2020 (5) TMI 591 - AT - Income Tax

Registration u/s 12AA - Trust exists solely for education and advancement of general public utility OR for profit - CIT(Exemption) rejected the registration merely on the ground of non furnishing of documents/information by the assessee to study the bona-fides of the objects of the assessee's Trust - HELD THAT - Finding recorded by the Ld. CIT(Exemption) that the registration cannot be granted for the assessee as it is involved in imparting the training to the employees of the state govt, is incorrect and contrary to the law. For this purposes, we may rely upon the decision of CIT Vs. Andhra Pradesh Police Welfare Society 1983 (3) TMI 19 - ANDHRA PRADESH HIGH COURT and Water and land Management Training Research Institute 2015 (6) TMI 248 - ITAT HYDERABAD and DIT Vs. National Safely Counsel 2015 (6) TMI 248 - ITAT HYDERABAD . Object of general public utility is wider and larger object which encompasses the object like imparting the training to the Govt employees working in various Department and Revenue. The Govt. Employees working with state govt. belongs to various state of the society and they are not restricted to one religion, caste or creed. If there is an improvement in their workmanship and the managerial skill then it will indirectly benefit the public and also to the Government. We are of the opinion that the assessee is entitled to get relief claimed before us and accordingly, we direct the Ld. CIT(Exemption) to issue the registration certificate from the date of application u/s.12AA of the Act. Thus, the grounds raised by the assessee in this appeal are allowed.

Issues:
1. Rejection of application for registration under section 12AA of the Income Tax Act.
2. Trust's existence solely for education and public utility.
3. Rejection based on presumption of non-genuine activities.
4. Dissemination of training benefiting the public.
5. Compliance with registration requirements and previous decisions.

Analysis:

Issue 1: Rejection of Registration Application
The appeal arose from the rejection of the assessee's application for registration under section 12AA of the Income Tax Act by the Ld. CIT (Exemption) Pune. The rejection was primarily due to the non-furnishing of documents/information by the assessee to verify the legitimacy of the trust's objectives. Despite the assessee's responses and submission of necessary documents, the Ld. CIT (Exemption) failed to utilize the provided information effectively. The rejection was based on the lack of fresh material to deviate from the earlier decision, highlighting a procedural shortcoming rather than substantive issues.

Issue 2: Trust's Purpose for Education and Public Utility
The trust in question was established for the sole purpose of education and advancement of general public utility, emphasizing its non-profit nature. The trust's activities were deemed genuine by the assessee, focusing on disseminating training that ultimately benefited the public at large. The trust's objectives aligned with broader public welfare goals, as it catered to the training needs of state government employees, contributing indirectly to public and governmental efficiency.

Issue 3: Presumption of Non-Genuine Activities
The rejection order was based on the presumption that the trust's activities were not genuine, primarily due to the training programs being limited to specific groups such as government employees. However, the tribunal emphasized that the trust's activities, even if targeted at a specific group, could still serve the broader public interest by enhancing workmanship and managerial skills, thereby indirectly benefiting society and the government as a whole.

Issue 4: Dissemination of Training Benefiting the Public
The trust's training programs for state government employees were viewed as activities that could enhance public welfare by improving the skills and efficiency of government personnel. The tribunal highlighted precedents where similar training initiatives were considered to fall under the ambit of general public utility, emphasizing the indirect benefits to society and governance resulting from improved workforce capabilities.

Issue 5: Compliance and Previous Decisions
The tribunal noted that the assessee had complied with the registration requirements by submitting the necessary documents and responding to queries raised by the authorities. Additionally, the tribunal referenced a previous decision where registration had been granted to a similar trust with comparable objectives. Drawing on legal precedents, the tribunal concluded that the rejection based on the nature of training provided to government employees was incorrect and directed the Ld. CIT (Exemption) to issue the registration certificate from the date of the initial application under section 12AA of the Act.

In conclusion, the tribunal allowed the appeal, emphasizing the trust's alignment with public welfare objectives and the indirect benefits accrued from its training programs, ultimately overturning the rejection and granting the registration sought by the assessee.

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