2015 (4) TMI 1288 - AT - Income Tax

Exemption u/s 11 - DIT(E) not allowing registration u/s 12AA on ground that the assessee is not carrying on genuine activity of charitable nature and assessee s activity will be benefited to members and not public at large - HELD THAT - As noted by the Director of Income Tax (Exemptions) Ahmedabad the object of the assessee was to encourage protect promote interest of manufacturers of the icecream and frozen dessert and to promote expansion of market for icecream and frozen dessert and to promote and improve quality and variety of ice-cream and frozen dessert and to take all such steps as may be considered expedient for that purpose including provision of legal technical and other professional advice and assistance. The object of the assessee was of general public utility and hence charitable in nature. Therefore the following the decision of the Hon ble Gujarat High Court in the case of Gujarat State Plastic Manufacturers Association 1998 (7) TMI 715 - GUJARAT HIGH COURT we set aside the order of the Director of Incometax (Exemptions) Ahmedabad and direct him to grant registration to the assessee under section 12AA of the Act. Thus this ground of the appeal of the assessee is allowed.

Summary

Issues:
Registration under section 12AA of the Act denied on the grounds of not carrying out genuine charitable activities benefiting the public at large.

Analysis:
The appellant filed an appeal against the order of the Director of Income Tax (Exemptions) denying registration under section 12AA of the Act. The main issue was whether the appellant's activities were genuinely charitable and beneficial to the public at large. The Director observed that the appellant's activities only benefited the manufacturers of ice cream and not the general public. It was argued that allowing registration would enable the appellant to receive donations from the public, which would only benefit its members, making it akin to a mutual society rather than a charitable organization.

The appellant relied on a decision of the Hon'ble Gujarat High Court in a similar case, where registration was allowed for an association benefiting a particular trade. The Tribunal noted that the primary purpose of the appellant's activities was to encourage, protect, and promote the interests of ice cream manufacturers, which were considered activities of general public utility. Drawing from the Gujarat High Court's decision and the Supreme Court's precedent, the Tribunal held that the appellant's activities were charitable in nature and directed the Director to grant registration under section 12AA of the Act.

The Tribunal emphasized that the appellant's activities were of general public utility, following the Gujarat High Court's decision. It distinguished the Agra Bench of the Tribunal's decision by aligning with the jurisdictional High Court's ruling, which was based on the Supreme Court's decision. Ultimately, the Tribunal allowed the appeal, setting aside the Director's order and granting registration to the appellant under section 12AA of the Act.