2012 (8) TMI 701 - AT - Income Tax

Registration under section 12A/12AA Held that - Society can be held to be charitable there must be an element of charity to public at large - society under consideration is a mutual concern of the members who form the society and the whole idea of this mutual society is that the particular members comprising it should be benefited out of their own contribution - assessee society is not a charitable society within the meaning of the Act so that registration under section 12A/12AA can be granted - appeal of the assessee is dismissed.

Summary

Issues:
1. Refusal of registration under section 12A(a) of the Income Tax Act.
2. Determination of charitable purposes for registration under section 12A/12AA.

Issue 1: Refusal of registration under section 12A(a) of the Income Tax Act:
The appeal was filed by the assessee against the order of the Ld. CIT, Gwalior, dated 30.03.2009, refusing registration under section 12A(a) of the Income Tax Act. The CIT found that the society was not engaged in charitable activities and did not meet the necessary conditions for registration. The society's activities were deemed to be for the benefit of a few persons only, not for charitable purposes. The society's main objects were focused on the welfare of the colony residents, security, and maintenance services, indicating a mutual benefit rather than a charitable purpose.

Issue 2: Determination of charitable purposes for registration under section 12A/12AA:
The assessee society, registered under the Madhya Pradesh Society Registration Act, 1973, aimed to look after the welfare of colony residents, address colony problems, provide security, and organize cultural and welfare programs. The society relied on various legal decisions to support its charitable status claim. However, the Tribunal found these cases to be distinguishable as they did not align with the facts of the current case. The Tribunal emphasized that charity must be altruistic, benefiting the public at large, and not based on mutual benefit among members. The definition of charitable purposes under section 2(15) was crucial in assessing whether the society qualified for registration under section 12A/12AA. The Tribunal concluded that the society, formed by members for mutual benefit, did not serve a charitable purpose as required by the Act.

In light of the above discussions, the Tribunal upheld the CIT's decision to reject the registration of the assessee society under section 12A/12AA. Consequently, the appeal of the assessee was dismissed.