9911796707
TMI Blog2014 (1) TMI 1812X X X X Extracts X X X X X X X X Extracts X X X X ..... CIT after 31-03-2007, the assessee society had not made any other application in Form No. 10G save the application on which the present impugned order is passed. The Ld. CIT has noted that the application was not accompanied with the copies of the financial statements for the years ended 31-03-2010 and 31-03-2011 but had attached the financial statements for F.Ys. 2006-07, 2007-08 and 2008-09. The Ld. CIT has observed that the application was not accompanied by any notes on activities carried out during the three preceding years. The Ld. CIT has noted that as per Rule 11AA, furnishing of copies of statements of accounts for the prior years not exceeding a period of three years as well as submission of notes on activities during the preceding three years along with the application in Form No. 10G is a mandatory requirement and assessee had not complied with the said requirement. As noted by the Ld. CIT the application was also not accompanied by a copy of the Memorandum of Association. The assessee was issued the letter for making the compliance for filing the documents and particulars. After examining the documents filed by the assessee, the Ld. CIT has observed as under: 3.2. In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... esaid proviso. iv) It was also seen from the statement of accounts for the year ended 31/3/2011 that the applicant had taken the interests received/accrued on Fixed Deposit with Banks directly to the balance-sheet without routing the said receipts through the Income and Expenditure accounts. In other words, the interest received was not admitted as part of total income. v) It was also noticed from the statements that the applicant had incurred foreign trip expenses in some years. The purpose for which these expenses were incurred was not self-evident from the statements. 3. The assessee's explanation was sought on the above points. The assessee filed the reply which is reproduced in the impugned order in Para No. 4.1, as under: a) The applicant conducts various adventure sports events whereby advertisement and sponsorship money is also raised for the purpose of advancing the objects. The persons making the payments for advertisement/sponsorship do so after deducting tax at source under sec. 194C of the Income tax Act, 1961. As regards deduction of tax under sec. 194J, the corresponding payments were received from M/s Kirloskar Oil Engines Limited, Nashik. However, as could b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l amounts had been received during the F.Ys. 2009-10 and 2010-11 towards Advertisement and sponsorship. Similarly, the applicant received amounts towards fees for professional or technical services. The plea now being raised to the effect that the receipts from M/s M/s Kirloskar Oil Engine Limited, Nashik, were in the nature of donations is without merit. The act of the applicant in acknowledging the receipt as donation would not make it so particularly when the payer had deducted tax at source u/s. 194J of the Act. From the submissions made by the assessee it is also clear that the concerned payers who deducted tax at source had done so as the payments were on account of contract, advertisement and other professional charges. This in itself would demonstrate that the activities of the applicant in respect of which the impugned payments were received amounted to being in the nature of trade or commerce. Further, advertising a sponsor in a sports event tantamounts to rendering services to a trade, commerce or business in as much as the concerned sponsor gets the benefit of advertisement, which in turn promotes its trade, commerce or business. Thus, the applicant's case would c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... We have heard the parties. The Ld. Counsel submits that the assessee has been granted the registration u/s. 12A of the Act which has not been cancelled. The Ld. Counsel relied on the decision of the Hon'ble High Court of Punjab and Haryana in the case of Sonepat Hindu Educational & Charitable Society Vs. CIT & Anr. 278 ITR 262. He submits that so far as the nature of the activities of the assessee are concerned, the assessee cannot be refused the approval u/s. 80G as admittedly in the preceding years on the same activities and objects, the assessee has been granted approval u/s. 80G and the registration u/s. 12A is still valid. In the case of Sonepat Hindu Educational & Charitable Society (supra) the Hon'ble High Court has explained the power and scope of enquiry of the Ld. CIT while considering the application filed by the assessee u/s. 80G(5) and it is held as under: "15. We may now examine the case in hand on the touchstone of the aforenoted broad principles. In the instant case, the Commissioner has not found that the objects of the petitioner-society, established in India, as set out in its memorandum of association, are not for a charitable purpose or that the socie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s of sections 11 and 12 of the Act, a bare perusal of the said provisions would show that there are various factors, like the nature of contributions ; the quantum of income set apart and accumulated for application in future for specified purposes which would require consideration to determine whether the income derived by such trust or society would be liable to be included in the total income. It will thus be not possible, to determine on the date when a donation is made for deduction under section 80G, as to what will be the position as on the end of the relevant previous year of the society or the trust, who had sought approval under section 80G of the Act. We have no hesitation in holding that the scope of enquiry by the Commissioner, while dealing with the application under section 80G(5)(vi) of the Act, extends to eligibility to exemption under various provisions of the Act, referred to in that sub-section, but not to actual computation of income under the Act, particularly when a society or a trust is claiming exemptions under sections 11 and 12 and not under section 10 of the Act. It needs little emphasis that the enquiry for the said purpose relates to whether the applic ..... X X X X Extracts X X X X X X X X Extracts X X X X
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