009, the assessee has declared sale of milk of
Rs.70,12,289/- and Organic fertilizer of Rs.5,58,432/- although to the
members only.
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ITA No.3924/Del/2011
4.1 It is also noted that the assessee has also debited relevant
expenditure in account ending 31.3.2009 and 31.3.2010 by way of milk
packing expenses of Rs.1,40,334/- and Rs.2,06,508 respectively.
Further, assessee has also debited organic fertilizer expenses of and
Rs.1,98,238/- and Rs.172,654/- respectively for the year ending
31.3.2009 and 31.3.2010.
4.2 From the above it is clear that assessee is selling milk in
organized by way of packing to different parties claiming to be
members, which is a clear violation of the provisions of section 2 (15)
of the Income Tax Act, 1961 is against the spirit of provisions of
Section 2 (15). The activities of the assessee, at the most may be
covered by "Advancement of any other object of general public utility"
as mentioned in section 2 (15). A proviso below section 2 (15) has
been introduced with effect from A.Y. 2009-10 which provides that
where a charitable institution is engaged in charitable activity being
advancement of any other object of general public utility, if such a
charitable institution engages in any activity of trade, commerce or
business or provides services in relation to any trade commerce or
business for any fee, cess or any other consideration, its activities shall
not be taken as charitable activity.
Examination of the activities of the applicant reveals that it is engaged
in sale of milk and fertilizer, which is a systematic business activity and
the same cannot be said to be charitable activities as per section 2
(15). Thus, its income would not be entitled for exemption u/s 11 & 12.
In view of this, conditions mentioned in section 80G (5)(i) are not
satisfied. Thus, applicant is not entitled to exemption u/s 80G (5).
Accordingly, request for applicant is rejected."
2. Challenging the impugned order, the ld. Counsel for the assessee has
contended that the ld. DIT (E) has erred in rejecting the assessee's
application for renewal of registration u/s 80G of the Act, wrongly ignoring
the submissions made by the assessee and not considering that the
registration granted to the assessee is continuing.
3. The Ld. DR, on the other hand, has placed strong reliance on the
impugned order. It has been submitted that from the facts noted by the ld.
DIT (E), it is evident that the assessee is selling milk to its members in an
organized manner by way of packing, in violation of the provisions of Section
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ITA No.3924/Del/2011
2 (15) of the Act and that the assessee is engaged in the sale of milk and
fertilizer, which is a systematic business activity and cannot be termed as a
charitable activity.
4. The assessee filed an application for renewal of certificate u/s 80G on
28.01.2011 in Form 10G. The DIT (E) asked the assessee to furnish certain
documentary explanation vide letter dated 09.02.2011. Dissatisfied with the
explanation filed by the assessee, the DIT (E) rejected the assessee's
application, as above.
5. Undisputedly, the assessee has been granted registration u/s 12A of
the Act and the same has not been hitherto withdrawn. Now, as held in
similar circumstances in `Seth Amarnath Charitable Trust vs. DIT (E)', passed
by the Delhi Bench of the Tribunal in ITA No.4840/Del/2010, vide order dated
20.04.2012, the department cannot agitate the issue of renewal of the
certificate u/s 80G of the Act by holding that the assessee is not engaged in
charitable activities, particularly when the registration u/s 12A of the Act has
not been withdrawn and the assessee continue to enjoy the same.
6. Accordingly, finding merit in the grievance sought to be raised by the
assessee, the same is accepted.
7. In the result, the appeal filed by the assessee is allowed.
The order pronounced in the open court on 05.12.2013.
Sd/- Sd/-
[G.D. AGRAWAL] [A.D. JAIN]
VICE PRESIDENT JUDICIAL MEMBER
Dated, 05th December, 2013.
dk
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ITA No.3924/Del/2011
Copy forwarded to:
1. Appellant
2. Respondent
3. CIT
4. CIT (A)
5. DR, ITAT
AR, ITAT, NEW DELHI.
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