2015 (11) TMI 990 - AT - Income Tax

Registration u/ss 12AA(1)b)(ii) and 80(G) denied - Held that - In the case in our hand, the assessee s charitable activities are not restricted to any particular caste or section of society. In addition to celebrating Dussehra and Ekadashi festivals which are to promote the heritage, culture and festivals of India, it is also engaged in the activity of helping the poor and needy. It also incurs expenditure for marriage of poor girls and pays fees of poor students. It is not the case of the ld.CIT that the assessee has incurred expenditure other than for promotion of the objects of the society. Under these circumstances, we are of the considered opinion that registration u/s 12AA should be granted to the assessee society. Thus, we direct the ld.CIT to grant registration to the society u/s 12A of the Act. For the very same reason, recognition u/s 80G should also be granted to the society. The approval u/s 80G(5)(vi) should be granted to the assessee. - Decided in favour of assessee.

Summary

Issues Involved:
1. Rejection of registration under section 12AA of the Income Tax Act, 1961.
2. Rejection of registration under section 80G of the Income Tax Act, 1961.

Detailed Analysis:

1. Rejection of Registration under Section 12AA:

The assessee, a society registered with the District Registrar of Firms and Societies, Sonepat, appealed against the rejection of its application for registration under section 12AA by the CIT, Rohtak. The CIT cited several reasons for the rejection:
- The assessee did not satisfy the essence of charity required under section 2(15) of the Act.
- The main aims and objects of the society, which included promoting inherited culture and festivals, did not fall within the ambit of section 2(15).
- The Memorandum and Articles of Association were incomplete.
- A significant portion of the expenditure was on religious activities, which exceeded 50% of total expenses.
- The Dissolution clause was not in accordance with the law.

The assessee countered these points by stating:
- The objects were charitable in nature, including helping the poor, paying fees for poor students, and supporting the marriage of poor girls.
- The Dissolution Clause was in accordance with the law.
- Expenditure on festivals like Dussehra was for societal benefit and not purely religious.
- The signed and complete copy of the Memorandum was later made available to the CIT.

The Tribunal found that:
- The objects of the society were indeed charitable.
- The society was required to re-register due to changes in the law in Haryana, and the new registration documents were submitted to the Department.
- The Dissolution Clause in the amended regulations fulfilled the legal requirements.
- The gaps in the earlier Memorandum were rectified in the later registration documents.
- Expenditure on festivals could not be considered purely religious, as they promoted cultural heritage and were for the benefit of the society at large.

The Tribunal referred to several case laws, including the judgment of the Hon'ble Supreme Court in CIT, Ujjain vs. Dawoodi Bohara Jamat, which supported the assessee's claim that activities with both charitable and religious elements could still qualify for exemption under section 11.

2. Rejection of Registration under Section 80G:

The CIT also rejected the application for registration under section 80G, citing similar reasons as for section 12AA. The Tribunal found that:
- The objects of the society were charitable and did not propagate any particular religion.
- The expenditure on festivals and other activities was for the benefit of the general public and not restricted to any particular caste or community.
- The Nagpur Bench of the Tribunal in Shiv Mandir Devsttan Panch Committee Sanstan vs. CIT-1, Nagpur, held that activities promoting cultural heritage and providing public utility services could not be considered purely religious.

The Tribunal concluded that the assessee's activities were not restricted to any particular caste or section of society and were in line with the objects of the society. Therefore, the society was entitled to registration under section 12AA and recognition under section 80G.

Conclusion:

The Tribunal directed the CIT to grant the assessee society registration under section 12AA and recognition under section 80G(5)(vi) of the Income Tax Act, 1961. Both appeals of the assessee were allowed.