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TMI Blog2021 (11) TMI 326X X X X Extracts X X X X X X X X Extracts X X X X ..... tion u/s 12AA and where such an approval is placed on record, as part of assessee s application u/s 12AA and supporting documentation as required under law, it shall provide an additional level of comfort to the ld CIT(E) in terms of examining the true intent behind its objects of setting up/incorporation and also for the purposes of examining compliance of other laws material for achievement of its objectives under section 12AA(a)(ii) of the Act. The appellant company s application seeking registration u/s 12AA for undertaking the aforesaid objects of general public utility deserve to be accepted as falling within the purview of charitable purpose u/s 2(15) of the Act. In terms of examining the allowability of benefit u/s 11, 12 r/w section 13, it is a settled position that the same can be examined on year to year basis by the Assessing officer and he shall be free to take action, as per law including under section 13(8) as so provided in the statue, during the course of regular assessment proceedings. We accordingly direct the ld CIT(E) to grant approval to the assessee company u/s 12AA of the Act - Appeal of the assessee company is allowed. - ITA. No. 48/JP/2021 - - - Dated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , the ld. AR submitted that the appellant is a company incorporated under the provisions of Section 8 of the Companies Act, 2013 and promoted by IIS (Deemed to be University) Trust which is also solely engaged in imparting education having necessary approvals u/s 12AA of the Act. It was submitted that the main object of the appellant company is to set up high class incubation facility to foster entrepreneurial culture. The Memorandum of Association and Articles of Association are placed at APB 17-41. 6. It was submitted that an application seeking approval u/s 12AA in Form 10A was filed with the office of ld CIT(E) on 16.10.2020 which was however rejected by ld. CIT(E) vide his order dated 30.03.2021 for the sole reason that the object no. (a) 1,2, 3, 4 (b) 1, 6, 25 as stated in the memorandum of association are having element of commercial/business nature. It was submitted that promoting business/economic activities, are charitable in nature falling under the last limb any other object of general public utility of the definition of charitable purpose u/s 2(15) of the Act. It was submitted that the ld. CIT(E) has accepted the objects being charitable in nature and after havi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lare any dividend, and shall utilize the profits of the Company only for the promotion of its Objects and thus no portion of the profits, other income or property aforesaid shall be paid or transferred, directly or indirectly, by way of dividend, bonus or otherwise by way of profits, to persons who, at any time are, or have been, members of the company or to any one or more of them or to any persons claiming through any one or more of them. The Boards may also carry forward any profits which it may consider necessary motto divide, without setting them aside as a reserve. Winding Up If upon a winding up or dissolution of the Company, there remains, after the satisfaction of all the debts and liabilities, any property whatsoever, the same shall not be distributed amongst the members of the Company but shall be given or transferred to such other Company registered under this section and having similar objects, subject to such conditions as the Tribunal may impose, or may be sold and proceeds thereof credited to the Rehabilitation and Insolvency Fund formed under section 224 of the Act. In view of the above, it was submitted that no commercial/business nature is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... her submitted that merely because the assessee company has been registered u/s 8 of the Companies Act, the same by default does not necessarily mean that it shall be eligible for registration u/s 12AA of the Act. It was submitted that both are separate legislation operating in respective domain and in absence of anything mentioned in the Income Tax Act, the companies registered u/s 8 of the Companies Act does not necessarily qualify for registration u/s 12AA of the Act. The company, where it seeks registration u/s 12AA, has to independently apply seeking registration and file requisite documentation in support of its application, and the Commissioner has to consider its objects and genuineness of activities and then take appropriate action in terms of either accepting or rejecting its application seeking registration u/s 12AA of the Act. It was accordingly submitted that there is no infirmity in the findings of the ld. CIT(E) in rejecting application of the assessee company seeking registration u/s 12AA of the Act. 11. We have heard the rival contentions and perused the material available on record. It is observed that the precise reason for the rejection of assessee s applicati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... egulatory guidance, etc. 3. To foster an entrepreneurial culture, by providing the students, alumni, and faculty, opportunity to transform their business ideas to reality. These facilities are also open to the general public. 4. To encourage innovation in the Indian ecosystem, through activities such as, but not limited to, (a) awareness workshops, (b) training and capacity building, (c) mentoring support, to early stage start up enterprises. No objects of the Company shall be carried out without the permission of the competent authorities whomsoever and no objects of the Company shall be carried out on commercial basis. (b) Matters which are necessary for furtherance of the objects specified in clause 3(a) are:- 1. to make available infrastructure facilities to support funding to start up. 6. To aid, institute, encourage, fund and support establishments institutions or aid in establishment of institutions, funds trusts, for technical education, development and research for the development of skill and encouragement of quality consciousness and enhancement of productivity and added value, including setting up of model workshops, etc. 25. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h should have been considered by the ld CIT(E) before rejecting the application seeking registration u/s 12AA of the Act. 16. We may clarify that merely because the assessee company has been registered u/s 8 of the Companies Act, we are not saying that the same by default mean that it shall be eligible for grant of registration u/s 12AA of the Act as the legislation is currently not worded to support the said proposition. All we are saying is that where another arm of the Government administering the company law legislation has examined through its designated authority the objects and intended application of profits and has granted the registration to the assessee company as section 8 company, the said registration allows the assessee company to take necessary steps to seek separate and independent registration u/s 12AA and where such an approval is placed on record, as part of assessee s application u/s 12AA and supporting documentation as required under law, it shall provide an additional level of comfort to the ld CIT(E) in terms of examining the true intent behind its objects of setting up/incorporation and also for the purposes of examining compliance of other laws material ..... X X X X Extracts X X X X X X X X Extracts X X X X
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