2021 (9) TMI 127 - AT - Income Tax

Exemption u/s 11 - rejecting the application for registration u/s.12A as the Assessee has not yet commenced its charitable activities - Whether Society has to carry out charitable activities for entitling to exemption u/s 12AA? - HELD THAT - As the society has given donation, but, the CIT(E) has not found the same as per section 2(15) - AR also could not produce any details before us to establish that the details of donation paid to the activities which are charitable in nature - As assessee requested that the matter may kindly be restored to the file of CIT(E) to demonstrate that the activities of the society are genuine as per the object clauses of the society. Considering all we remit the issue back to the file of CIT(E) with a direction to decide the issue after examining the details, which will be put-forth before him by the assessee regarding the charitable activities of the society and in accordance with law after providing reasonable opportunity of hearing to the assessee - Appeal of the assessee allowed for statistical purposes.

Issues Involved:
1. Delay in filing appeal due to COVID pandemic.
2. Rejection of registration under section 12A of the Income Tax Act.
3. Interpretation of charitable activities under section 2(15) of the Act.
4. Consideration of object clause for granting registration under section 12AA.
5. Applicability of judgment in Ananda Social & Educational Trust Vs. CIT.
6. Examination of society's activities for registration.

Delay in filing appeal due to COVID pandemic:
The appeal filed by the Assessee suffered from a 3-day delay in filing, attributed to the COVID pandemic and consequent lockdown. The Tribunal, considering case law precedent, condoned the delay as unintentional due to circumstances beyond the Assessee's control, emphasizing the importance of substantial justice. The case proceeded for adjudication on merits following the condonation of the delay.

Rejection of registration under section 12A of the Income Tax Act:
The CIT(E) rejected the Assessee's application for registration under section 12A, noting that the Assessee had not commenced charitable activities but only made a donation not considered charitable under section 2(15) of the Act. Relying on various case laws, the CIT(E) concluded that the Assessee was ineligible for registration under section 12AA due to the absence of genuine charitable activities as per its objects, leading to the Assessee's appeal before the ITAT.

Interpretation of charitable activities under section 2(15) of the Act:
The dispute centered on whether the donation made by the Assessee qualified as a charitable activity under section 2(15) of the Act. The CIT(E) found the donation to M/s Helping Hand Foundation not meeting the criteria of charitable activities, leading to the denial of registration under section 12A. The Assessee's contention was that the registration should be granted based solely on the charitable nature of the object clause, invoking relevant case law.

Consideration of object clause for granting registration under section 12AA:
The Assessee argued that registration under section 12AA should be based on the charitable nature of the object clause alone. However, the CIT(E) exercised discretion in evaluating the Assessee's activities in line with the Act and relevant judicial precedents. The Tribunal emphasized the need for genuine charitable activities aligned with the object clause for registration under section 12AA.

Applicability of judgment in Ananda Social & Educational Trust Vs. CIT:
The Assessee contended that their case aligned with the Supreme Court's judgment in Ananda Social & Educational Trust Vs. CIT, emphasizing the importance of considering proposed charitable activities for registration under section 12AA. The Tribunal examined the applicability of this judgment to the present case involving the Assessee's delayed commencement of charitable activities.

Examination of society's activities for registration:
After considering submissions from both parties and reviewing the object clause of the Assessee society, the Tribunal remitted the issue back to the CIT(E) for further examination. The Tribunal directed the CIT(E) to evaluate the details of charitable activities presented by the Assessee and make a decision in accordance with the law after providing a reasonable opportunity for the Assessee to be heard. Ultimately, the appeal of the Assessee was treated as allowed for statistical purposes.

This detailed analysis covers the various legal issues involved in the judgment delivered by the ITAT Hyderabad regarding the rejection of registration under section 12A of the Income Tax Act.

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