2024 (1) TMI 1006 - AT - Income Tax

Exemption u/s 11 - charitable activity u/s 2(15) or not? - rejection of the application of the assessee for registration u/s. 12AB - HELD THAT - On perusal of the objects of the society it is apparent that the society has charitable objects and, therefore, the request of the society for grant of registration u/s.12AB cannot be denied on the basis of assessment of the activities, which has actually been carried out by the assessee society. Hon ble Apex Court in the case of Ananda Social Educational Trust 2020 (2) TMI 1293 - SUPREME COURT has even held that the activities in the provision includes 'proposed activities'. As decided in Shri Agrasen Jan Kalyan Trust 2024 (1) TMI 407 - ITAT RAIPUR since the actual activities of the trust cannot be the deciding factor while granting the registration u/s. 12A but the object of the trust should have been looked into, the activities have to be looked into by the AO at the time of assessment proceedings. It is also a fact that the trust was formed with charitable objects eligible for approval u/s. 12AA of the Act, which is substantiated by the department itself by granting registration u/s. 12AA. In such circumstances we are of the considered opinion that the rejection of application for registration u/s. 12AA of the Act by Ld CIT(E) was an erroneous application of law - Thus we direct to grant registration u/s. 12AB in accordance with law - Decided in favour of assessee.

Issues Involved:
1. Rejection of application for registration under Section 12AB of the Income-tax Act, 1961.
2. Rejection of application for approval under Section 80G(5) of the Income-tax Act, 1961.
3. Condonation of delay in filing the appeal.

Summary:

1. Rejection of Application for Registration under Section 12AB:
The assessee challenged the order of the Commissioner of Income Tax (Exemption) [CIT(E)], Bhopal, which rejected the application for registration under Section 12AB of the Income-tax Act, 1961, and canceled the provisional registration granted by CPC under the same section. The CIT(E) rejected the application on the grounds that no charitable activities were conducted, and the activities carried out were commercial in nature. The Tribunal observed that the society has charitable objects and that the term 'activities' in Section 12AA includes 'proposed activities.' The Tribunal referenced the Supreme Court's decision in Ananda Social & Educational Trust v. CIT, which held that the Commissioner must consider whether the trust's objects are genuinely charitable and whether the proposed activities align with those objects. Consequently, the Tribunal set aside the CIT(E)'s order and directed the grant of registration under Section 12AB.

2. Rejection of Application for Approval under Section 80G(5):
The assessee also challenged the rejection of their application for approval under Section 80G(5) of the Income-tax Act, 1961, and the cancellation of the provisional approval granted by CPC. However, the assessee requested to withdraw this appeal (ITA No. 93/RPR/2023), which was granted by the Tribunal, leading to the dismissal of the appeal.

3. Condonation of Delay in Filing the Appeal:
The appeal in ITA No. 312/RPR/2023 was filed with a delay of 173 days. The assessee applied for condonation of delay, explaining that they were unaware of the separate cancellation order for registration under Section 12A due to identical wording and the issuance of separate DIN numbers. The Tribunal found the assessee's explanation bona fide and allowed the condonation of delay, permitting the appeal to be adjudicated.

Conclusion:
The Tribunal allowed the appeal regarding the rejection of registration under Section 12AB, directing the CIT(E) to grant registration in accordance with the law. The appeal concerning the approval under Section 80G(5) was dismissed following the assessee's request for withdrawal. The delay in filing the appeal was condoned based on the bona fide explanation provided by the assessee.

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