2018 (9) TMI 1950 - AT - Income Tax

Exemption u/s 11 - Application of the assessee society for registration u/s 12A rejected - charitable activity u/s 2(15) - assessee society is a religious body and is engaged in the maintenance of Shree Durga Mata Mandir at Manimajra - corpus fund as been duly utilized for temple premises, furnishing fittings and on utensils - HELD THAT - It is evident that the assessee society is engaged in maintenance of Mandir. There is no allegation that the Corpus fund or the surplus accumulated funds are being used for the purpose other than the aims and objects of the assessee society. The corpus as well as accumulated surplus as is claimed is being used for maintenance and development of Shree Durga Mata Mandir which is a religious place visited by the devotees and open to all. No justification on the part of the Ld. CIT(E) for rejecting the application of the assessee society for registration u/s 12A - CIT(E), therefore, is directed to grant registration to the assessee society from the date of application i.e. from 16.9.2016 onwards. The appeal of the assessee society is accordingly treated as allowed.

Summary

Issues:
Appeal against rejection of registration u/s 12A of the Income-tax Act, 1961 by the Commissioner of Income Tax (Exemptions), Chandigarh.

Analysis:
The assessee society appealed against the rejection of its registration u/s 12A of the Income-tax Act, 1961 by the Commissioner of Income Tax (Exemptions), Chandigarh. The society, engaged in managing a temple, had applied for registration, which was denied by the CIT(E) citing various reasons. The CIT(E) noted that the society had filed returns for the past three assessment years to claim tax exemption, received a plot as a gift without reliable evidence of its value, lacked a dissolution clause in its Memorandum of Association, and had internal issues like the removal of the society's President. Additionally, the society had accumulated significant funds but allegedly used only a small portion for charitable and religious purposes, leading to the denial of registration.

The Appellate Tribunal, after hearing both parties and reviewing the records, found the denial of registration by the CIT(E) to be incorrect. The Tribunal highlighted that the CIT(E) did not provide specific findings or observations to show that the society was not working towards its stated aims and objectives. It emphasized that the society's main purpose was the maintenance of a religious temple, which was not private property and therefore could not be distributed among society members. The Tribunal noted that the society had subsequently added a dissolution clause to its Memorandum of Association and explained that the accumulated funds were used for temple maintenance, new property acquisition, staff salaries, and charitable activities such as providing free food. The Tribunal found no evidence of misuse of funds and concluded that the society was operating in line with its objectives, directing the CIT(E) to grant registration to the society from the date of application.

In conclusion, the Appellate Tribunal allowed the appeal of the assessee society, overturning the CIT(E)'s decision to reject the registration u/s 12A of the Act. The Tribunal emphasized that the society was dedicated to maintaining a religious temple and utilizing its funds for charitable and religious activities, finding no justification for the denial of registration. The Tribunal directed the CIT(E) to grant registration to the society from the date of application, thereby ruling in favor of the assessee society.