2017 (8) TMI 380 - HC - Income Tax

Eligibility to registration to the Assessee u/s 12AA and u/s 80G - proof of charitable activities - Held that - ITAT has observed that the genuineness of the activities of the Assessee stood established and that the ingredients of Section 12AA of the Act stood satisfied. This finding has not been shown to be perverse by the Revenue. It is in fact found by the DIT (E) that the activities carried on by the Assessee did fall under the last limb of Section 2(15) of the Act, that is, for advancement of any other object of general public utility. The mere fact that the Assessee had received service charges from the various organizations for conducting programmes would not convert its essential function to that of a business and this is what has also weighed with the ITAT to finally accept the case of the Assessee. Consequently, the ITAT had rightly directed the DIT (E) to grant registration to the Assessee under Section 12AA and exemption under Section 80G of the Act. - Decided in favour of assessee

Summary

Issues:
1. Appeal filed by Revenue challenging ITAT order directing DIT(E) to grant registration to Assessee under Section 12AA and deduction under Section 80G of Income Tax Act, 1961.

Analysis:
The judgment pertains to an appeal filed by the Revenue under Section 260A of the Income Tax Act, 1961, challenging the order passed by the Income Tax Appellate Tribunal (ITAT) in relation to the Assessment Year 2014-15. The key issue raised by the Revenue was whether the ITAT erred in directing the Director of Income Tax (Exemption) to grant registration to the Assessee under Section 12AA and deduction under Section 80G of the Act. The ITAT, in its order, found that the genuineness of the Assessee's activities was established, and the requirements of Section 12AA of the Act were satisfied. This factual finding was not shown to be perverse by the Revenue. Additionally, the DIT (E) determined that the Assessee's activities fell under the last limb of Section 2(15) of the Act, pertaining to the advancement of any other object of general public utility. The ITAT correctly concluded that receiving service charges did not transform the Assessee's essential function into a business. Consequently, the ITAT's direction to grant registration under Section 12AA and exemption under Section 80G was upheld.

The judgment underscores the importance of factual determinations made by the ITAT and the DIT (E) regarding the nature of the Assessee's activities and their alignment with the provisions of the Income Tax Act. It highlights that receiving service charges does not necessarily negate an entity's eligibility for registration and exemption under relevant sections of the Act if the core activities are in line with the prescribed criteria. The decision emphasizes the need for a holistic assessment of an organization's operations to ascertain its eligibility for tax benefits under the Act. Ultimately, the judgment affirms the ITAT's findings and dismisses the Revenue's appeal, reinforcing the principle that genuine activities for public welfare can merit registration and exemption under the Income Tax Act.