NORKA ROOTS Vs. COMMISSIONER OF INCOME-TAX

JUDGEMENT

(1.) Appellant is a Government of Kerala promoted company registered under Section 25 of the Companies Act for taking care of the interest of the non-Resident Keralites. Registration of the company as a charitable institution was applied for under Section 12AA on 12-4-2004. On rejection of the application on 7-3-2005, appeal was filed before the Tribunal and the Tribunal set aside the order and remanded the matter back to the Commissioner on 5-5-2006. However, fresh order was issued by the Commissioner on 6-2-2007 which was again appealed against before the Tribunal. The assessee contended that the order passed by the Commissioner is beyond the period of limitation, and so much so, they are entitled to be treated as registered under Section 12AA(2) of the Act. The Tribunal however held that limitation is saved by operation of Section 153(2A) of the Act and so much so the assessee's claim for deemed grant of registration is not tenable. On merits. Tribunal decided the appellant's eligibility. It is against this order that the assessee has approached this Court with this appeal.

(2.) We have heard Counsel for the appellant and standing Counsel appearing for the Income-tax Department.

(3.) On going through the orders of the Tribunal and that of the Commissioner of Income-tax, we do not think any of these authorities has considered the matter properly. The only question to be considered is whether the appellant is an institution formed for advancement of any object of general public utility, which is included in the definition of "charitable purpose" under Section 2(15) of the Act. Prima facie we are satisfied that the organisation is promoted for advancement of object of general public utility because it is formed to promote the interests of the non-resident Keralites. According to the statistics furnished by Counsel for the appellant around 9 per cent of the adult Keralites work 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 the statistics furnished. However, it is a well known fact that lakhs of Keralites are employed abroad particularly in the middle-east and many so employed are not well educated and they certainly need assistance of various types from Government agencies. Further, majority of the people employed are in the middle-east countries which do not promote settlement or acquisition of citizenship there. Therefore, a Governmental agency promoted by the Government to protect the interests of non-resident Keralites who are out of Kerala and India is certainly an object of general public utility. The findings of the authorities below to the contrary are set aside. However, we find that before deciding the entitlement for registration as charitable institution, the Commissioner should verify the source of fund and utilisation of the same. Even though this is an exercise to be done every year in the course of assessment, after granting registration, we feel the object of the institution should be ascertained with reference to source of fund and the application of the same. If under cover of promoting interests of non-resident Keralites, appellant is engaged in collection of charges from them and making profit, then certainly it is a profitable organisation no matter no dividend is declared by virtue of registration granted under Section 25 of the Companies Act. If funds are expended for unnecessary travel and extravaganza then the same will reflect upon the true purpose of the organisation. The question of limitation raised by the appellant is neither tenable nor would advance the case of the appellant because in the first round, the Tribunal did not accept the limitation, but set aside the order and remanded the matter for fresh consideration. Secondly by getting declaration that the matter is time barred, appellant will not registration more so because appellant's application is not an application for renewal and an application for fresh registration. We therefore, reject this contention also. Since these are matters not considered by the Commissioner or the Tribunal, and since after registration appellant was engaged in six years of operation, we dispose of the appeal by setting aside the orders of the Tribunal and that of the Commissioner and by restoring the matter to the Commissioner for fresh decision, but Commissioner is directed to consider original application after calling for particulars, particularly statement of accounts, as stated above.