2019 (6) TMI 1040 - AT - Income Tax

Registration u/s 12A - holding of conferences which was not covered by the definition of charitable purposes as defined in section 2(15) - HELD THAT - A perusal of the name as well as of the objects of the appellant society reveals that its main object is not only to hold treatment of patients with liver diseases but also to disseminate and spread the knowledge to the treating doctors, experts in relation to the advancements in treatment of liver diseases. At the time of registration u/s 12A of the Act, what is to be seen is the nature of the aims and objects of the society and genuineness of the activities of such trust or society, if such trust / institution or society has already commenced its operations. From the perusal of the documents placed on the file reveal that none of the members of the appellant society is receiving salary and that proper documentation regarding the income donations received and expenditure incurred is maintained. CIT(E) has not disputed in the impugned order as to the nature of the aims and objects of the society which are covered under the definition of charitable purposes as defined u/s 2(15) of the Income Tax Act. Further as discussed above, it cannot be said that the appellant society is not doing the activities in pursuance of its main objects or that the aims and objects of the society are not genuine. no justification on the part of the Ld. CIT (E) for rejecting the application of the appellant society for registration u/s 12A - Decided in favour of assessee.

Summary

Issues:
- Appeal against rejection of registration u/s 12A of the Income-tax Act, 1961.

Detailed Analysis:
1. Issue of Rejection of Registration: The appellant Society appealed against the rejection of its application seeking registration u/s 12A of the Income-tax Act by the Commissioner of Income Tax (Exemptions), Chandigarh (CIT(E)). The CIT(E) rejected the application on the grounds that the Society primarily focused on holding conferences, with major expenses incurred on conference-related activities. The CIT(E) noted a lack of evidence of financial contributions by society members and highlighted that major donors were pharmaceutical companies. The rejection was based on the view that the Society's activities, especially conference holding, did not align with the definition of charitable purposes under section 2(15) of the Act.

2. Nature of Society's Activities: The Tribunal analyzed the aims and objects of the appellant Society, emphasizing its focus on treating patients with liver diseases and disseminating knowledge to medical professionals. The Society aimed to provide support for research, education, and treatment of liver diseases, falling within the definition of charitable purposes as per section 2(15) of the Act. The Tribunal considered the genuineness of the Society's activities, highlighting its efforts to educate medical experts, conduct community service programs, and facilitate medical officers in treating liver diseases in prisons.

3. Activities Supporting Charitable Purposes: The appellant Society demonstrated various activities beyond conference holding to achieve its charitable objectives. It engaged in programs like ECHO to enhance healthcare outcomes in underserved areas, educate medical officers, and conduct screenings for hepatitis C and B viruses in prisons. The Society distributed free test kits and maintained proper documentation of income, donations, and expenditures. The Tribunal noted that none of the Society members received salaries, further supporting the genuine nature of its charitable activities.

4. Legal Precedent and Decision: The Tribunal referred to a previous decision involving a similar case, where relief was granted to a society under comparable circumstances. Considering the aims, objects, and activities of the appellant Society, along with the precedent set by the Coordinate Bench of the Tribunal, the rejection of registration by the CIT(E) was deemed unjustified. The Tribunal set aside the CIT(E)'s order and directed the grant of registration to the appellant Society under sections 12A/12AA of the Income-tax Act within a specified timeframe.

In conclusion, the Tribunal allowed the appeal of the appellant Society, emphasizing the alignment of its activities with charitable purposes defined under the Income-tax Act. The decision highlighted the importance of genuine charitable endeavors and proper documentation in securing registration for tax-exempt status.