2009 (10) TMI 581 - AT - Income Tax

Registration under s. 12A - The learned Director of IT (Exemptions) found that the main activity of the assessee-trust was to set community radio stations as per the contract agreement between the assessee-trust and UNESCO and that the payment received from UNESCO was for an activity being an object of general public utility and, hence, does fall within the purview of amended provisions of s. 2(15) of the Act Thus, the Director of IT (Exemptions) had rejected the assessee-trust s application for registration under s. 12A of the Act on the ground that in lieu of the amended provisions of s. 2(15), the assessee s activities were squarely covered as not a charitable purpose . - Held that as per the case of Sole Trustee, Loka Shikshana Trust vs. CIT 1975 -TMI - 6453 - SUPREME Court , the assessee-trust falls in the category of advancement of any other object of general public utility as envisaged in the fourth limb of s. 2(15) of the Act - The assessee-trust s appeal is allowed

Summary

Issues:
Appeal against rejection of registration under s. 12A of the Income Tax Act.

Analysis:

Issue 1: Rejection of Registration under s. 12A
The appeal was filed by the assessee-trust against the rejection of its application for registration under s. 12A of the Income Tax Act by the Director of IT (Exemptions). The Director rejected the application citing that the activities of the trust did not qualify as 'charitable purpose' under the amended provisions of s. 2(15) of the Act. The main activity of the trust was setting up community radio stations under a contract with UNESCO. The trust argued that its activities aimed at educating the public, benefiting marginalized communities, and providing various educational and social services. The trust also highlighted its collaboration with UNESCO and the educational initiatives undertaken without charging any fees.

Issue 2: Interpretation of s. 2(15) and Activities of the Trust
The Tribunal examined the activities of the trust in light of the amended provisions of s. 2(15) and relevant judicial precedents. It was observed that the trust's activities did not involve trade, commerce, or business, but focused on educating the public about community media and empowering marginalized communities. The Tribunal noted that the funds received by the trust, termed as 'fee' by UNESCO, were actually reimbursement for expenses incurred in conducting training and educational activities. The Tribunal emphasized that the trust's activities aligned with the 'advancement of any other object of general public utility' as per s. 2(15) and did not violate the provisions related to charitable purposes.

Issue 3: Qualification for Registration under s. 12A
After considering the submissions and evidence presented, the Tribunal concluded that the trust qualified for registration under s. 12A of the Act. It emphasized that the trust's activities were in line with promoting general public utility and did not involve commercial elements. The Tribunal recognized the importance of encouraging selfless services rendered by organizations like UNESCO and highlighted the Ministry of Information and Broadcasting's recognition of community radio for developmental and social welfare purposes. Consequently, the Tribunal allowed the appeal of the assessee-trust and directed the registration under s. 12A of the Act.

In conclusion, the Tribunal upheld the appeal, emphasizing the trust's activities aligned with the promotion of general public utility and did not amount to engaging in trade, commerce, or business, thereby qualifying for registration under s. 12A of the Income Tax Act.