Association of Oral Maxillofacial Surgeons of India v. The Commissioner of Income-tax (Exemption) Pune
[Citation -2019-LL-0917-28]

Citation 2019-LL-0917-28
Appellant Name Association of Oral Maxillofacial Surgeons of India
Respondent Name The Commissioner of Income-tax (Exemption) Pune
Court ITAT-Pune
Relevant Act Income-tax
Date of Order 17/09/2019
Judgment View Judgment
Keyword Tags genuineness of the activities • memorandum of association • charitable activities • interest of justice • financial statement • charitable purpose • object clause • profit motive • trust fund • association of person • general public utility
Bot Summary: At the same time, the Ld. CIT(Exemption) wrote a letter to ITO, Ward-1, Pune within which the jurisdiction of the assessee s case was being scrutinized for assessment year 2011-12 asking for various information regarding assessee Trust which are on record. The most important aspect which the Ld. CIT(Exemption) asked from the ITO Ward-1, Pune was with regard to receipts, expenses and surplus along with property and assets of the assessee trust which is as follows: Sr. No. F.Y. Receipts Expenses Surplus Property Assets 1 2014-15 2766969 1485019 1281950 20938756 2 2015-16 4059855 1287972 2771883 30387890 3 2016-17 3583657 2112746 1470911 37470809 From the above table, it is clear that the assessee had surplus in each year from FY 2014-15, 2015-16 2016-17 and probably also in FY 2011-12, 2012-13 and 2013-14. Non profiting motive of the activities carried out by the assessee were not established in the case of assessee. The assessee trust is only a channel to provide benefit to the society and public at large on behalf of these Corporate houses and in association with them, the assessee Trust are only doing charitable activities which are beneficial for the entire society. No financial statements were placed on record by the Ld. AR to demonstrate for what charitable purpose, receipts were spent and also no list of Corporate doners who contribute to the cause of the assessee Trust as claimed by the assessee were also not produced before us. The Ld. CIT(Exemption) has only harped upon the excess surplus received by the assessee Trust and huge income element of the assessee Trust but has not analyzed the expenditure part so as to clearly establish whether the expenses were for charitable purpose which ultimately benefits the public at large or not. In the interest of justice, we set aside the order of the Ld. CIT(Exemption) and restore the matter back to his file for analyzing the receipts components along with expenditure components of the assessee Trust with the financial statement and also for verification of the Corporate people from whom the assessee trust received the fund for doing activities as enshrined in their object Clause in the Memorandum of Association.


IN INCOME TAX APPELLATE TRIBUNAL BENCH, PUNE BEFORE SHRI D. KARUNAKARA RAO, AM AND SHRI PARTHA SARATHI CHAUDHURY, JM ITA No. 616/PUN/2019 Association of Oral Maxillofacial Surgeons of India. PN 38, S. No.16, Butte Patil Classic Prabhat Road, Erandwane, Pune-411004. PAN : AABTA3313P Appellant V/s. Commissioner of Income Tax (Exemption) Pune. Respondent Assessee by : Shri V. Jayaraman & Shri Rajeev Kulkarni Revenue by : Shri B Kishor Date of Hearing : 12.09.2019 Date of Pronouncement : 17.09.2019 ORDER PER PARTHA SARATHI CHAUDHURY, JM : This appeal preferred by assessee emanates from order of Ld. CIT(Exemption), Pune dated 28.02.2019 as per grounds of appeal on record. 2. solitary grievance of assessee in this appeal before us is refusal by Ld. CIT(Exemption) for granting of registration u/s.12AA of Income Tax Act, 1961 (hereinafter referred to as Act ). 2 ITA No. 616/PUN/2019 Association of Oral Maxillofacial Surgeons of India 3. brief facts in this case are that assessee E-filed Form 10A for registration of Trust u/s.12A of Act on 07.08.2018. assessee trust is established under BPT Act, 1950 with registration No. F-21581/Pune dated 28.11.2006. On perusal of Memorandum of Association uploaded along with Form 10A, it was noticed by Ld. CIT(Exemption) that main object of assessee association of persons (AOP) is to endeavor to attain higher oral and maxillofacial surgical standards and to promote research in oral and maxillofacial surgery. Thereafter, clarifications were required from assessee Trust to furnish information and other evidences for purpose of verifying genuineness of activities and utilization of Trust fund towards objects of Trust. In respect of this, assessee made necessary submissions on ITBA portal on 03.10.2018. These submissions were downloaded and were perused by Ld. CIT(Exemption). It was observed that assessee is mainly engaged in conducting seminar and workshop for maxillofacial surgeons i.e. members of AOP only. Also financial statements of last three years uploaded from assessment year 2015-16 to 2017-18, there is huge surplus in all years and no details have been furnished regarding status of return of income filed for respective years. Thus, no audited accounts were filed with Department for respective years as required by provision of Section 139(1) or 139(4) of Act as no return has been filed. 4. Further, it was verified from charity Commission website that no documentation have been filed with them for last two years. It was also found by Ld. CIT(Exemption) that prima facie, assessee was engaged in activities which are beneficial to specific individuals or group of individuals which are members of that assessee Trust and not for public at large. Further, profit motive of assessee could not be denied in 3 ITA No. 616/PUN/2019 Association of Oral Maxillofacial Surgeons of India view of surplus in each year and no compliance was made with Income Tax Department and Charity Commissioner Office which makes suspicion whether Trust has been working for charitable purpose or not. At same time, Ld. CIT(Exemption) wrote letter to ITO, Ward-1, Pune within which jurisdiction of assessee s case was being scrutinized for assessment year 2011-12 asking for various information regarding assessee Trust which are on record. most important aspect which Ld. CIT(Exemption) asked from ITO Ward-1, Pune was with regard to receipts, expenses and surplus along with property and assets of assessee trust which is as follows: Sr. No. F.Y. Receipts Expenses Surplus Property & Assets 1 2014-15 2766969 1485019 1281950 20938756 2 2015-16 4059855 1287972 2771883 30387890 3 2016-17 3583657 2112746 1470911 37470809 From above table, it is clear that assessee had surplus in each year from FY 2014-15, 2015-16 & 2016-17 and probably also in FY 2011-12, 2012-13 and 2013-14. Thereafter, ITO, Ward-1, Pune submitted factual report dated 26.02.2019 before Ld. CIT(Exemption) which is on record. 