2018 (2) TMI 255 - AT - Income Tax

Registration u/s 12AA and approval u/s 80G rejected - denial of claim on the ground that the activities of the assessee company does not fall within the ambit of section 2(15) being merely into the promotion of transport business - Held that - When we examine the aims and objects of the assessee company in the light of the aforesaid definition of charitable purpose imparting skill education in logistics, warehousing management and courier management, it would certainly lead to fulfilling the object of general public utility. Furthermore, by imparting skill development in logistics industry, warehouse and courier management, to be deployed in the logistics industry, would certainly serve the object of general public utility as driving vehicles by the untrained drivers on the roads are also leading to numerous road accidents in our country. Asassessee company registered u/s 25 of the Companies Act is carrying out its activities with specific aims and objects of imparting training in logistics, warehousing management and courier management for the benefit of the public at large being a public private partnership having affiliation of NSDC under the Ministry of Skill Development and Entrepreneurship as its vocational training partner and as such, is entitled to be registered u/s 12AA and consequent approval u/s 80G of the Act. So, the impugned orders passed by the CIT (Exemption), Chandigarh are not sustainable in the eyes of law, hence the ld. CIT is directed to grant registration u/s 12AA to the assessee company forthwith, with approval u/s 80G of the Act. Consequently, both the appeals filed by the assessee company are allowed.

Summary

Issues:
- Rejection of application for registration under sections 12AA and 80G of the Income Tax Act based on the nature of activities of the assessee company.

Detailed Analysis:

Issue 1: Registration under Section 12AA
The assessee company sought to set aside orders rejecting its application for registration under section 12AA of the Income Tax Act. The Commissioner of Income-tax (Exemptions) rejected the application based on the view that the company's activities were primarily related to the promotion of transportation business and did not qualify as charitable under section 2(15) of the Act. The Tribunal analyzed the aims and objects of the company, which focused on skill development in the logistics sector, creating job opportunities, and collaborating with the National Skill Development Corporation (NSDC). The Tribunal concluded that the company's activities aligned with the definition of charitable purpose, emphasizing the public utility aspect of skill education in logistics, warehousing, and courier management. Therefore, the Tribunal directed the registration under section 12AA to be granted.

Issue 2: Registration under Section 80G
Similarly, the application for registration under section 80G was rejected by the Commissioner based on the perceived promotion of transportation business by the assessee company. However, the Tribunal, after examining the company's objectives and activities in detail, found that the skill development initiatives in logistics, warehousing, and courier management served the public at large and qualified as activities for general public utility. The Tribunal emphasized the importance of skill development in reducing road accidents caused by untrained drivers. Consequently, the Tribunal allowed the appeals filed by the assessee company and directed the approval under section 80G to be granted.

Conclusion
The Tribunal's decision highlighted the importance of considering the broader societal impact of an organization's activities when assessing eligibility for registration under sections 12AA and 80G of the Income Tax Act. By focusing on skill development and public utility, the Tribunal concluded that the assessee company's initiatives aligned with charitable purposes and deserved registration and approval under the Act.