2019 (9) TMI 191 - AT - Income Tax

Application for registration u/s 12A rejected - objects of the assessee-company not found to be charitable in nature - HELD THAT - At the time of granting of registration under section 12AA of the Income-Tax Act, the CIT(E) is required to satisfy himself about the objects of the Trust or Institution and the genuineness of its activities. The assessee has produced sufficient evidence on record that assessee-company is involved in charitable activities and have also held Seminars and Training Sessions for training of the registered valuers. The decisions relied upon by Assessee squarely apply to the facts and circumstances of the case. The objects as noted above have not been disputed by the CIT(E). Further, in similar assessee s having the same objects, registration under section 12AA have been granted in their favour. These facts, therefore, show that assessee has satisfied the conditions of Section 12AA of the Income Tax Act, 1961. Accordingly there were no justification for CIT(E) to reject the application for registration under section 12A. We set aside the impugned order and direct the CIT(E) to grant registration under section 12A of the Income Tax Act to the assessee within one month from the date of the order. - Decided in favour of assessee.

Summary

Issues:
1. Application for registration under section 12A of the Income Tax Act 1961 rejected by Ld. CIT(E).
2. Determination of charitable nature of the company's objects and genuineness of activities.

Issue 1: Application for registration under section 12A rejected
The appeal was against the Order of Ld. CIT(E) rejecting the application for registration under section 12A of the Income Tax Act 1961. The Ld. CIT(E) observed that the assessee-company was formed to promote the quality of registered valuers, which was deemed not charitable work. Additionally, the genuineness of the activity was not established, leading to the rejection of the application under section 12AA.

Issue 2: Determination of charitable nature and genuineness
The Assessee contended that the company was registered under section 25 of the Companies Act, 2013, with objectives to enroll and educate registered valuers for effective valuations. Various documentary evidences were submitted, including the Memorandum and Articles of Association, Certificate of Incorporation, and proof of seminars and training sessions conducted. Legal precedents were cited to support the charitable nature of the company's activities, emphasizing the dissemination of knowledge for public benefit. Similar organizations with comparable objectives had been granted registration under section 12A.

The Tribunal found that the Assessee had provided sufficient evidence of engaging in charitable activities, conducting training sessions for registered valuers. The Ld. CIT(E) did not dispute the company's stated objectives, and registration had been granted to similar organizations with analogous purposes. Consequently, the Tribunal concluded that the Assessee met the conditions of Section 12AA of the Income Tax Act and directed the Ld. CIT(E) to grant registration under section 12A to the Assessee within one month from the date of the order.

This judgment highlights the importance of demonstrating the charitable nature of an organization's activities and the genuineness of its objectives when seeking registration under the Income Tax Act. The decision underscores the need for clear documentation and evidence to support claims of engaging in charitable work, as well as the relevance of legal precedents in establishing the eligibility for registration.