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TMI Blog2013 (12) TMI 18X X X X Extracts X X X X X X X X Extracts X X X X ..... ated 24/25.09.2012 passed by learned Commissioner of Income- Tax-I, Jalandhar. 2. The facts relating to the issue in dispute are that the assessee filed an application for grant of registration under Section 12A of the Income Tax Act, 1961 (in short "the Act") on 15.03.2012 along with a copy of the Certificate of Incorporation showing that the Company has been incorporated on 28.08.2010. 3. The assessee is a Company registered under Section 25 of the Indian Companies Act, 1956 and it has filed a copy of its Memorandum of Association and a list of the subscribers to its share capital. The primary objective of the company has been stated to be the creation of a Common Facility Centre for the use of hand tool manufacturers that is stated to contain facilities for the various manufacturing activities such as forging, heat treatment, packaging, training, finishing, testing etc. This facility is to be accessed by the hand tools manufacturer upon payment of user/service charges that are to be decided from time to time. In addition to the above, the Company also lists out various ancillary objectives. 4. An opportunity of being heard was given to the assessee and its authorized repre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urther stated that for the purposes of registration of trust, only the objects of the trust are to be seen and not the activities. Since in the absence of the infrastructure in the shape of land, building, machinery and persons with technical know- how, it would not be possible to start the activities as have been enshrined in the deed. Further, for the purpose of registration under Section 12AA, all the details and informations, as had been called by the Assessing Officer, had been filed before him to his satisfaction. The only essential ingredient is the genuineness of the objects of the trust that are to be seen and not the activities. In support of his contention, he cited the following judgments/decisions: i. Himachal Pradesh Environment Protection and Pollution Control Board Vs. Commissioner of Income Tax, reported in (2009) 28 DTR 289; ii. Commissioner of Income Tax Vs. Andhra Chamber of Commerce, reported in (1965) 55 ITR 722 (SC); iii. Commissioner of Income Tax Vs. Haryana Building Other Construction Works Welfare Board, reported in (2011) 52 DTR (P H) 253 7. On the contrary, learned DR relied upon the impugned order passed by Commissioner of Income Tax-I, Jalan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ities such as forging, heat treatment, packaging, training, finishing, testing etc. to hand tool manufacturers upon payment of user/service charges that are to be decided from time to time. On this issue, a liberty of being heard was provided to the assessee and after hearing the authorized representative of the assessee and perusing the written submission of the assessee, learned First Appellate Authority was of the view that in the case of the assessee, the hand tool manufacturers can utilize the proposed CFC of the Company upon payment of usage charges and that shall be determined by the directors of the company who themselves are the industry leaders in this segment. Learned Commissioner of Income Tax-I, Jalandhar, has also held that if the usage are so fixed as to recover the basic cost and not to make any profit still as per the first proviso to Section 2(15) of the Act, it ceases to be a charitable purpose, since this proviso specifically excludes any activity in the nature of trade, commerce or business or any activity of rendering any service in relation to any trade, commerce or business for a cess or fees or any other consideration irrespective of the nature of use of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ese conditions, therefore the case laws relied upon by learned counsel for the assessee are not helpful in the present case. 10. The contention of the assessee regarding registration under Section 25 of the Indian Companies Act, 1956, we are of the view that Section 25 is for those companies which are formed for the purposes of promoting commerce, art, science, religion, charity or any other useful object and it should intend to apply its profits or other incomes only in promoting its objects. The assessee has not produced any evidence establishing that the assessee-company was incorporated not for commercial purpose but for propagating a cause for the benefit of general public utility. In the absence of any evidence, we are of the view that learned Commissioner of Income Tax-I, Jalandhar, has rightly rejected the application of the assessee for registration under Section 12A of the Act. 11. From the income and expenditure account of the assessee- company for the year ending 31.03.2011, we find that the assessee- company has not incurred even a single penny to achieve its objects i.e. for charitable purpose. For the sake of convenience, the Income and Expenditure Account for th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... registration i.e. the Commissioner, on receipt of an application for registration of a trust or institution, can call for such documents or information from the trust or institution as he thinks necessary in order to satisfy himself about the genuineness of activities of the trust or institution and may also make such inquiries as he may deem necessary in this behalf. If the Commissioner of Income Tax is satisfied about the genuineness of activities of the trust or institution, he shall pass an order in writing registering the trust or institution and if he is not so satisfied, shall pass an order in writing refusing to register the trust or intuition. The argument advanced by learned counsel for the assessee that at the time of registration of a trust, only the objects of the trust are to be seen and not the activities, are contrary to the provisions of Section 12A of the Act and thus the same are not tenable in the eye of law. 14. In the present case, learned Commissioner of Income Tax-I, Jalandhar, after examining the documentary evidence filed by the assessee and perusing the objects of the assessee-company along with the income and expenditure account reproduced above, was n ..... X X X X Extracts X X X X X X X X Extracts X X X X
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