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2018 (10) TMI 1896 - AT - Income TaxExemption u/s 11 - Denying registration u/s 12A - grievance of the assessee is that the Director has unjustly denied registration u/s 12A notably Sec. 12AA of the Act empowers the Director to grant registration after being satisfied about the objects of the Trust and the genuineness of its activities - HELD THAT - In the present case the primary object of the Trust is to administer financial assistance towards medical needs of the retired employees of Bank of India who are its Members and the dependent spouse of such retired employee-members in terms of the rules and regulations of the Scheme. As notable that the corpus of the Trust enures from one-time lump sum contribution equal to 100% of the basic pay last drawn received from the retired employees and the contribution received from Bank s Central Welfare Committee. In sum and substance the dominant object of the Trust is to provide assistance towards the medical needs of the retired employees of the Bank who are its Members in terms of the Scheme. At this stage we may also observe that the expression charitable purpose has been defined in Sec. 2(15) of the Act to mean to include relief of poor education medical relief etc. as well as advancement of any other objects of general public utility. The Director has denied exemption solely on the ground that assessee-trust s objects are not for the benefit of the general public but only for its specific Members/employees of Bank of India.The aforesaid proposition sought to be raised by the Director is quite untenable and is directly contrary to the observations in the case of Ahmedabad Rana Caste Association 1971 (9) TMI 8 - SUPREME COURT Hon ble Andhra Pradesh High Court in the case of Andhra Pradesh Police Welfare Society 1983 (3) TMI 19 - ANDHRA PRADESH HIGH COURT the plea of the assessee for registration u/s 12A of the Act has to be upheld and on account of distinction in facts in our view the Director erred in relying on the decision of the Hon ble Bombay High Court in the case of Zenith Tin Works Charitable Trust 1974 (7) TMI 29 - BOMBAY HIGH COURT to deny registration u/s 12A of the Act to the assessee-trust. A perusal of the impugned order reveals that reference has also been made to the judgment of the Hon ble Madras High Court in the case of Sakthi Charities vs CIT 1984 (4) TMI 52 - MADRAS HIGH COURT which in our view is also inapplicable as it was a case of a private employment. We hereby set-aside the order of the Director and hold that the assessee is eligible for registration u/s 12A of the Act. Accordingly it is directed that registration u/s 12A of the Act be granted to be assessee. - Decided in favour of assessee.
Issues Involved:
1. Condonation of delay in filing the appeal. 2. Denial of registration u/s 12A of the Income Tax Act, 1961 by the Director of Income-Tax (Exemptions). Issue-wise Detailed Analysis: 1. Condonation of Delay in Filing the Appeal: The appellant filed an appeal with a delay of 927 days. The appellant sought condonation of delay, citing administrative exigencies and the honorary management of the trust by Bank of India employees. The delay was explained through two affidavits, detailing the transfer and retirement of key officers responsible for the trust's affairs. The Tribunal noted that the trust is managed on an honorary basis and considered the reasons for the delay as bona fide. The Tribunal emphasized a liberal and practical approach in evaluating the reasons for delay, referencing the Supreme Court judgment in N. Balakrishnan vs M. Krishnamurthy, which stated that "length of delay is no matter, acceptability of the explanation is the only criteria." The Tribunal concluded that the delay in filing the appeal deserved to be condoned, considering the bona fide reasons provided. 2. Denial of Registration u/s 12A of the Income Tax Act, 1961: The primary grievance was the denial of registration u/s 12A by the Director of Income-Tax (Exemptions). The Director denied registration on the grounds that the trust's objects were not for the benefit of the general public but only for the retired employees of Bank of India. The Tribunal examined the trust's objectives, which included providing financial assistance for medical expenses to retired employees and their dependent spouses. The Tribunal referred to the Supreme Court judgment in Ahmedabad Rana Caste Association vs CIT, which held that an object beneficial to a section of the public falls within the purview of 'charitable purpose.' The Tribunal also cited the Andhra Pradesh High Court judgment in CIT vs Andhra Pradesh Police Welfare Society, which upheld the grant of exemption u/s 11 for a trust benefiting police department members and their families. The Tribunal distinguished the present case from the Kerala High Court judgment in CIT vs Ernakilam District Cement Dealers Association, noting that the trust in question was a public sector bank's scheme for medical relief, not a private association's income from services rendered to its members. The Tribunal also addressed the Director's reliance on the Bombay High Court judgment in Zenith Tin Works Charitable Trust vs CIT, clarifying that the present case involved a public sector bank's retired employees, not a private enterprise. The Tribunal further distinguished the present case from the Madras High Court judgment in Sakthi Charities vs CIT, which involved private employment. In conclusion, the Tribunal set aside the Director's order and held that the assessee was eligible for registration u/s 12A of the Act, directing that the registration be granted. Judgment: The appeal of the assessee was allowed, with the Tribunal directing the grant of registration u/s 12A of the Income Tax Act, 1961. The order was pronounced in the open court on 3rd October, 2018.
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