2022 (9) TMI 1637 - AT - Income Tax

Rejecting application for registration u/s 12A - assessee society is doing no charitable activities - assessee society is established for a particular community and almost objects are for the benefit of a particular community and carried out activities for the benefit of Satnami Samaj, which is a society publishing a magazine in every month in the name of Satnami Sandesh - HELD THAT - Regarding duties of CIT(E) to be performed with respect to procedure for registration u/s 12AA(1)(a) and (b) Hon'ble Rajasthan High Court in the case of CIT Vs. Vijay Vargiya Charitable Trust 2015 (2) TMI 671 - RAJASTHAN HIGH COURT has categorically held that at the time of granting registration, the objects of the Trust for which it was formed, is only to be looked into and the CIT s satisfaction about genuineness of activities of the Trust was not criteria as the Trust was just commencing activities. Hence the issue regarding satisfaction or genuineness of the activities of the trust is not a matter to be looked into at the time of granting registration u/s 12AA of the Act. Invoking provision of section 13(1)(b) coordinate bench of the ITAT Raipur in the case of Shree Vimalnath Jain Swetamber Mandir Trust 2019 (1) TMI 1129 - ITAT RAIPUR has given the finding by respectfully following the observation in the case of Kul Foundation 2015 (2) TMI 323 - ITAT PUNE has held that where the conditions of section 13(1)(b) is attracted so to denying exemption u/s 11 and 12 of the Act is a matter to be looked into by the AO at the time of assessment proceedings. Thus, where the Trust attracts section 13 (1)(b) of the Act and therefore, not entitle to the claim of deduction u/s 11 and 12 of the Act is a matter of concern only at the time of assessment proceedings. As in the case of Barkate Saifiyah Society, 1993 (11) TMI 13 - GUJARAT HIGH COURT has held that the provisions of section 13(1)(b) will apply only to the Trust which are purely for charitable purposes. If the assessee Trust has objects in both charitable and religious in nature, in such Trust, Section 13(1)(b) is not applicable. On perusal of the bye-laws of the assessee society it is evident that the assessee society has charitable as well as religious objects, therefore, squarely covered by the judgment of Barkate Saifiyah Society 1993 (11) TMI 13 - GUJARAT HIGH COURT Thus we are of the considered opinion that registration to the assessee trust cannot be denied on the basis of observation of the CIT(E) - Assessee appeal allowed.

Summary

Issues:
- Rejection of application for registration u/s 12AA of the Act by CIT(E) based on specific grounds.
- Dispute regarding the charitable nature of the activities carried out by the assessee society.
- Interpretation of provisions of Section 13(1)(b) in relation to the registration of a trust or institution.
- Comparison of previous judicial decisions on similar matters to determine the applicability of the law in the present case.

Analysis:
1. The appeal was filed against the rejection of the application for registration u/s 12AA of the Act by the CIT(E) based on the grounds that the society was established for the benefit of a particular community and the activities were not deemed charitable. The CIT(E) found that the society primarily worked for the Satnami Samaj, leading to the rejection of the application.

2. The assessee argued that its activities were not limited to a particular community but aimed at spreading education, ethical knowledge, and social reforms among women and children. The assessee contended that its funds were transparent and accounted for the public interest. The assessee also relied on Explanation 2 of Section 13 to support its case.

3. The CIT(E) emphasized the need for the society to prove its charitable activities to be eligible for registration u/s 12AA. The CIT(E) rejected the application based on the belief that the society primarily benefited the Satnami Samaj and did not provide sufficient evidence of charitable work.

4. The Tribunal examined the activities of the society and noted that the society was engaged in charitable activities for the larger public, not just a specific community. Reference was made to judicial decisions emphasizing that the genuineness of activities need not be a criterion for granting registration u/s 12AA.

5. The Tribunal also considered the applicability of Section 13(1)(b) and previous judgments to determine whether the rejection of registration was justified. It was concluded that the society's objects included both charitable and religious aspects, making Section 13(1)(b) inapplicable.

6. Ultimately, the Tribunal set aside the order of the CIT(E) and directed the grant of registration u/s 12AA to the assessee trust. The decision was based on the assessment of facts, submissions, and relevant judicial pronouncements, which supported the eligibility of the society for registration.

This detailed analysis highlights the key arguments presented by both parties, the interpretation of relevant legal provisions, and the application of previous judicial decisions to reach a conclusion favoring the assessee in obtaining registration under Section 12AA of the Act.