2017 (2) TMI 1113 - AT - Income Tax

Registration u/s 12A denied - assessee Trust was not following any charitable activities and hence cannot be termed as a Charitable Organization and for reaching the aforesaid conclusion he inter-alia noted that the News letter titled SIMA which was published by assessee was a News letter meant for the Members only and did not reach out to general public - Held that - On perusing the objectives of the Trust it is seen that the objects of the assessee are inter alia to promote and advance Medical and Allied Sciences in different branches and to promote improvement in Public Health and Medical Education. Thus the objects of the Trust, prima facie, appears to be of charitable in nature. Further, we are of the view that in order to ascertain the true nature and purpose of the Trust, the objectives are to be considered as a whole and not in isolation. Another aspect of issue is the introduction of first proviso of sec (15) holding that activities of the trust was commercial in nature. In this connection, we find that the Amritsar Bench of Tribunal in the case Kapurthala Improvement Trust vs. CIT, Jalandhar 2015 (7) TMI 77 - ITAT AMRITSAR has held that first proviso to section 2(15) have no role in matters relating to registration of a trust or institution under section 12A or 12AA for granting or declining registration or in respect of cancellation of registration. Before us, Revenue has not placed any material on record to demonstrate that the Trust was either not genuine or its activities were not as professed in the Trust Deed. Further, before us, ld. AR has submitted a list of branches of Medical Associations having similar objects as that of assessee but in different cities and which have been granted the status of exemption u/s 12A of the Act. Ld.D.R., has not pointed out any difference in the objects of the assessee Trust and the others which have been granted exemption u/s 12 A by the authorities. Thus we set aside the impugned order of CIT and the CIT is directed to grant registration in terms of Sec.12A of the Act. - Decided in favour of assessee

Summary

Issues:
Denial of registration under section 12A of the Income Tax Act based on charitable activities.

Detailed Analysis:

1. Background and Facts:
The appeal arises from the Commissioner of Income Tax-IV (CIT), Pune's decision dated 31.10.2013, where the Trust's application for registration under section 12(A) of the Act was rejected. The Trust, established in 1954, engaged in various activities, including educational camps, medical education, computer training, and sports events.

2. Contentions of the Assessee:
The Assessee argued that its activities were charitable, benefiting the public, and similar branches of the Indian Medical Association had been granted exemption under section 12A. The Assessee emphasized that the CIT's role was to verify the Trust's genuineness, not its income application.

3. Revenue's Arguments:
The Revenue contended that the Trust's activities, as per the News Letter, did not qualify as charitable. They relied on legal precedents to support their position.

4. Legal Provisions and Precedents:
The registration under section 12A is crucial for availing exemptions under sections 11 and 12. The Commissioner must ensure the Trust's genuineness and objectives. The Kerala High Court clarified that the Trust's nature and funds' application are assessed during the assessment, not registration.

5. Judgment and Analysis:
The Tribunal observed the Trust's objectives to promote medical sciences and public health as charitable. The first proviso to section 2(15) was deemed irrelevant for registration matters. The Revenue failed to prove the Trust's lack of genuineness or deviation from its stated objectives. Comparisons with other exempted branches supported the Trust's charitable nature.

6. Decision and Conclusion:
The Tribunal overturned the CIT's decision, directing the registration under section 12A. The rejection was deemed unwarranted, and the Trust's activities were considered charitable. The Revenue's arguments were dismissed, and the Trust's appeal was allowed on the grounds of charitable activities.

In conclusion, the Tribunal's judgment favored the Trust, emphasizing the charitable nature of its activities and the Commissioner's limited scope in assessing registration applications under section 12A of the Income Tax Act.