Ita/31/2009 Of Norka Roots,Centre Plaza,Trivandrum-14 v. Commissioner Of Income Tax,Trivandrum

IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE C.N.RAMACHANDRAN NAIR & THE HONOURABLE MR. JUSTICE K.SURENDRA MOHAN THURSDAY, THE 19TH MARCH 2009 / 28TH PHALGUNA 1930 ITA.No. 31 of 2009() -------------------- ITA.253/COCH/2007 of I.T.A.TRIBUNAL,COCHIN BENCH .................... APPELLANT: -------------------- NORKA ROOTS, CENTRE PLAZA, VAZHUTHACAUD, TRIVANDRUM-14. BY ADV. SRI.P.BALAKRISHNAN (E) SRI.MOHAN PULIKKAL SRI.K.C.KIRAN RESPONDENT(S): --------------- THE COMMISSIONER OF INCOME-TAX, TRIVANDRUM. BY SC SRI. JOSE JOSEPH THIS INCOME TAX APPEAL HAVING COME UP FOR ADMISSION ON 19/03/2009, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: C .N. RAMACHANDRAN NAIR &K. SURENDRA MOHAN, JJ. --------------------------------------------I.T. A. No. 31 OF 2009 -------------------------------------------- Dated this the 19th day of March, 2009 JUDGMENT Ramachandran Nair,J. Appellant is a Government of Kerala promoted companyregistered under Section 25 of the Companies Act for taking care of theinterest of the non-Resident Keralites. Registration of the company asa charitable institution was applied for under Section 12AA on12.4.2004. On rejection of the application on 7.3.2005, appeal wasfiled before the Tribunal and the Tribunal set aside the order andremanded the matter back to the Commissioner on 5.5.2006. However,fresh order was issued by the Commissioner on 6.2.2007 which wasagain appealed against before the Tribunal. The assessee contendedthat the order passed by the Commissioner is beyond the period oflimitation, and so much so, they are entitled to be treated as registeredunder Section 12AA(2) of the Act. The Tribunal however held thatlimitation is saved by operation of Section 153(2A) of the Act and somuch so the assessee's claim for deemed grant of registration is not tenable. On merits, Tribunal decided the appellant's eligibility. It isagainst this order that the assessee has approached this Court with thisappeal. 2. We have heard counsel for the appellant and standing counselappearing for the Income tax Department. 3. On going through the orders of the Tribunal and that of theCommissioner of Income tax, we do not think any of these authoritieshas considered the matter properly. The only question to be consideredis whether the appellant is an institution formed for advancement ofany object of general public utility, which is included in the definitionof "charitable purpose" under Section 2(15) of the Act. Prima facie weare satisfied that the organisation is promoted for advancement ofobject of general public utility because it is formed to promote theinterests of the non-resident Keralites. According to the statisticsfurnished by counsel for the appellant around 9% of the adult Keraliteswork abroad and an average of four persons in Kerala for every non-resident Keralite are the beneficiaries of his/her employment abroad.We do not think we should consider meticulously the correctness of thestatistics furnished. However, it is a well known fact that lakhs ofKeralites are employed abroad particularly in the middle-east and many so employed are not well educated and they certainly need assistance ofvarious types from government agencies. Further, majority of thepeople employed are in the middle-east countries which do not promotesettlement or acquisition of citizenship there. Therefore aGovernmental agency promoted by the Government to protect theinterests of non-resident Keralites who are out of Kerala and India iscertainly a object of general public utility. The findings of theauthorities below to the contrary are set aside. However, we find thatbefore deciding the entitlement for registration as charitable institution,the Commissioner should verify the source of fund and utilisation ofthe same. Even though this is an exercise to be done every year in thecourse of assessment, after granting registration, we feel the object ofthe institution should be ascertained with reference to source of fundand the application of the same. If under cover of promoting interestsof non-resident Keralites, appellant is engaged in collection of chargesfrom them and making profit, then certainly it is a profitableorganisation no matter no dividend is declared by virtue of registrationgranted under Section 25 of the Companies Act. If funds are expendedfor unnecessary travel and extravaganza then the same will reflectupon the true purpose of the organisation. The question of limitation raised by the appellant is neither tenable nor would advance the case ofthe appellant because in the first round, the Tribunal did not accept thelimitation, but set aside the order and remanded the matter for freshconsideration. Secondly by getting declaration that the matter is timebarred, appellant will not registration more so because appellant'sapplication is not an application for renewal and an application forfresh registration. We therefore reject this contention also. Since theseare matters not considered by the Commissioner or the Tribunal, andsince after registration appellant was engaged in six years of operation,we dispose of the appeal by setting aside the orders of the Tribunal andthat of the Commissioner and by restoring the matter to theCommissioner for fresh decision, but Commissioner is directed toconsider original application after calling for particulars, particularlystatement of accounts, as stated above. (C.N.RAMACHANDRAN NAIR)Judge. (K. SURENDRA MOHAN) Judge.