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2016 (8) TMI 260 - ITAT HYDERABAD

2016 (8) TMI 260 - ITAT HYDERABAD - TMI - Registration under S.12AA - dissolution clause - incidental objects - Held that:- A bare reading of the order of the CIT(Exemption) would show that the objections of the CIT(Exemption) to the applications of the assessee for registration under S.12AA and approval under S.80G are two fold. Firstly, as per the dissolution clause specified in the Memorandum of Association, extracted above, there is no intention on the part of the assessee to transfer the as .....

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as provided for attainment of main objects in the Memorandum of Association. As per CIT(Exemption), the incidental objects indicate the intention of the assessee to pursue its activities outside India. This objection of the Commissioner for denial of registration is also without any force. We notice from the relevant incidental clause relied upon by the Revenue that such clause primarily enables the assessee to raise funds to attain the main objects of the company. It does not give any impressio .....

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KUMAR KEDIA, ACCOUNTANT MEMBER For The Appellant : Shri Ajay Gandhi For The Respondent : Shri J.Siri Kumar ORDER Per Pradip Kumar Kedia, Accountant Member : This appeal is filed against the order of the Commissioner of Income-tax (Exemption), Hyderabad dated 22.9.2015, refusing registration under S.12AA and grant of approval under S.80G of the Income Tax Act,1961 sought by the assessee. 2. Facts in brief are that the assessee company was incorporated on 10.2.2015 under S.7 of the Companies Act, .....

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lso simultaneously denied the approval sought under S.80G(5) of the Act on the ground that dissolution clause as specified in the Memorandum of Association (MOA) indicates that there is no intention on the part of the assessee to transfer the assets to another institution registered under S.12AA of the Act. The Commissioner of Income-tax(Exemption) also observed that objects incidental to the attainment of the main objective also indicate the intention of the assessee company to carry out its ob .....

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uesting the applicant to produce its original memorandum of Association (MoA) for verification and to furnish. detailed reply on specific points. In response to the same, Sri M. S. Dayakar, CA & A.R of the company appeared and filed information. 2. Vide query No.11 of this office notice dt.23-06-201S, it was asked to provide details of amendment clause, dissolution clause of the MoA along with a detailed note thereon. As seen from the MoA, the dissolution clause is mentioned as under:- " .....

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and in default thereof by the High Court of Judicature that has or may acquire jurisdiction in the matter" 2.1 A perusal of the said clause indicates that there is no intention on the part of the society to transfer the assets to another society, which is also having registration u/s.12AA of the I.T. Act. 3. Further, as seen from the objectives incidental or ancillary to the attainment of the main objects of MoA, the objective clause (6) is mentioned as under: 6. To assist any viable enterp .....

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pplication in Form NO.10G filed by the assessee company, seeking approval u/s 8OG(5) of the Act is also rejected. 5. Aggrieved by the above order of the Commissioner of Income-tax(Exemption), assessee is in appeal before the Tribunal. 6. The learned Authorised Representative for the assessee, Shri Ajay Gandhi submitted that the Commissioner of Incometax( Exemption) refused registration under S.12AA and denied approval under S.80G on two grounds. He submitted that the first objection of the Commi .....

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Income-tax(Exemption) founded on the incidental objects , which according to the Commissioner revealed the assessee s intention to carry out its activities outside India, the learned Authorised Representative asserted that this objection is also not sustainable in view of the decision of the Mumbai Bench of the Tribunal in the case of Critical Art and Media Practices V/s. Commissioner of Income-tax (Exemption), Mumbai (2015) 153 ITD 644 (Mum) and Hyderabad Bench of the Tribunal in International .....

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r S.12AA and approval under S.80G are two fold. Firstly, as per the dissolution clause specified in the Memorandum of Association, extracted above, there is no intention on the part of the assessee to transfer the assets to any other similar institution having registration under S.12AA of the Act. We find no rationale in this objection of the Commissioner. Relevant dissolution clause clearly specifies that surplus arising on dissolution, after satisfaction of its debts and liabilities shall be t .....

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sessee under S.12AA of the Act taking shelter of such objection. Relevant observations of the Tribunal in this case are as follows- 9. Having heard both the sides, I have carefully gone through the orders of the authorities below. In clause X of Memorandum of Association on page 5 and clause 52 of Articles of Association on page 10, it is clearly mentioned the conditions of windingup/ dissolution, which is reproduced hereunder:- If upon winding up or dissolution of the company there remains, aft .....

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on are contained in clause A(1) of the Memorandum of Association, wherein it is clearly mentioned that no objects of the company shall be carried out on commercial basis . In clause X of Memorandum of Association, it is clearly mentioned that upon a winding up or dissolution of the company there remains, after the satisfaction of all the debts and liabilities, any property whatsoever the same shall not be distributed amongst the members of the company but shall be given or transferred to such ot .....

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tration sought by the assessee u/s 12AA of the Income-tax Act, 1961. I, therefore, set aside the impugned order of ld Commissioner of Income-tax, Jamnagar and direct him to read the clause X of Memorandum of Association on page 5 and clause 52 of Articles of Association on page 10, wherein it is clearly stated that if upon winding up or dissolution of the company there remains, after satisfaction of all the debts and liabilities any property whatsoever the same shall not be distributed amongst t .....

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essee-trust u/s 12AA of the Income-tax Act, 1961. The assessee is an Educational and Charitable Trust and issuance of registration u/s 12AA is a primary condition for the start of the charitable activity of the trust, therefore its case has to be decided on priority basis. I, therefore, direct the assessee-trust to suo motu appear before the ld Commissioner of Incometax, Jamnagar within 15 days on receipt of this order of the Tribunal without waiting for any notice from the Revenue Department an .....

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main objects in the Memorandum of Association. As per CIT(Exemption), the incidental objects indicate the intention of the assessee to pursue its activities outside India. This objection of the Commissioner for denial of registration is also without any force. We notice from the relevant incidental clause relied upon by the Revenue that such clause primarily enables the assessee to raise funds to attain the main objects of the company. It does not give any impression that the assessee shall carr .....

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Keeping in view of the above submissions, in our view, the second ground on which the registration is rejected needs to be relooked by the Ld. DIT(E). In view of our above observations, we hold that if the activities otherwise are charitable and fall in the definition of charitable purposes as defined under section 2(15) of the Act and further the property is held wholly and exclusively under trust for charitable and religious purposes as provided under section 11 of the Act, then such a trust s .....

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