5. That after scrutinizing factual report of ITO, Ward-1, Pune it was observed by Ld. CIT(Exemption) that activities of assessee were sponsored by various Corporate/drug manufacturers. sponsorship of activities by corporate/drug manufacturers are nothing more than promotional events organized by drug manufacturers for their products. Moreover, assessee has shown surplus from conferences/seminars financed by drug manufacturers in financial statements of last three 4 ITA No. 616/PUN/2019 Association of Oral Maxillofacial Surgeons of India years. It is also noticed that assessee has been non-filer from A.Y.2012-13 and has shown surplus in all year which is not incidental profit or surplus. Therefore, non profiting motive of activities carried out by assessee were not established in case of assessee. Ld. CIT(Exemption) at Para 8 and 9 of his order gave reasons in detail for which registration u/s.12AA of Act was refused finally to assessee Trust. 6. At time of hearing, Ld. AR of assessee vehemently argued that Ld.CIT(Exemption) has acted beyond his scope of jurisdiction as permissible within Act. Ld. CIT(Exemption) should look into activities and objects of assessee Trust at time of granting registration u/s.12AA of Act and not more than that. It was further submitted by Ld. AR that they are conducting various campaigns for public awareness like anti-tobacco campaign. They are also providing awareness regarding protection of environment by planting of saplings and prevention and maintenance of garden within target area. They are also undertaking health check up and blood donation camps and enlightening public at large regarding health and hygene. That for these activities, it is Corporate who sponsors these events. assessee trust is only channel to provide benefit to society and public at large on behalf of these Corporate houses and in association with them, assessee Trust are only doing charitable activities which are beneficial for entire society. Ld. AR has also placed reliance on object Clause in Memorandum of Association of assessee Trust. 7. Per contra, Ld. DR contended that from report of ITO, Ward-1, Pune, it does not transpire factually that details of charitable activities conducted by assessee trust were placed on record before ITO since in his report no such direct reference is made with regard to charitable activities 5 ITA No. 616/PUN/2019 Association of Oral Maxillofacial Surgeons of India conducted by Trust which they have now filed before Bench. That further, even statement submitted regarding receipts and surplus, it is not clear that after receiving money where that money has been spent and for what charitable purposes, it is utilized. Even at time of hearing before Tribunal, assessee has not furnished any details of accounts which can clearly demonstrate that they have received this much amount from sponsor and have spent this much for charitable activities. In absence of these documents it cannot be simply said that they are doing work of charitable activities which is of general public utility. 8. We have perused case records and heard rival contentions. We have also analyzed facts and circumstances in this case. Ld. CIT(Exemption) has obtained report from ITO, Ward-1, Pune regarding actual work of Trust and to what extent they are involved in charitable activities. That before us, no financial statements were placed on record by Ld. AR to demonstrate for what charitable purpose, receipts were spent and also no list of Corporate doners who contribute to cause of assessee Trust as claimed by assessee were also not produced before us. Ld. CIT(Exemption) has only harped upon excess surplus received by assessee Trust and huge income element of assessee Trust but has not analyzed expenditure part so as to clearly establish whether expenses were for charitable purpose which ultimately benefits public at large or not. Therefore, in interest of justice, we set aside order of Ld. CIT(Exemption) and restore matter back to his file for analyzing receipts components along with expenditure components of assessee Trust with financial statement and also for verification of Corporate people from whom assessee trust received fund for doing activities as enshrined in their object Clause in Memorandum of Association. Ld. CIT(Exemption) should also look into facts whether activities done by 6 ITA No. 616/PUN/2019 Association of Oral Maxillofacial Surgeons of India assessee trust is in consonance with such object Clause as mentioned in Memorandum of Association. With these directions, matter is remitted back to file of Ld. CIT(Exemption) who shall adjudicate matter after following principles of natural justice. 9. In result, appeal of assessee is allowed for statistical purposes. Order pronounced on 17th day of September, 2019. Sd/- Sd/- D. KARUNAKARA RAO PARTHA SARATHI CHAUDHURY ACCOUNTANT MEMBER JUDICIAL MEMBER Pune; Dated : 17th September, 2019. SB Copy of Order forwarded to : 1. Appellant. 2. Respondent. 3. CIT(Exemption), Pune. 4. DR, ITAT, Bench, Pune. 5. Guard File. True Copy BY ORDER, Private Secretary , ITAT, Pune. 7 ITA No. 616/PUN/2019 Association of Oral Maxillofacial Surgeons of India Date 1 Draft dictated on 12.09.2019 Sr.PS/PS 2 Draft placed before author 12.09.2019 Sr.PS/PS 3 Draft proposed and placed JM/AM before second Member 4 Draft discussed/approved by AM/JM second Member 5 Approved draft comes to Sr.PS/PS Sr. PS/PS 6 Kept for pronouncement on Sr.PS/PS 7 Date of uploading of order Sr.PS/PS 8 File sent to Bench Clerk Sr.PS/PS 9 Date on which file goes to Head Clerk 10 Date on which file goes to A.R 11 Date of dispatch of order Association of Oral Maxillofacial Surgeons of India v. Commissioner of Income-tax (Exemption) Pune
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