2015 (12) TMI 1409 - AT - Income Tax

Registration u/s 12A(a) denied - Held that - When the assessee has produced certain evidence regarding free coaching camps distribution of kits etc. registration can not be denied on the ground that the activity is insignificant. Collection of entry fee and subscription /contribution and utilising the same for incurring expenditure on tournaments etc. cannot be a reason for coming to conclusion that the activity of the assessee is on commercial lines. Thus rejection of registration on this ground is bad in law.The finding that the assessee society has no activity after 2003 is contrary to the facts on record as evidenced by the income and expenditure account for the year ended 31st March 2013. In view of the above discussion we direct the Ld. CIT(A) to grant registration to the assessee u/s 12A/12AA of the Act. - Decided in favour of assessee

Summary

Issues:
Appeal against rejection of registration under section 12A(a) of the Income Tax Act, 1961.

Analysis:
1. The rejection of registration was based on multiple grounds, including concerns about the commercial nature of some activities, lack of evidence of promoting tennis, and insufficient charitable activities.
2. The objects of the trust were examined, revealing charitable intentions such as supporting tennis players and promoting the game in various ways.
3. The Tribunal found that the objects of the trust were indeed charitable in nature, and there was no evidence to suggest otherwise, leading to the conclusion that the registration should be granted.
4. Precedents were cited where registration was granted even if activities had not commenced, emphasizing the importance of genuineness over the timing of activities.
5. The fear that certain objectives might turn into commercial ventures was dismissed, as the AO had the authority to address such concerns under section 11 of the Act.
6. Evidence of activities like free coaching camps and distribution of kits was considered valid, refuting the claim that the activities were insignificant.
7. The utilization of funds for tournaments and other expenses was not deemed as evidence of commercial activities, invalidating the ground for rejection based on commercial lines.
8. The claim that the society had no activity after 2003 was contradicted by the income and expenditure account for the year ended March 31, 2013.
9. Ultimately, the Tribunal directed the Ld. CIT(A) to grant registration to the assessee under section 12A/12AA of the Act, allowing the appeal.