2015 (2) TMI 495 - AT - Income Tax

Registration under S.12AA denied - Held that - Under Section 12AA were confined to satisfy himself about the genuineness of the activities of the trust as well as nature of its object being charitable the action of the learned D.I.T(Exemption) in refusing to grant registration to the assessee trust on the ground of violation of the provisions of Section 13(1)(b) was not justified especially when he had not doubted either the genuineness of the activities of the assessee trust or the nature of its object being charitable. In that view of the matter we set aside his impugned order and direct that registration applied for by the assessee trust under Section 12AA be granted to it. - Decided in favour of assessee.

Summary

Issues Involved:
1. Delay in filing the appeal.
2. Rejection of application for registration under Section 12AA of the Income Tax Act, 1961.
3. Interpretation of the charitable nature of the assessee society's objectives.
4. Application of Section 13(1)(b) in the context of granting registration under Section 12AA.

Detailed Analysis:

1. Delay in filing the appeal:
The appeal filed by the assessee was delayed by 72 days. The assessee submitted an application along with an affidavit seeking condonation of the delay. The Tribunal, satisfied with the reasons provided and noting no objection from the Departmental Representative, condoned the delay and proceeded to dispose of the appeal on merits.

2. Rejection of application for registration under Section 12AA:
The assessee, a society, applied for registration under Section 12AA on 20.9.2012. The Director of Income-tax (Exemption) rejected the application, citing that the society's objectives primarily benefited the Christian minority community, which, according to him, disqualified it from being considered a public charitable institution.

3. Interpretation of the charitable nature of the assessee society's objectives:
The assessee argued that while the society aimed to benefit the Christian minority community, it also intended to serve others, suggesting preferential rather than exclusive treatment. The Tribunal referenced the Supreme Court's decision in Ahmedabad Rana Caste Association, which held that benefiting a section of the public constitutes a charitable purpose. The Tribunal also cited Allahabad High Court rulings supporting the view that trusts benefiting specific communities could still serve a charitable purpose.

4. Application of Section 13(1)(b) in the context of granting registration under Section 12AA:
The Director of Income-tax (Exemption) had rejected the registration based on a perceived violation of Section 13(1)(b), which pertains to the benefit of a particular religious community. However, the Tribunal clarified that Section 13(1)(b) is relevant only during the assessment stage and not at the registration stage under Section 12AA. The Tribunal emphasized that the Director's role under Section 12AA is limited to verifying the genuineness of the activities and the charitable nature of the objectives. Since the Director did not doubt these aspects, the rejection based on Section 13(1)(b) was deemed unjustified.

Conclusion:
The Tribunal concluded that the Director of Income-tax (Exemption) was not justified in refusing the registration under Section 12AA. The Tribunal set aside the impugned order and directed that the registration be granted to the assessee society. The appeal was allowed, and the order was pronounced on 27th August 2014.