Commissioner Of Income-Tax, Panchkula v. M/S Haryana Building & Other Construction Works Welfare Board

ITA No. 249 of 2010 IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH ITA No. 249 of 2010 Date of Decision: 30.8.2010 Commissioner of Income-tax, Panchkula ....Appellant. Versus M/s Haryana Building & Other Construction Works Welfare Board ...Respondent. CORAM:-HON'BLE MR. JUSTICE ADARSH KUMAR GOEL.HON'BLE MR. JUSTICE AJAY KUMAR MITTAL. PRESENT: Mr. Yogesh Putney, Advocate for the appellant. ADARSH KUMAR GOEL, J. 1.This appeal has been preferred by the revenue underSection 260A of the Income Tax Act, 1961 (in short “the Act”) againstthe order dated 23.9.2009 of the Income Tax Appellate Tribunal,Chandigarh Bench 'B' (hereinafter referred to as “the Tribunal”) passedin ITA No. 907/Chd/2008, proposing to raise following substantialquestion of law:- “Whether on the facts and circumstances of the casethe ITAT was justified in directing the Commissionerof Income tax to grant registration to the assesseedespite the fact that there is no application of fundstowards charitable purpose by the assessee?” The assessee has been created under the Building & Other Construction Works (Regulation of Employment & Condition of Service)Act, 1996. It applied under Section 12AA for registration as CharitableInstitution to the Commissioner of Income Tax. The Commissionerrejected the application on the ground that the assessee did not receiveany voluntary contribution but only received statutory cess and it did notcarry on charitable activities during the year. On appeal, the Tribunalreversed the view taken by the Commissioner relying upon orderpassed by the Director of Income-tax (Exemption), Bangalore in thecase of Karnataka Board, carrying on identical activities and furtherholding that activities of the assessee were covered under Section 2(15) of the Act. The finding recorded by the Tribunal is as under:- “The Board was constituted under section 18 of thebuilding and other construction workers (Regulationof Employment & conditions of service) Act, 1996.The source of receipt of the assessee are receiptsfrom the cess imposed on the cost of constructionprojects and paid by the executive agency of theproject and also contribution from building workers.For regulating the working of the Board, theGovernment of Haryana framed rules. The Board isresponsible for: a)All matters connected with the administration ofthe Fund; b)Laying down policies for the deposits of theamount of the Fund. c)Submission of annual budget to State Govt. of Haryana. d)Submission of annual report to State Govt. onthe activities of the Board.the activities of the Board. e)Proper maintenance of accounts. f)Annual audit of accounts of the Board Govt. inaccordance with the provisions of the Act.accordance with the provisions of the Act. g)Collection of contribution of the Fund and othercharges.charges. h)Launching of prosecutions for and on behalf ofthe Board.the Board. i)Speedy settlement of claim and sanction ofadvances and other benefits.advances and other benefits. j)Proper and timely recovery of any amount dueto the Board.to the Board. The objects and the purposes for which the Boardwas constituted are broadly mentioned hereunder:-was constituted are broadly mentioned hereunder:- i)To regulate the employment conditions ofservice.service. ii)To prove safely, healthy and welfare measureto the “building and other constructions works”,which is most numerous and vulnerablesegment of the second largest unorganizedlabour sector in India after agriculture.to the “building and other constructions works”,which is most numerous and vulnerablesegment of the second largest unorganizedlabour sector in India after agriculture. If the aforesaid activities/objects are analysed, onefact is clearly oozing out that the objectives/activitiesfact is clearly oozing out that the objectives/activities The objects and the purposes for which the Boardwas constituted are broadly mentioned hereunder:-was constituted are broadly mentioned hereunder:- i)To regulate the employment conditions ofservice.service. ii)To prove safely, healthy and welfare measureto the “building and other constructions works”,which is most numerous and vulnerablesegment of the second largest unorganizedlabour sector in India after agriculture.to the “building and other constructions works”,which is most numerous and vulnerablesegment of the second largest unorganizedlabour sector in India after agriculture. If the aforesaid activities/objects are analysed, onefact is clearly oozing out that the objectives/activitiesfact is clearly oozing out that the objectives/activities of the assessee are of general public utility,therefore, it can safely be said that these falls underthe definition of 'charitable purposes' as definedunder section 2 (15) of the Act. The department onidentical situation granted registration to Building andOther Constructions Welfare Board, Karnataka videorder dated 30.9.2008 (copy available on record)granting registration under section 12AA of the Actfortifies the claim of assessee. The ChandigarhBench of the Tribunal in the case of Command AreaDevelopment Authority Vs. CIT, Panchkula (ITA No.282/Chd/2009), on the powers of the learnedCommissioner, granted registration to the assessee.” 