2015 (11) TMI 571 - AT - Income Tax

Rejection of application filed under section 80G(5)(vi) - as per revenue the benefit of the activities of the assessee goes to the members of the assessee s council only and general public at large is not the beneficiary in any manner - Held that - Contention of the assessee that registration of an Institution under section 12A by itself is a sufficient proof of fact that trust or institution concerned is created or established for charitable/ general public utility purposes and it is eligible for renewal of approval under section 80G enjoyed in the earlier years. The admitted facts in the case of the present assessee are that it was registered under section 12A of the Act and was enjoying the same when it moved the present application for renewal of approval under section 80G enjoyed earlier. It is also an undisputed fact that there were no new facts during the year under consideration in comparison to the facts of the other years when the assessee was granted benefit of section 80G of the Act When on the same set of facts and circumstances of the case, renewal of approval under section 80G(5)(vi) has been granted for earlier years and there being no change in the facts and circumstances in the years for which renewal is sought for, there is no justification to reject the assessee s application for renewal of exemption certificate under section 80G(5)(vi) for the assessment year 2010-11 onwards. it was not proper to characterise the activities of the assessee as activities amounting to a business in the generally understood sense of the word, the most important feature of business being profit motive. It was held that it had not been suggested by the Income-tax authorities that the activities carried out by the assessee were propelled by any profit motive, therefore, the provisions of section 11(4)(a) were not attracted. Under these facts and circumstances, we hold that the learned Director of Income-tax (Exemptions) was not justified in denying the renewal of approval under section 80G(5)(vi) of the Act to the assessee. Thus, while setting aside the order impugned, we direct the learned Director of Income-tax (Exemptions) to grant renewal of approval under section80G(5)(vi) of the Act as applied for by the assessee. - Decided in favour of assessee.

Summary

Issues:
Challenge to rejection of application under section 80G(5)(vi) of the Income-tax Act, 1961.

Analysis:
1. The appellant contested the decision of the Director of Income-tax (Exemptions) rejecting their application under section 80G. The rejection was based on the belief that the appellant's activities primarily benefited its council members rather than the general public, making them ineligible for charitable status under section 80G.

2. The appellant was established to support and promote exports of electronic goods and software, aiming to develop electronics usage and conduct marketing studies abroad. The appellant argued that their activities were of general public utility, not solely for their members, emphasizing their role in significantly increasing the country's exports over the years.

3. The appellant's authorized representative highlighted their registration under section 12A since 1986, continuous charitable assessments, and governmental support as proof of their charitable nature. They cited various legal precedents to support their argument that registration under section 12A signifies charitable intent.

4. The appellant also challenged the application of the proviso to section 2(15) of the Act, asserting that their activities were not profit-motivated. Legal decisions were referenced to strengthen their position that their activities did not align with profit-making objectives.

5. The Commissioner of Income-tax defended the rejection, arguing that assessment orders were separate from renewal requirements under sections 12A and 80G. Legal precedents were cited to support this stance.

6. The authorized representative countered, stating that the objects for registration under section 12A and benefits under section 80G should be considered together. They emphasized that the appellant had previously received section 80G benefits and that no new facts warranted rejection this time.

7. After analyzing legal precedents, the Tribunal found that registration under section 12A alone demonstrated charitable intent, making the appellant eligible for section 80G renewal. They referenced previous cases to support their decision and emphasized the absence of profit motives in the appellant's activities.

8. Consequently, the Tribunal ruled in favor of the appellant, directing the Director of Income-tax (Exemptions) to grant renewal under section 80G(5)(vi) as requested. The decision was based on the appellant's history of charitable activities and lack of profit-driven motives.

9. The appeal was allowed, and the order was pronounced in open court on October 31, 2014.