2016 (9) TMI 1042 - AT - Income Tax

Grant of registration U/s 12AA - denial of registration by holding that the objects of the society are not charitable in nature as they are for the benefit of particular group of persons and not for the benefit of public at large - the objects of the society are loud and are meant to help the retired advocates and also to the family of the deceased advocates - Held that - We have gone through the records the Advocates Act 1961 and also appreciated the role of lawyer in the society. It is an admitted position in law that the advocates are officers of the court and even the public prosecutor or the advocates representing the government and its various departments are required to be registered under the Advocates Act 1961. In our view for the orderly behavior of the society and for the purposes of adjudication of disputes the lawyers play an important role and the institution of the advocates cannot be dispensed with as they are helping the poor litigant to seek justice and get justice from the court of law. In our view the advocates are discharging the public duties but incidentally they are also being paid for rendering those services either by the government or by the legal aid or by the litigant. This Court cannot be oblivious to the facts that there is no pension scheme flouted by any of the statutory bodies for the benefit of the lawyers community. In our view the useful and public purpose would be served if the registration is granted to the assessee as sought by it. In our view there is direct nexus between the duty discharged by the advocates and the public purposes and public utility. In view thereof the assessee society is required to be granted registration. - Decided in favour of assessee

Summary

Issues Involved:
1. Whether the objects of the society are charitable in nature.
2. Whether the society qualifies for registration under Section 12AA of the Income Tax Act, 1961.

Issue-wise Detailed Analysis:

1. Charitable Nature of the Society's Objects:

The primary issue was whether the objects of the society are charitable in nature. The Commissioner of Income Tax (Exemptions) [CIT(E)] examined the aims and objects of the society and concluded that the activities of the society cannot be considered charitable. The CIT(E) held that the society's benefits were limited to a specific group of persons (advocates of Alwar City) and not for the public at large. This conclusion was based on the interpretation of Section 2(15) of the Income Tax Act, which defines "charitable purpose" to include activities for the general public utility.

The CIT(E) referenced several judgments, asserting that if the objects of a society are for the benefit of a limited group, it cannot be deemed charitable. The CIT(E) concluded that the society’s activities did not serve the general public utility as required under Section 2(15).

2. Qualification for Registration under Section 12AA:

The assessee appealed against the CIT(E)’s order, arguing that the society's objects were to help retired advocates and the families of deceased advocates, which should be considered as an act of public utility. The assessee cited the Supreme Court's judgment in CIT Vs Dawoodi Bohara, which stated that if an act benefits a section of the public, it can be considered an act of public utility. The assessee contended that the CIT(E) had taken a narrow interpretation of "general public utility" and that the society's activities should qualify as charitable.

The Tribunal examined the aims and objects of the society and the qualifications for membership. It was noted that the membership was not restricted solely to advocates but was open to all persons within the geographical area of Alwar, provided they met certain criteria. The Tribunal emphasized that the society's registered rules and regulations allowed any person living in Alwar to become a member, thereby broadening the scope of beneficiaries.

The Tribunal also considered the role of lawyers in society, highlighting their contributions to public welfare, justice, and legal aid. Lawyers were recognized as officers of the court, and their work was deemed to have a public purpose. The Tribunal acknowledged that there were no pension schemes for lawyers and that the society's efforts to support retired and deceased advocates' families served a useful public purpose.

The Tribunal concluded that the CIT(E)’s emphasis on the society benefiting a limited group was incorrect. It was held that for effective fulfillment of its aims, a society might need to identify a limited number of beneficiaries, provided this identification was not based on caste, creed, religion, or geography. The Tribunal found that the society’s activities had a direct nexus with public purposes and public utility.

Conclusion:

The Tribunal allowed the appeal, granting the society registration under Section 12AA. It was determined that the society's activities served a public purpose and met the criteria for charitable status under the Income Tax Act. The order was pronounced in the open court on 08/08/2016.