2012 (8) TMI 457 - AT - Income Tax

Denail of registration u/s.12A - Held that - The assessee has come up into existence in pursuance of decision of Government of Maharastra to provide certain assistance to the public at large in the matter of various administrative works in various Government Offices at a nominal charge as a social obligation - while providing facilities like Telephone calls, Xerox etc., the society collects suitable service charges from the beneficiaries of such services to meet the expenses. Such service charges cannot be termed as involving carrying of any activity in the nature of trade/commerce or business or any activity of rendering any services in relation to any trade/commerce or business so as to disentitle the assessee society the benefit of registration u/s.12A/12AA. As no orders were passed by CIT on application filed on 04-05-2006 within a period of six months, the registration is deemed to have been granted to the appellant and in the circumstances the learned CIT ought to have granted registration to the appellant from date of its inception - in favour of assessee.

Issues Involved:
1. Delay in filing the appeal.
2. Rejection of registration under Section 12A of the Income Tax Act.
3. Charitable nature of the appellant's activities.
4. Deemed registration due to non-action by CIT within the prescribed time.

Detailed Analysis:

1. Delay in Filing the Appeal:
The appeal was filed with a delay of about eight months and one week. The assessee provided an affidavit explaining the reasons for the delay, which was accepted by the Tribunal. Consequently, the delay in filing the appeal was condoned.

2. Rejection of Registration under Section 12A:
The primary issue was the rejection of the appellant's request for registration under Section 12A of the Income Tax Act. The CIT-I, Pune, concluded that the appellant could not be regarded as a Charitable Trust within the meaning of Section 12A read with Section 2(15) of the IT Act, 1961. The CIT observed that some objects of the society, such as recovering service charges and providing facilities like telephone booths and ATMs, fell within the exclusionary provisions of Section 2(15). The CIT opined that these activities amounted to trade, commerce, or business, thus disqualifying the society from being considered charitable.

3. Charitable Nature of the Appellant's Activities:
The appellant argued that the dominant purpose of the society was charitable, aimed at providing better, speedy, and efficient services to the public. The society was formed under the Societies Registration Act, 1860, and the Bombay Public Charitable Trust Act, 1950. The appellant cited a decision by the Hon'ble Bombay High Court, which held that incidental profits used for charitable purposes do not negate the charitable nature of an institution. The Tribunal agreed with the appellant, noting that the service charges collected were nominal and aimed at meeting expenses rather than making a profit. The Tribunal also noted that a similar entity, District Setu Centre, Nashik, had been granted registration under identical circumstances. Thus, it was held that the appellant was entitled to registration under Section 12A.

4. Deemed Registration Due to Non-Action by CIT:
The appellant contended that since no orders were passed by the CIT on the application filed on 04-05-2006 within the prescribed six months, registration should be deemed to have been granted from the date of application. The Tribunal found evidence that the application was indeed filed on 04-05-2006 and deemed it proper to restore the issue to the CIT for verification and appropriate action.

Conclusion:
The Tribunal allowed the appeal regarding the rejection of registration under Section 12A, recognizing the appellant as a charitable trust. The issues of deemed registration due to non-action by the CIT were remanded back for verification. Grounds of appeal No. 1 were allowed, while grounds No. 2 and 3 were allowed for statistical purposes.

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