2014 (1) TMI 70 - AT - Income Tax

Rejection of application for registration u/s 12AA of the Act Held that - The society has been established for maintaining the agencies and franchisees in the district to conduct business of the society, which clearly establishes that the present society is doing business with other agencies and franchisees in the district none of the object of the society which shows that the present society is doing any charitable activities for the general public utility - Even otherwise the assessee-society has failed to establish that the assessee-society is doing any charitable work keeping in view its object - Merely mentioning about various objects in the nature of charitable activities in the memorandum of association, does not mean that the society is doing any charitable activities as general public utility and is entitled for registration under section 12A(a) of the Act. The activities of the assessee-society are not charitable in nature within the meaning of provisions of section 2(15) of the Act thus, it does not qualify to be treated as charitable institution - the assessee has not established that its society is formed with objects of any charitable purpose the society is doing its business and charging huge fees from the public which is in addition to the prescribed fee of the Punjab Government - the fees charged by the present society are in addition to the burden forced upon the common man - Because of this, service has to be rendered by the Punjab Government free of cost to the public against the fee Decided against Assessee.

Summary

Issues Involved:
1. Rejection of the application for registration under section 12AA of the Income-tax Act, 1961.
2. Condonation of delay in filing the appeal.

Issue-Wise Detailed Analysis:

1. Rejection of the Application for Registration under Section 12AA:
The assessee-society, created on February 22, 2006, filed an application under section 12A(a) of the Income-tax Act, 1961, on November 29, 2011, for registration of the society. The society claimed to be engaged in providing services to the public for obtaining various licenses and certificates by charging a fee fixed by the regulatory authority of the Government of Punjab. The Commissioner of Income-tax-I, Jalandhar, rejected the application on the ground that the society's activities involved charging fees for services, which constituted an activity in the nature of trade, commerce, or business. This was based on the amendment to section 2(15) of the Act effective from April 1, 2009, which excluded activities involving trade, commerce, or business from the definition of "charitable purpose."

The Tribunal upheld the Commissioner's decision, noting that the society's income and expenditure accounts showed no expenditure on charitable public utility works, but rather on operational expenses such as salaries, printing, and maintenance. The Tribunal agreed with the Commissioner that the society's activities did not qualify as charitable under section 2(15) and thus did not merit registration under section 12AA.

2. Condonation of Delay in Filing the Appeal:
The assessee filed an application for condonation of a two-day delay in filing the appeal, attributing the delay to the counsel's illness. The Departmental representative did not object to the request. The Tribunal, convinced by the reasons provided, condoned the delay and admitted the appeal.

Conclusion:
The Tribunal dismissed the appeal, affirming the Commissioner's decision that the assessee-society's activities were not charitable in nature within the meaning of section 2(15) of the Act. The Tribunal found no evidence of charitable activities and noted that the society charged fees for services, which constituted a business activity. The Tribunal upheld the rejection of the application for registration under section 12AA, concluding that the society did not qualify as a charitable institution.