2015 (8) TMI 72 - AT - Income Tax

Registration u/s 12AA rejected - Held that - The main object of the assessee trust is to bring together all bankers club of the state under one umbrella. The assessee is organizing lecturers and seminars for the benefit of the employees of the bankers, thus by providing such kind of opportunity to the employees of the bank to listening to seminars and lecturers organized by the trust, the assessee is really rendering service to the banking business. It is not the case of the assessee that the aggregate value of the receipt is less than ₹ 25 lakh rupees. Therefore, this Tribunal is of the considered opinion that the First Proviso to section 2(15) would come into operation. In view of the First Proviso to section 2(15), this Tribunal is of the considered opinion that rendering of any service to the banking business cannot be considered to be a charitable activity or purpose. In this case, as found by this Tribunal, the assessee is rendering services to the banking business by organizing lectures and seminars. There may be an incidental benefit to the customers of the bank, but it does not mean that the assessee is doing charitable activity. This Tribunal is of the considered opinion that the assessee is not rendering any charitable activity other than rendering service to banking business by organizing lectures and seminars. - Decided against assessee.

Summary

Issues Involved:
1. Registration u/s 12AA of the Act for a trust organizing lectures and seminars for bank employees.
2. Whether the activities of the trust benefit the general public or are solely for the banking business.
3. Interpretation of section 2(15) of the Act regarding charitable purposes and activities related to trade, commerce, or business.
4. Requirement of commencing activities before applying for registration u/s 12AA.

Analysis:

1. The appeal was against the rejection of registration u/s 12AA for a trust aiming to unite bankers clubs and organize lectures/seminars for bank employees. The representative argued that the trust's purpose was not recreation but to enhance efficiency in banking. Activities included speeches by RBI officials, benefiting bank employees.

2. The trust aimed to bring together bankers clubs and improve employee efficiency, potentially benefiting the general public indirectly through better banking services. The Tribunal noted that organizing seminars could enhance bank profitability, thus benefiting the public. However, it was debated whether these services were solely for the banking business or had broader public utility.

3. Section 2(15) defines charitable purposes, excluding activities related to trade, commerce, or business unless the receipts are below a specified limit. The Tribunal found that organizing lectures for bank employees constituted service to the banking business, not charitable activity. Previous judgments cited were deemed inapplicable due to subsequent legal amendments.

4. The trust argued that commencing activities was not a prerequisite for registration u/s 12AA, citing a High Court judgment. However, a Division Bench ruling clarified that activity commencement was necessary before seeking registration. Consequently, the Tribunal upheld the lower authority's decision to deny registration, dismissing the appeal.

This detailed analysis covers the issues related to the rejection of registration for the trust under consideration, focusing on the nature of its activities, public benefit, legal provisions, and precedents cited during the proceedings.