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2023 (2) TMI 255 - AT - Income TaxExemption u/s 11- rejecting the application for registration u/s 12AB considering the objects of the assessee as non-charitable - HELD THAT - Taking into consideration the Memorandum of Association of the assessee foundation and found that the activities undertaken by the assessee trust are interconnected with the object of the foundation undertaken. It is also mentioned in the Memorandum of Association that the objects of the company extend to the whole of India which are not of profit motive. The profits, if any, or other income and property of the company, whensoever derived, shall be applied, solely for the promotion of its objects as set forth in this memorandum as is mentioned in the Memorandum of Association of Keeday Makauday Foundation filed under the Companies Act, 2013 who has granted Licence under Section 8(1) of the Companies Act, 2013. From the entire conspectus of the issue in question, we feel that the CIT (E) is not justified in denying the registration 12AB of the Act when the assessee foundation/ trust has supplied all the desired information as per his query letter and he did not controvert them which indicates that the order passed by the ld. CIT(E)suffers from infirmity which cannot be sustained. Thus appeal of the assessee foundation is allowed.
Issues Involved:
1. Rejection of the application for registration under section 12A of the Income Tax Act. 2. Consideration of the objects of the assessee as non-charitable. Detailed Analysis: Issue 1: Rejection of the Application for Registration under Section 12A The assessee appealed against the order of the CIT(Exemption) rejecting their application for registration under section 12A of the Income Tax Act for the assessment year 2022-23. The assessee contended that there was a one-day delay in filing the appeal due to circumstances beyond their control, specifically the late delivery of documents via speed post. The delay was condoned by the tribunal, referencing the Supreme Court decision in the case of Collector, Land Acquisition vs. MSt. Katiji and Others, 167 ITR 471. The CIT(Exemption) had asked the assessee to submit certain documents and explanations, which the assessee provided partially. The CIT(Exemption) found the submissions insufficient and noted that the objects of the assessee had elements of commercial/business nature, leading to the rejection of the application. Issue 2: Consideration of the Objects of the Assessee as Non-Charitable The CIT(Exemption) examined the genuineness of the activities and compliance with other laws material to achieving the assessee's objects. The CIT(Exemption) referenced Rule 17A of the Income Tax Rules, 1962, which requires the assessee to produce documents establishing the trust/society for verification. The CIT(Exemption) concluded that the assessee's activities appeared to be business-oriented rather than charitable, citing specific objects from the Memorandum of Association (MoA) that seemed commercial in nature. The assessee argued that the CIT(Exemption) erred in rejecting the registration and provided detailed explanations and documents supporting their claim. They contended that their activities were charitable and aligned with the preservation of the environment, which is included in the definition of charitable purpose under section 2(15) of the Income Tax Act. The assessee highlighted that they are registered under section 8 of the Companies Act, 2013, which mandates that any surplus be applied solely for promoting the objects and not distributed as dividends. The tribunal noted that the assessee had indeed furnished all the required details and documents. The CIT(Exemption) failed to specify which details were missing. The tribunal found that the activities of the assessee were interconnected with their charitable objects and that the CIT(Exemption) was not justified in denying the registration under section 12AB. Conclusion: The tribunal allowed the appeal of the assessee, concluding that the CIT(Exemption) was not justified in rejecting the registration under section 12AB of the Income Tax Act. The tribunal found that the assessee had provided all necessary information and that their activities were charitable in nature, aligned with the preservation of the environment. The order of the CIT(Exemption) was deemed to suffer from infirmity and was not sustained. The appeal was allowed, and the registration under section 12AB was granted.
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