3.We have heard learned counsel for the revenue. 4.It is submitted that the Board had not incurred anyexpenditure in the year under consideration and did not have anyincome from voluntary contributions. Reliance has been placed on thejudgment of Kerala High Court in Self Employers Service Society v. Commissioner of Income-Tax, [2001] 247 ITR 18 to submit that insuch a case, registration under Section 12AA was not justified. 5.We are unable to accept the submission. Requirements forregistration are laid down under Section 12AA(1)(b), i.e. satisfaction asto objects of the trust or the institution and genuineness of its activities.The Commissioner has not given any valid reason for not beingsatisfied about the objects of the trust and genuineness of its activities.It only stated that the assessee was not receiving voluntary contributions and had not done any charitable activity during the year.The Tribunal has given valid reasons for holding that the objects andactivities of the assessee to be genuine. The assessee was a statutorybody constituted for advancing welfare of workers employed inconstruction activity which is an object of general public utility underSection 2 (15) of the Act. Having regard to nature of statutoryconstitution of the assessee and its objects, activities of the assesseeare continuing in nature. This finding is not shown in any manner to beerroneous. As regards the judgment of Kerala High Court in Self Employers Service Society's case (supra), the same isdistinguishable. Therein it was held that since no charitable work wasdone by the society in question, its genuineness was not established.In the present case, the assessee is not a private society as in the caseconsidered by the Kerala High Court. The assessee is a statutory bodyand functioning under the statutory provisions. Judgment of the Hon'bleSupreme Court in Commissioner of Income-Tax v. Gujarat MaritimeBoard, [2007] 295 ITR 561 supports the case of the assessee for beingcovered by Section 2(15). Relevant observations are: “We have perused a number of decisions of this courtwhich have interpreted the words, in section 2(15),namely, “any other object of general public utility”.From the said decisions it emerges that the saidexpression is of the widest connotation. The word“general” in the said expression means pertaining toa whole class. Therefore, advancement of any objectof benefit to the public or a section of the public as “We have perused a number of decisions of this courtwhich have interpreted the words, in section 2(15),namely, “any other object of general public utility”.From the said decisions it emerges that the saidexpression is of the widest connotation. The word“general” in the said expression means pertaining toa whole class. Therefore, advancement of any objectof benefit to the public or a section of the public as distinguished from benefit to an individual or a groupof individuals would be a charitable purpose (CIT v.Ahmedabad Rana Caste Association [1983] 140 ITR1 (SC). The said expression would prima facieinclude all objects which promote the welfare of thegeneral public. It cannot be said that a purposewould cease to be charitable even if public welfare isintended to be served. If the primary purpose andthe predominant object are to promote the welfare ofthe general public the purpose would be charitablepurpose. When an object is to promote or protect theinterest of a particular trade or industry that objectbecomes an object of public utility, but not so, if itseeks to promote the interest of those who conductthe said trade or industry (CIT v. Andhra Chamber ofCommerce [1965] 55 ITR 722 (SC). If the primary orpredominant object of an institution is charitable, anyother object which might not be charitable but whichis ancillary or incidental to the dominant purpose,would not prevent the institution from being a validcharity (Addl. CIT v. Surat Art Silk ClothManufacturers Association [1980] 121 ITR 1 (SC).” 6.In view of finding of the Tribunal that the assessee was agenuine Charitable Institution, direction of the Tribunal for grant ofregistration is fully justified. No substantial question of law arises. ITA No. 249 of 2010 7.The appeal is dismissed. -7- (ADARSH KUMAR GOEL) JUDGE August 30, 2010gbs (AJAY KUMAR MITTAL)JUDGE