2014 (6) TMI 503 - AT - Income Tax

Denial of registration u/s 12AA of the Act Charitable purpose u/s 2(15) of the Act - Division opened for publication activity Held that - Following Asst. Director of Income-tax (Exemption) -III, Hyderabad Versus Gideons International in India, Hyderabad 2014 (5) TMI 815 - ITAT HYDERABAD - the placement and distribution of Bible and New Testament is for the benefit of the general public, and thus, is one of the charitable purposes referred to in S.2(15) of the Act being advancement of any other object of general public utility - exemption u/s 11 is available for trusts which are charitable or religious or partly charitable and partly religious - even if the income is earned by trust, which is charitable as well as religious and part of the income is applied for religious purposes, exemption u/s 11(1)(a) is still available - the assessee cannot be deprived of registration u/s 12AA of the Act, merely on account of engaging itself in publication of a magazine thus, the matter is to be remitted back to the DIT(E) for passing appropriate orders, granting registration to the assessee, subject to fulfillment of other conditions, in accordance with law and after giving reasonable opportunity of hearing to the assessee Decided in favor of Assessee.

Summary

Issues:
1. Denial of registration under S.12AA of the Income-tax Act, 1961 based on the nature of the company's activities, specifically publication of a magazine.
2. Interpretation of charitable activities under S.2(15) of the Income-tax Act, 1961 in relation to the publication and distribution of religious material like the Bible and New Testament.
3. Application of legal precedents to determine the eligibility for exemption under S.11 of the Act for trusts engaged in charitable or religious activities.

Analysis:
The judgment by the Appellate Tribunal ITAT Hyderabad addressed the appeal against the Director of Income-tax(Exemption)'s order denying registration under S.12AA of the Income-tax Act, 1961 to the assessee due to engaging in publication activities. The Tribunal noted the contention that publication of a magazine and distribution of knowledge should not disqualify the assessee for charitable status. Citing precedents like the case of Gideons International In India and Sri Venkateswara Bhakti Channel Tirupati, the Tribunal emphasized that activities like propagation of Christianity through printing and distribution of religious texts can be considered charitable under S.2(15) of the Act.

The Tribunal highlighted the decision in the Gideons International In India case, where it was established that the distribution of the Bible and New Testament for the benefit of the general public falls under the category of 'advancement of any other object of general public utility' as per S.2(15). Additionally, it was clarified that trusts engaged in both charitable and religious activities can still qualify for exemption under S.11(1)(a) of the Act. The judgment also referenced the Pocket Testament League(India) case, affirming that income earned by trusts involved in religious activities can still be eligible for exemption under S.11(1)(a).

Based on the legal precedents and the interpretation of charitable activities, the Tribunal concluded that the assessee should not be denied registration under S.12AA solely based on engagement in publication activities like a magazine. The impugned order was set aside, and the matter was remanded to the Director of Income-tax(Exemption) for reconsideration, with a directive to grant registration to the assessee if other conditions are fulfilled, in accordance with the law. Ultimately, the appeal of the assessee was allowed for statistical purposes, as pronounced by the court on 29.5.2014.