2017 (11) TMI 1214 - AT - Income Tax

Denying registration under section 12AA(1)(b)(ii) read with section 12A - proof of genuineness of the society and charitable purposes - Held that - The society is established for the purposes of spreading of education in the field of anesthesia. Anesthesia is a special filed for medical science and education in specialized medical field to evaluate the benefit of this research at much higher number of poor patients also and to do research and to develop knowledge on anesthesiologist means to held the large number of patients who undergo treatment in various hospitals. It was argued before us, that charitable purposes include education and said trust is doing work of education by conducting research and development, publishing the journals, books etc. in the field of anesthesiology medical science. Even going by the aims and objectives above reproduced, we are of the view that there is no whisper that assessee trust is not for general public or it is for any special community. It is also evident that this year the receipt of donation is only ₹ 1,25,000/- as on 31-03-2016. According to us, the newly inserted proviso to section 2(15) of the Act will not apply in respect of the first three limbs of section 2(15) of the Act i.e. relief for the poor, education or medical relief. Consequently, where the purpose of the trust or institution is relief for the poor, education or medical relief, it will constitute as charitable purpose even if it incidentally involves for carrying commercial activities. Accordingly, we are of the view that this society requires to register under section 12A of the Act as none of the authorities have doubted the genuineness of the society or there is any clause violated the proviso to section 2(15) - Decided in favour of assessee.

Summary

Issues involved:
Appeal against denial of registration under section 12AA(1)(b)(ii) read with section 12A of the Income Tax Act based on interpretation of "charitable purpose" under section 2(15) of the Act.

Analysis:
1. The only issue in this case is the denial of registration under section 12AA(1)(b)(ii) read with section 12A of the Income Tax Act, based on the interpretation of "charitable purpose" under section 2(15) of the Act. The appellant contended that the trust was established for the education of a specialized field of medical science, Anesthesiology, and not for the benefit of individual doctors. The Commissioner of Income Tax (Exemptions) rejected the application, stating that the trust did not fall under the definition of section 2(15) as there was no charity involved nor any benefit to the general public. The appellant argued that the trust's activities aimed to enrich the professional knowledge of anesthesiologists and ultimately benefit society at large. The Commissioner's decision was based on the trust's main object of associating with anesthesiologists, not for the interest of the general public.

2. The Tribunal analyzed the aims and objectives of the trust, which included associating anesthesiologists, encouraging research and development in anesthesiology, publishing journals, books, and disseminating information in the field. The Tribunal noted that the trust was established for spreading education in the field of anesthesia, a specialized medical science. The Tribunal emphasized that the trust's activities aligned with charitable purposes such as education and medical relief, as per section 2(15) of the Act. The Tribunal highlighted that the trust's receipt of donations was minimal, and the proviso to section 2(15) would not apply to relief for the poor, education, or medical relief.

3. The Tribunal further emphasized that whether an entity is carrying on activities in the nature of trade, commerce, or business is a factual determination based on the nature, scope, extent, and frequency of the activity. In this case, the Tribunal found that the trust's activities aligned with charitable purposes and did not violate the proviso to section 2(15) of the Act. Therefore, the Tribunal granted registration to the trust under section 12A of the Act, as none of the authorities questioned the genuineness of the trust. The appeal of the assessee was allowed, and the registration was granted.

In conclusion, the Tribunal overturned the Commissioner's decision and granted registration to the trust under section 12A of the Income Tax Act, emphasizing that the trust's activities aligned with charitable purposes such as education and medical relief, benefiting society at large.