2024 (11) TMI 1255 - AT - Income Tax

Denying Registration u/s 12AB - charitable purposes as defined u/s. 2(15) - objects of the Trust are for the benefit/welfare/interest of the members of the association only namely alumni and faculty members of Indus University and not for the benefit of public at large - HELD THAT - Looking into the objects of the trust, it cannot be held that the assessee/applicant trust has been formed only for the benefit of a particular set of public namely alumni and faculty members of the University. Perusal of the activities carried out by the Trust as reproduced in the table at Paragraph 3 above namely Food Donation, Blood Donation, Women Empowerment, English Learning, Awareness of ecological concept, New Library for the under privileged school children in Tramba Village activities clearly demonstrate that the Trust is not doing a charitable activities only for the alumni members of the Trust but for the general public at large. We also agree with the Counsel for the assessee that this aspect should be considered at the time of grant of exemption u/s 11 of the Act and the provisions of Section 13 should not be invoked at time of grant of registration u/s 12AA of the Act in the result. The impugned order is hereby set aside with a direction to CIT(E) to grant final registration u/s. 12AB of the Act.

Summary

Issues Involved:

1. Denial of final registration under Section 12AB of the Income Tax Act, 1961.
2. Interpretation of "charitable purposes" under Section 2(15) of the Act.
3. Application of Section 13 at the time of registration under Section 12AA.

Detailed Analysis:

1. Denial of Final Registration under Section 12AB:

The primary issue in this appeal was the denial of final registration under Section 12AB of the Income Tax Act, 1961, by the Commissioner of Income Tax (Exemption), Ahmedabad. The Trust, which had previously received provisional approval, sought final registration by filing Form 10AB. The CIT(E) rejected the application on the grounds that the Trust's activities were perceived to benefit only its members, namely the alumni and faculty members of Indus University, rather than the public at large. This decision was challenged by the Trust, which argued that its activities were indeed charitable and for the benefit of the general public, as evidenced by various programs and initiatives listed in the appeal.

2. Interpretation of "Charitable Purposes" under Section 2(15):

The Trust contended that its objects fell within the definition of "charitable purposes" as per Section 2(15) of the Act, specifically under the category of "advancement of any other general public utility." The Trust highlighted its diverse activities, such as food donation drives, educational programs, and community outreach, which were aimed at benefiting the general public and not restricted to a specific group. The Tribunal agreed with the Trust's interpretation, noting that the activities were not limited to alumni members but extended to the wider public, thus qualifying as charitable under the Act.

3. Application of Section 13 at the Time of Registration under Section 12AA:

The Tribunal addressed the CIT(E)'s application of Section 13 at the time of registration, which was deemed inappropriate. It was clarified that Section 13, which deals with the conditions for exemption, should be considered during the assessment of the Trust's income under Section 11, not at the registration stage under Section 12AA. The Tribunal cited judicial precedents to support this view, emphasizing that the CIT(E) should focus on the requirements for registration rather than the conditions for tax exemption at this stage.

Conclusion:

The Tribunal concluded that the Trust's activities were indeed for the public benefit and fell within the ambit of charitable purposes as defined under Section 2(15) of the Act. The CIT(E)'s decision to reject the application for final registration and cancel the provisional registration was set aside. The Tribunal directed the CIT(E) to grant final registration under Section 12AB, aligning with judicial precedents that support the Trust's position. The appeal filed by the Trust was allowed, reinforcing the principle that the scope of charitable activities should be interpreted broadly to include public utility initiatives.