2013 (11) TMI 1603 - AT - Income Tax

Application for registration u/s. 12AA - Held that - The assessee society was registered with the State Authorities on 16th February 2012 and field application for registration u/s. 12AA of the Act on 9th March 2012 i.e. within 21 days of registering the society with the State Authorities. In the meanwhile the assessee has not carried on any activities. But this reason itself does not disentitle the assessee in seeking registration u/s. 12AA of the Act.

Summary

Issues:
1. Non-granting of registration sought u/s. 12AA of Income-tax Act, 1961.
2. Objects of the society being mixed in nature - both charitable and religious.
3. Commencement of activities at the time of applying for registration.

Analysis:

Issue 1: Non-granting of registration u/s. 12AA
The appeal was against the order of the Director of income-tax (Exemptions) rejecting registration sought u/s. 12AA. The DIT(E) had cited reasons such as the Memorandum of Trust Deed containing objects in a descriptive nature, the presence of religious objects, and the lack of activity by the society. The ITAT Hyderabad found the reasons inadequate as the objects were in accordance with charitable nature, citing the judgment of Allahabad High Court. The Tribunal vacated the findings of the DIT(E) on this issue, emphasizing that the absence of activity was not a requirement for registration u/s. 12AA.

Issue 2: Objects of the society being mixed in nature
The next reason for rejection was the mixed nature of the society's objects - both charitable and religious. The ITAT Hyderabad referred to various court cases supporting the notion that a trust can carry out both charitable and religious activities. Citing the Hyderabad Bench of the Tribunal and judgments from different High Courts, the ITAT concluded that the presence of religious activities alongside charitable ones did not disqualify the society from registration u/s. 12AA. The Tribunal directed the DIT(E) to grant registration to the society.

Issue 3: Commencement of activities at the time of applying for registration
The final reason for rejection was the lack of activities by the society at the time of applying for registration. The ITAT Hyderabad held that the society need not commence activities before seeking registration, citing previous Tribunal decisions. Referring to specific cases, the Tribunal emphasized that the absence of ongoing activities did not disentitle the society from seeking registration u/s. 12AA. Consequently, the ITAT directed the DIT(E) to grant registration to the society.

In conclusion, the ITAT Hyderabad allowed the appeal of the assessee, emphasizing that the reasons provided by the DIT(E) for rejecting registration were not valid. The Tribunal highlighted that the objects being charitable, mixed in nature, or the absence of activities did not preclude the society from obtaining registration u/s. 12AA.