2010 (11) TMI 478 - AT - Income Tax

Registration u/s 12A - Exemption u/s 11 - the test whether an assessee could be registered under section 12A of the Act is not the status of the person , but whether the person (assessee) was established for charitable or religious purpose - Since the Revenue treats company as a taxable entity, being an assessee in terms of definition of the word assessee as defined in section 2(7) of the Act, it does not lie in the mouth of the Department to plead to the contrary and to take a contrary stand in the context of provision of section 11 of the Act, that a company is not a person so as to be eligible for the benefit of section 11 of the Act - Decided in the favour of the assessee by way remand

Summary

Issues:
Refusal of registration under section 12A of the Income-tax Act, 1961 to the assessee based on being a private limited company incorporated for producing religious feature films, serials, etc. for Tirumala Tirupati Devasthanam (TTD).

Analysis:
The appeal challenged the order of the Commissioner of Income-tax, Tirupati, denying registration under section 12A of the Act to the assessee, a private limited company converted under section 25 of the Companies Act. The counsel for the assessee argued that the company, being a 'person' as per the Act, is eligible for exemption under section 11 if other conditions are met. Reference was made to other companies granted registration under section 12A. The CIT-Departmental Representative contended that only 'trust' or 'institution' could be registered under section 12A, not a company. The Tribunal examined the definitions and provisions of the Act, emphasizing that the word 'person' includes a 'company'. It noted that denial of registration solely based on the entity being a company would defeat the purpose of providing tax exemption to entities established for charitable or religious purposes. The Tribunal highlighted the definition of 'charitable purpose' under section 2(15) and concluded that the test for registration under section 12A is the charitable or religious purpose of the assessee, not its status as a company.

The Tribunal emphasized that a company, as a 'person' under the Act, is entitled to the benefits of section 12A for income exemption if established for charitable or religious purposes. Denying registration to a company would render section 11 redundant. The Tribunal directed the Commissioner to re-evaluate whether the assessee fulfills other conditions for registration under section 12A, rather than rejecting it solely for being a company. The order of the Commissioner was set aside, and the matter was remanded for a fresh assessment based on all relevant conditions for registration under section 12A.

Therefore, the Tribunal allowed the appeal of the assessee for statistical purposes, emphasizing the importance of considering the charitable or religious purpose of the entity rather than its corporate form for registration under section 12A of the Act.