2013 (12) TMI 1198 - AT - Income Tax

Registration under section 12A Held that - The trust was created to provide opportunities for the students of the Department of Economics, Delhi School of Economics to seek employment - Assessee is charging money for registration and subscription from the enrolled students as well as it is also getting subscription from the companies who coming to the campus for providing employment to the enrolled students - The activities of trust are focused on the students of Delhi School of Economics getting education in the institute - Public at large is neither eligible to become a member nor is provided any benefit of the trust activities, as all its activities are for the members enrolled - The activities cannot be in any manner classified as being charitable in nature - Apart from administrative heads of expenditure, no other expenses were shown to have been incurred on any charitable activity Decided against assessee.

Summary

Issues:
1. Rejection of application for registration under section 12A and 80G of the Income Tax Act, 1961.
2. Eligibility of trust activities for charitable classification.
3. Incurrence of expenses on charitable activities.
4. Lack of documentary evidence to support charitable nature of activities.

Issue 1: Rejection of application for registration under section 12A and 80G of the Income Tax Act, 1961:
The appeal was against the order of the Ld. Director of Income Tax (Exemptions) rejecting the application for registration under section 12A and 80G of the Income Tax Act, 1961. The trust in question was formed to provide employment opportunities for students of the Department of Economics, Delhi School of Economics. The rejection was based on the grounds that the trust's activities were not charitable in nature and did not fulfill the conditions for registration under section 12A. The rejection of the 80G exemption application was also a consequence of the initial rejection under section 12A.

Issue 2: Eligibility of trust activities for charitable classification:
The trust's activities were primarily focused on providing opportunities for enrolled students to interact with corporate bodies for employment purposes. The trust charged fees for registration and subscription from students and received contributions from companies for providing employment opportunities to students. The Ld. Commissioner of Income Tax found that the trust's activities were not charitable in nature as they were limited to benefiting enrolled students and did not extend to the public at large. The trust's activities were deemed commercial in nature, aimed at facilitating placements for enrolled students rather than charitable endeavors.

Issue 3: Incurrence of expenses on charitable activities:
The rejection of the registration application was also based on the observation that apart from administrative expenses, no other costs were shown to have been incurred on charitable activities by the trust. The lack of evidence showcasing expenditure on charitable initiatives further supported the conclusion that the trust's activities did not align with the charitable nature required for registration under section 12A of the Income Tax Act, 1961.

Issue 4: Lack of documentary evidence to support charitable nature of activities:
The rejection of the application was reinforced by the absence of documentary evidence demonstrating the charitable nature of the trust's activities. The trust failed to provide sufficient proof to establish that its activities met the criteria for being classified as charitable under the Income Tax Act. Without proper documentation and evidence, it was challenging to substantiate the charitable nature of the trust's operations.

In conclusion, the appellate tribunal upheld the decision to reject the registration and exemption applications, as the trust's activities were deemed non-charitable, focused on enrolled students, lacked expenditure on charitable initiatives, and lacked documentary evidence to support their charitable classification. The appeal filed by the Assessee was dismissed based on these findings.