Indian Ice Cream Manufacturers ... vs Assessee

ी एन0एस0 सैनी, लेखा सद य एवं ी कुल भारत, या%यक सद य के सम& BEFORE SHRI N.S. SAINI, ACCOUNTANT MEMBER AND SHRI KUL BHARAT, JUDICIAL MEMBER आयकर अपील सं./ ITA No.2279/Ahd/2014 %नधा)रण वष)/Assessment Year: 2012-13

Indian Ice Cream Manufacturers' Director of Income Tax Association Vs (Exemption) A/801, 8th Floor, "Time Square" Ahmedabad. Building, Nr. Lal Bungalow Char Rasta, Navrangpura Ahmedabad 380 009.

PAN: AACCI 5818 F

अपीलाथ,/ (Appellant) -.यथ,/ (Respondent)

Assessee(s) by : Ms.Urvashi Shodhan Revenue by : Shri T.P. Krishna Kumar, Sr.DR

सन ु वाई क तार ख/ Dateof Hearing : 16/04/2015 घोषणा क तार ख / Date of Pronouncement: 29/04/2015

आदे श/O R D E R

PER N.S. SAINI, ACCOUNTANT MEMBER: This is an appeal filed by

the assessee against the order of the Director of Income Tax (Exemptions), Ahmedabad dated 24.6.2014.

2. Sole grievance of the assessee projected in the grounds of appeal taken before us is that the DIT(Exemption) erred in not allowing registration under section 12AA of the Act on invalid ground that the assessee is not carrying on genuine activity of charitable nature and assessee's activity will be benefited to members and not public at large.

ITA No.2279/Ahd/2014 2 3. Brief facts of the case are that the assessee filed application for registration under section 12AA of the Act on 5.1.2003 in form No.10A under Rule 11AA of the Act. The application was accompanied by copy of the certificate of registration of Asstt. Charity Commissioner and copy of objects of the Trust.

4. The Director of Income Tax (Exemptions) observed that it is noted that the main objects of the assessee-trust was to encourage, protect and promote interest of manufactures of ice-cream and frozen dessert, to promote expansion of market for ice-cream and frozen dessert and to promote and improve and quality and variety of ice-cream and frozen desert and to take all such steps as may be considered expedient for that purpose including provision of legal, technical and other professional advice and assistance. He observed that from a reading of the above objects shows that the assessee is not carrying on genuine activity of charitable nature, since the assessee is an association allowing benefit only to the manufacturers of ice cream and not the general public. If the assessee was allowed registration, u/s.12A it will be able to obtain donations from public, the same would be utilized only for the benefit of its member of the Association. The income of the Association would be tax free even though the benefit was not given to public at large and the activities were also not of general public utility. He observed that at best, it was only a mutual society, as decided in the case of Mahavrao Scindia Enclave Resident Welfare Society, 52 SOT 125, and therefore, the registration under section 12AA cannot be allowed to a mutual benefit society.

5. The AR of the assessee relied upon the decision of the Hon'ble Gujarat High Court in the case of Gujarat State Plastic Manufacturers Association Vs. CIT, 150 CTR 97 (Guj) and submitted that the case of the assessee is exactly similar to the case of Gujarat State Plastic Manufactures Association, and the Hon'ble Gujarat High Court in that ITA No.2279/Ahd/2014 3

case held that the application for registration made by the petitioner assessee was allowable, and that the rejection of the same was not on valid ground. He, therefore, submitted that following the decision of the Hon'ble Gujarat High Court, the Tribunal should allow the appeal of the assessee.

6. On the other hand, the DR vehemently argued and supported the order of the DIT(Exemptions).

7. We have heard the rival submissions and perused the orders of the lower authorities and materials available on record. We find that similar issue came up before the Hon'ble Gujarat High Court in the case of Gujarat State Plastic Manufacturers' Association (supra), wherein the assessee was denied registration under section 12A of the Act on the ground that the objects of the association were aimed at benefiting the traders engaged in a particular trade, namely, manufacturers of plastic goods. We find that the Hon'ble Gujarat High Court in the case of Gujarat State Plastic Manufacturers Association (supra) has relied on the decision of the Hon'ble Supreme Court in the case of Additional CiT Vs. Surat Art Silk Cloth Manufacturers Association, 121 ITR 1 (SC) wherein it was held that if dominant or primary purpose of the assessee was to promote commerce and trade in art silk, yarn, raw silk, cotton yarn, art silk cloth, silk cloth and cotton cloth as set out in various clauses of the objects of the Association, it could not be said that it was not for charitable purpose. It was further observed that even if some activities have been undertaken in the course of carrying out primary purpose of trust or institution, it would not cease to be a trust or institution for charitable purposes. It was, therefore, held that predominant object of the activity of the association was promotion of commerce and trade in a particular industry which was clearly an object of general public utility. Hon'ble High Court further observed that the same principle were reiterated by the Hon'ble Supreme Court in the ITA No.2279/Ahd/2014 4

case of CIT Vs. Bar Counsel of Maharashtra, 130 ITR 28 (SC), and in that case also, primary and dominant purpose was advancement of a particular profession, namely, legal profession. Inspite of that it was held by the Apex Court that the object was of general public utility. In the opinion of the Court, having regard to the obligatory functions enjoined on the State Bar Counsel under the Advocate Act, 1961 the Bar Council could be regarded as a body intended to advance the object of general public utility. The Hon'ble Gujarat High Court thereafter went on to observe that the Rule 3 states that the Gujarat State Plastic Manufacturers' association was established with a view to protect general interest of plastic manufacturers and to encourage allied interest and form cooperation amongst them; to resolve any dispute between the members of the association and other persons; to do all such work directly or indirectly for fulfilling the above objection of the association. It was also stated that the association will not do any act for its profit, will fulfill the objects of the association and that its funds, reserve fund etc. will be used for the general and extraordinary object of the association. The High Court observed that in the context of the objects specified in the constitution and in the light of the law laid down by the Hon'ble Supreme Court in the above two cases, we have no hesitation in holding that the respondent has committed an error in law in rejecting the application for registration under section 12A of the Act.

8. We find that in the present case also, as noted by the Director of Income Tax (Exemptions), Ahmedabad, the object of the assessee was to encourage, protect, promote interest of manufacturers of the ice- cream and frozen dessert and to promote expansion of market for ice- cream and frozen dessert and to promote and improve quality and variety of ice-cream and frozen dessert and to take all such steps as may be considered expedient for that purpose including provision of legal, technical and other professional advice and assistance. Thus, the object of the assessee was of general public utility and hence charitable ITA No.2279/Ahd/2014 5

in nature. Therefore, the following the decision of the Hon'ble Gujarat High Court in the case of Gujarat State Plastic Manufacturers' Association (supra), we set aside the order of the Director of Income- tax (Exemptions), Ahmedabad and direct him to grant registration to the assessee under section 12AA of the Act. Thus, this ground of the appeal of the assessee is allowed.

9. Before parting with the order, we would like to state that the decision which has been followed by the DIT(Exemption) in his order is of Agra Bench of the Tribunal. As we are following the decision of the Hon'ble jurisdictional High Court, which was rendered after following the decision of the Hon'ble Supreme Court, in our considered view, we are not required to deal with the said decision of the Agra Bench of the Tribunal.

10. In the result, the appeal of the assessee is allowed.

Order pronounced in the Court on Wednesday the 29th April, 2015 at Ahmedabad.

Sd/ Sd/- (KUL BHARAT) ( N.S. SAINI) JUDICIAL MEMBER ACCOUNTANT MEMBER