2012 (8) TMI 795 - AT - Income Tax

Application for registration filed u/s 12A rejection on ground of non-charitable purposes assessee-institution formed with primary object of setting-up suitable memorials to perpetuate the memory of National War heroes Held that - The Finance No. 2 Act, 2009 with retrospective effect from 1.4.2009 had inserted the preservation of environment or preservation of monuments or places of objects of artistic or historic interest as part of the definition of charitable purpose within the meaning of section 2(15). Admittedly, assessee is desirous of constructing monuments in the memory of war heroes and once such monument is constructed, the preservation of the said monument would be charitable purpose entitling the assessee to fall within the amended definition enshrined in section 2(15). The assessee has not constructed any such war memorials till date. However, perusal of other objects of assessee like setting up educational institutions, arranging seminars, and further to inculcate moral, spiritual, physical and patriotic spirit in the public in general, reflect the nature of advancement of other objects of general public utility. Consequently, the assessee is entitled to the benefit of registration u/s 12AA Decided in favor of assessee

Summary

Issues Involved:
1. Rejection of application for registration under section 12A of the Income-tax Act.
2. Assessment of the charitable nature of the activities of the assessee society.
3. Verification of the correctness of the accounts and receipts issued to donors.

Detailed Analysis:

1. Rejection of Application for Registration under Section 12A:
The primary issue at hand is the rejection of the assessee's application for registration under section 12A of the Income-tax Act by the Commissioner of Income Tax (CIT). The assessee society, registered with the District Registrar of Societies, Yamuna Nagar, applied for registration under section 12A on 01.10.2009. The CIT rejected the application, stating that the activities of the society were not genuine towards achieving its aims and objects. The CIT concluded that the primary purpose of the society, which is to build memorials in favor of national heroes, did not fall within the definition of 'charitable purposes' as per the Act.

2. Assessment of the Charitable Nature of the Activities:
The assessee society's primary objectives include setting up suitable memorials for national war heroes, establishing a museum, library, and exhibition for defense-related items, conducting research in martial arts and warfare, and promoting military activities among the youth. The CIT argued that the creation of new monuments does not fall within the definition of 'charitable purposes' which includes preservation of monuments or places of artistic or historic interest. However, the Tribunal noted that the amended definition of 'charitable purpose' under section 2(15) of the Act, effective from 01.04.2009, includes preservation of monuments or places of artistic or historic interest. The Tribunal concluded that once such a monument is constructed, its preservation would be considered a charitable purpose.

3. Verification of the Correctness of Accounts and Receipts Issued to Donors:
The CIT also observed that the receipts issued by the assessee society lacked the addresses of the donors, making it difficult to verify the correctness of the accounts. The Tribunal held that this issue should be addressed by the Assessing Officer during the computation of income and should not form the basis for rejecting the application for registration under section 12AA.

Conclusion:
The Tribunal concluded that the assessee society is engaged in activities that are charitable in nature, as defined under section 2(15) of the Act. The Tribunal directed the Commissioner of Income Tax to grant registration to the assessee society under section 12AA of the Income-tax Act. The grounds of appeal raised by the assessee were allowed, and the appeal was decided in favor of the assessee.