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2021 (11) TMI 746 - AT - Income TaxExemption u/s 11 - rejection of application seeking registration u/s. 12AA - appellant is a company incorporated under the provisions of Section 8 of the Companies Act, 2013 and promoted by IIS (Deemed to be University) Trust which is also solely engaged in imparting education having necessary approvals u/s.12AA - HELD THAT - Assessee company had filed an application on 16.10.2020 seeking registration u/s. 12AA of the Act. Thereafter, the assessee company was issued a letter dated 30.12.2020 asking them to submit certain documents/explanation and to submit original registration certificate and Memorandum of Association for verification - only part information/documentation was submitted by the assessee company. Thereafter, a show cause notice dated 11.03.2021 was issued asking for certain specific details/information and matter was fixed for hearing on 15.03.2021. In response to the show cause, the ld PCIT stated that the assessee company furnished part details and failed to furnish clarification regarding certain objects having elements of commercial/business nature and clarification on the objects benefiting particular community or class in terms of ICG-IISU Alumnae Association and not for general public utility, ownership proof of the assessee premises. Pr. CIT therefore stated that the assessee company has failed to furnish valid explanation inspite of giving sufficient opportunity and being a limitation matter, he decided basis material available on record and application seeking registration u/s. 12AA was rejected. AR submitted that in response to the show cause dated 11.03.2021, the assessee company did submit its response vide letter dated 19th of March, 2021 and it is therefore, factually not correct that the assessee company has not submitted the requisite information and explanation as sought by the ld. Pr. CIT rather he has failed to correct appreciate the submissions so filed by the assessee company. While examining the assessee's application seeking registration u/s. 12AA, the ld. Pr. CIT has raised broadly two issues which require deeper examination. Firstly, certain objects of the assessee company have been stated to be having elements of commercial/business nature and secondly, whether the objects sought to be achieved were for the benefit of Alumnae ICG-IISU and whether the same qualify as benefiting the public at large and can therefore be classified as object of general public utility. Though the assessee claims to have submitted the requisite explanation, however, in absence of findings by the ld. Pr. CIT, we deem it appropriate that the matter is set aside to the file of ld. Pr. CIT to examine the same afresh - Appeal of the assessee is allowed for statistical purposes.
Issues Involved:
1. Delay in filing the appeal. 2. Rejection of application seeking registration under Section 12AA of the Income Tax Act. 3. Alleged commercial/business nature of certain objects of the appellant company. 4. Whether the objects of the appellant company benefit the public at large or a specific group. Issue-wise Detailed Analysis: 1. Delay in Filing the Appeal: The appellant filed the appeal with a delay of 27 days, attributing the delay to the COVID-19 pandemic and consequent lockdowns. The appellant cited a Supreme Court decision extending the period of limitation due to the pandemic. The respondent did not object to this explanation. The Tribunal found the delay reasonable and condoned it, admitting the appeal for adjudication on merits. 2. Rejection of Application Seeking Registration under Section 12AA: The appellant, a company incorporated under Section 8 of the Companies Act, 2013, sought registration under Section 12AA of the Income Tax Act. The application was rejected by the CIT(E) on the grounds that certain objects in the Memorandum of Association had elements of commercial/business nature. The appellant argued that these activities were extensions of educational activities and not commercial in nature. The Tribunal noted that the CIT(E) had accepted the charitable nature of the objects but rejected the application due to perceived commercial elements. 3. Alleged Commercial/Business Nature of Certain Objects: The CIT(E) identified specific objects in the appellant's memorandum that appeared to have commercial/business elements. The appellant contended that these objects were necessary for maintaining continuity in education and were not conducted on a commercial basis. The appellant also highlighted that the company was incorporated under Section 8 of the Companies Act, which prohibits commercial activities. The Tribunal observed that the CIT(E) had not adequately considered the appellant's explanations and judicial precedents supporting their case. 4. Whether the Objects Benefit the Public at Large or a Specific Group: The respondent argued that the appellant's activities primarily benefited ex-students of specific educational institutions and not the public at large, thus not qualifying as objects of general public utility. The appellant countered that fostering cooperation among alumni indirectly benefits the public by promoting education. The Tribunal noted that the CIT(E) had not provided sufficient findings on whether the appellant's activities qualified as benefiting the public at large. Conclusion: The Tribunal found that the CIT(E) had not thoroughly examined the appellant's explanations and submissions. It set aside the CIT(E)'s order and remanded the matter for fresh examination, directing the CIT(E) to consider the appellant's submissions and provide a reasonable opportunity for further clarification. The appeal was allowed for statistical purposes. Order Pronouncement: The order was pronounced in the open Court on 02/11/2021.
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