TMI Blog2007 (10) TMI 431X X X X Extracts X X X X X X X X Extracts X X X X ..... ural functions, games and sports, melas, lectures, exhibition, festivals and film shows for the benefit of the general public. ( iv )To organize camps for the relief of the poor and to extend assistance for national and public causes. ( v )To open dispensaries to provide medical relief to the needy public. ( vi )To promote the development and achievement of civil amenities and welfare of the residents of the locality. ( vii )To carry on such other activities as may ensure benefits of the residents of Greater Kailash-II and citizens of Delhi. ( viii )To carry out such other activities as the General Body of the Association may decide to undertake for the welfare of the residents but such activities shall be non-political and non-commercial. 3. The appellant Association claimed to be a charitable institution and applied to the Commissioner of Income-tax ( CIT ) for registration under section 12A of the Income-tax Act, 1961. The CIT, vide order dated 20-6-2006, denied the registration by observing as under : "...The society is engaged in the welfare of the residents of its colony i.e ., benefits are being derived by an identifiable group of persons. It appears to be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... are not members of association. As against the aforesaid, the case of the learned DR is that benefiting about 15,000 persons cannot be said to be an object of general public utility. We are of the view that Ahmedabad Rana Caste Association s case ( supra ) benefited not only the local Rana caste persons but also other persons who entered Ahmedabad from outside and who wanted enter the caste in order to become the beneficiaries of the association as per their customs and usages. Thus, that association catered to the benefit of fairly large number of persons in Ahmedabad and outside Ahmedabad. As against the aforesaid, the main purpose of clauses ( i ), ( vi ) and ( viii ) is to benefit a limited number of persons residing in Greater Kailash-II. Those persons are identifiable and they do not have impersonal nature. Thus, the words residents of Greater Kailash-II does not specify the test of public at large in any impersonal manner. Therefore, all the objects of the association do not constitute the objects of general public utility. The executive committee can apply any part of income or the whole income to any object. The income can be applied wholly to any of the aforesaid th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s of the association was called on 2-7-2006, in which the following amendment was adopted: "All the income, earnings, movable and immovable properties of the Society, shall be solely utilized and applied towards the promotion of its aims and objects only set forth in the Memorandum of Association and no profit thereof shall be paid or transferred directly or indirectly by way of dividends, bonus, profits or in any manner, whatsoever, to the present or past members of the Society or to any person claiming through any or more of the present or past members. No member of the Society shall have any personal claim on any movable or immovable properties of the Society or make any profit, whatsoever, by virtue of his membership." 10. This amendment was forwarded to the Registrar of the Societies on 8-7-2006, for taking it on record and to be returned as duly registered to the association at an early date. On the basis of these facts the Association submitted that the objects of the association were not only for the residents of Greater Kailash-II but also extends to citizens of Delhi in general, or so to say the public in general. Therefore, it can be said that there was an identifi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... learned counsel in reply pointed out that the association had carried out the horticulture activities and maintenance of parks which were for general public. Medical camps were also held for public at large. Diwali Milan and other programmes were held where public was free to attend. Therefore, it was argued that the objects of the association are of general public utility and it was constituted charitable purposes. 13. Parties are heard and rival submissions considered. Both the members agreed about the settled legal position that an object of public utility need not be an object in which the whole of public is interested. It is sufficient if a well-defined section of the public benefits by the objects. Therefore, an object beneficial to a section of the public would be an object of general public utility. The focus is upon the common quality which unites those within the class concerned and asks whether that quality is essentially impersonal or essentially personal. If, the former, the class will rank as a section of public but if later, it will be private. This is what the Supreme Court had observed in the decision of Ahmedabad Rana Caste Association s case ( supra ). ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eneficial to a section of the public is an object of general public utility. To serve a charitable purpose, it is not necessary that the object should be to benefit the whole of mankind or all persons in a particular country or State. It is sufficient if the intention to benefit a section of the public as distinguished from a specified individual is present. Supreme Court found itself unable to comprehend how such members of the Rana caste can be regarded as having been introduced into that caste by consideration of their personal status as individual. As a matter of fact the predominant content and requirement of the clause defining beneficiaries in the constitution of the assessee is the factum of their belonging to the Rana community of Ahmedabad. The common quality, therefore, unity the potential beneficiaries into the class consists of being members of the Rana caste or community of Ahmedabad whether as natives or as being admitted to that caste or community under custom or usage. The mere fact that a person of the Rana community who is not an original native of Ahmedabad has to prove his credentials according to the custom and usage of that community to get admitted into th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and celebrate events in the community is not a charitable purpose within the meaning of the expression used in the Income-tax Act ; that Doing acts and deeds and things for the welfare of a specified community is not necessarily charitable ; that Where a society is registered under the Societies Registration Act, 1860 with many objects, no one object can be considered to be primary object, and the others subsidiary. Such a society may, under section 20 of that Act, have objects which may not be charitable ; and that Where some of the objects of a society registered under the Societies Registration Act are not charitable and it is open to the society or its executive committee to spend its income on any of the objects, not necessarily on those which are charitable objects, the income derived by that society cannot be exempt under the provisions of section 4(3)( i ) of the Income-tax Act, 1922 . 19. This case was prior to the decision of the Supreme Court in Ahmedabad Rana Caste Association s case ( supra ) it is clearly held that an object beneficial to a section of the public is an object of general public utility and to serve a charitable purpose, it is not necessary tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lication of income. All that he may examine is whether the application is made in accordance with the requirements of section 12A read with rule 17A of the Income-tax Rules, 1962, and whether Form No. 10A has been properly filled up. He may also see whether the objects of the trust are charitable or not. Merely, because the objects of a charitable trust are general, they do not cease to be charitable. It is also not for the requirement of section 12A that any activity should be carried on by the charitable society for obtaining registration. 22. Madras High Court in the case of New Life Christ Evangelistic Association ( supra ) observed that a perusal of the provisions of section 12A of the Income-tax Act, 1961 would show that unless a society or trust, as the case may be, is registered under section 12A of the Act, it would not be entitled to claim the benefits under sections 11 and 12 of the Act. The caption of the section says "conditions as to the registration of the trust". The two conditions which are provided are, firstly, that the person concerned should have made an application for registration in the prescribed form and in the prescribed manner to the authorities na ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t three years, the Association has carried out the following activities : -Free health camps on 19-6-2005 and 24th and 25th September, 2005 in association with Rockland Hospital and Centre for Sight respectively for the benefit of citizens. - Free general OPD for 2 hours daily with SAI Health Clinic, E-281, GK II; -Arranged lectures on health topics like Better health through vegetarian life style management , Taking care of your ears and hearing etc. -Got five rain-water harvesting projects at different locations sanctioned from the Central Ground Water Authority. Out of these, two projects have already been completed. These were inaugurated on 23-1-2005 and 11-9-2005. With the availability of funds, we hope to complete the remaining three projects by March, 2007. -Organised Diwali Utsav every year a few days before Diwali. -Celebrated festivals like Holi, Lorhi, etc. regularly. - Undertook tree plantation programmes from time to time to improve greenery and ecology in the area. -Collected Rs. 1.54 lakhs in January 2005 for the Prime Minister s National Relief Fund for help of the Tsunami-affected population. -Formed a panel of plumbers and electricians and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... residents of Greater Kailash-II in particular and citizens of Delhi in general. Extends the benefits to citizen of Delhi in general and do not restrict it to residents if Greater Kailash-II alone. Clause ( ii ) is to foster and promote unity and co-operation among the Welfare Association of Delhi and organize activities beneficial to the public in general. Clause ( iii ) is to arrange scientific, literary and cultural functions, games and sports, melas, lectures, exhibition, festivals and film shows for the benefit of the general public. Clause ( iv ) is to organize camps for the relief of the poor and to extend assistance for national and public causes. Clause ( v ) To open dispensaries to provide medical relief to the needy public. Clause ( vi ) To promote the development and achievement of civil amenities and welfare of the residents of the locality. It is extended to locality and not restricted to Greater Kailash-II. Clause ( vii ) is to carry on such other activities as may ensure benefits of the residents of Greater Kailash-II and citizens of Delhi. Clause ( viii ) is to carry out such other activities as the General Body of the Association may decide to undertake for the we ..... X X X X Extracts X X X X X X X X Extracts X X X X
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