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Issues involved: Rejection of registration application u/s 12AA for a society solely for advancement of general public utility service.
The issue in the present appeal is whether the activities of the society can be classified as charitable for general cause under section 12AA(1)(b)(ii) of the Income Tax Act, 1961. The main objects of the society included certifying seeds, inspecting seeds, and granting certification in accordance with the provisions of the Seed Act. The Commissioner of Income Tax held that the society's activities were commercial in nature and not charitable. The amendment to section 2(15) of the Act by the Finance Act, 2008 was cited, which led to the rejection of the registration application. The Hon'ble Andhra Pradesh High Court considered the amended provisions of section 2(15) which defined 'charitable purpose'. It was observed that activities advancing any other object of general public utility would not be charitable if they involve trade, commerce, or business. The court analyzed the activities of the society in certifying seeds and facilitating their sale, concluding that these activities did not qualify as charitable purposes. The Kerala High Court's view on the exclusion of activities involving trade, commerce, or business from charitable purposes was also considered. The High Court upheld the rejection of the registration application under section 12AA, as the society's activities were deemed not for the advancement of general public utility but for trade and commerce. In conclusion, the appeal filed by the society was dismissed as its activities were found not to be for charitable purposes under section 12AA of the Act. The order of the Commissioner of Income Tax in refusing registration was upheld based on the interpretation of the proviso to section 2(15) and the nature of the society's activities.
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