2015 (2) TMI 279 - AT - Income Tax

Registration u/s 12A rejected - Rejection of application for approval u/s 80G - Held that - In the present case it appears that the details of the seminars and symposium etc. organized by the assessee society and the literature, newsletters and books on probiotics etc. were not furnished earlier so these were not available to the DIT(Exemption) for her examination and consideration. The claim of the assessee society for getting the registration u/s 12A of the Act is based on these documents. We, therefore, to meet the ends of justice deem it appropriate to remand this issue back to the file of the ld. DIT(Exemption) to be decided afresh in accordance with law after providing due and reasonable opportunity of being heard to the assessee society and by considering all the documents which are furnished first time before the ITAT.- Decided in favour of assessee for statistical purposes.

Summary

Issues:
1. Rejection of application for registration u/s 12A of the Income Tax Act, 1961.
2. Rejection of application for approval u/s 80G of the Income Tax Act.

Analysis:
Issue 1: The assessee's appeal against the rejection of the registration application u/s 12A was based on the contention that their activities were charitable in nature. The Department of Income Tax (DIT) raised concerns about the society's funding sources, primarily from Yakult Danone India (P) Ltd., and the nature of its activities. The DIT concluded that the society's activities were more akin to sponsored research by a commercial organization rather than charitable work. The assessee argued that their research on probiotics was for the benefit of the public and cited various cases to support their claim. Ultimately, the Income Tax Appellate Tribunal (ITAT) found that crucial documents supporting the charitable nature of the activities were not submitted earlier and remanded the issue back to the DIT for a fresh decision after considering all relevant documents.

Issue 2: The rejection of the application for approval u/s 80G was closely linked to the decision on the registration u/s 12A. Since the ITAT remanded the registration issue for reconsideration, the decision on the approval u/s 80G was also remanded back to the DIT for a comprehensive review. The ITAT allowed both appeals for statistical purposes, emphasizing the need for a fair and thorough assessment based on all available documents and legal provisions.

In conclusion, the ITAT's judgment highlighted the importance of providing complete documentation to support claims of charitable activities for registration and approval under the Income Tax Act. The case underscores the significance of adhering to legal requirements and ensuring transparency in financial dealings to qualify for tax benefits related to charitable work.