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TMI Blog2023 (2) TMI 255X X X X Extracts X X X X X X X X Extracts X X X X ..... ry 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. - ITA No. 418/JP/2022 - - - Dated:- 30-1-2023 - Dr. S. Seethalakshmi, JM And Shri Rathod Kamlesh Jayantbhai, AM For the Assessee : Shri Vivek Bhargava, CA For the Revenue : Shri Ajay Malik, CIT -DR ORDER PER: RATHOD KAMLESH JAYANTBHAI, AM This appeal by the assessee is directed against the order of the ld. CIT(Exemption), Jaipur dated 28-09-2022 for the assessment year 2022-23 in the matter of registration u/s 12AB of the Income Tax Act, 1961. The grounds of appeal raised by the assessee are as under:- 1. The ld. CIT(Exemption) erred in law and on facts in rejecting the application for registration u/s 12A of the Act. 2. The ld. CIT(Exemption) erred in law and on facts in considering the objects of the assessee as non-charitable without considering the para 5 of Memorandum of Association and Licence u/s 8(a) of the Companies Act, 2013. 2.1 During the course of hearing, the ld. AR of the assessee prayed that there was delay of one day in filing th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tively. Kindly note that if you fail to file the reply on this date or comply with required details in writing, your application will be decided on the basis of materials available on recored of this office without giving any further opportunity. The ld. CIT(E) noted that the assessee foundation furnished the reply in response to show cause notice and examined the record and proceeded to decide the case of the assessee based on the materials available on record. In order to consider the case for registration u/s 12AB of the Act, following issues are to be examined by the ld. CIT(E). (i) Genuineness of the activities. (ii) The compliance of such requirements of any other law for the time being in force by the trust or institution as are material for the purpose of achieving its objects. The ld. CIT(E) took the reference of Rule 17A of Income Tax Rules, 1962 whereby the assessee foundation is required to produce documents regarding establishing of the trust/society for verification and in order to decide the matter of seeking registration u/s 12AB the genuineness of the activities of the assessee trust /institution being undertaken and its object are required to be exami ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... herefore these cannot be termed as charitable, Moreover, neither this particular object mentions that establishment of impugned intuitions will be run without any profit motive nor in the object clause without any profit motive have Been referred to. Hence, it cannot be deducted that the trust will carry out charitable activity on this object. Section 2(15) defines the charitable purpose. It reads as under:- Charitable purpose includes relief of the poor, education, medical relief [preservation of environment (including watersheds, forests and wildlife) and reservation of monuments or places or objects or artistic or historic interest.] and the Advancement of any other object of General Public Utility. Proviso to Section 2(15) reads as under- Provided that the Advancement of any other object of General Public Utility shall not be a charitable purpose, if it involves the carrying on of 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 fee or any other consideration, irrespective of the nature of use or application, or retention, of the income from such activ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the foundation on 12/09/2022 and 13/09/2022 and oral explanations were also given by him. The foundation also submitted online reply to show cause notice dated 19/09/2022, placed at PB page 81-83, explaining all the issues raised in the show cause notice. 4. The assessee has also obtained copy of the proceedings note sheet, which itself proves that the allegation of the department is incorrect. We fail to understand the reason behind making non furnishing of documents as one of the basis for rejection of registration application whereas each and every document was furnished during registration proceedings. 5. Relief Sought- We request the Hon ble Bench to declare the finding of the ld. CIT(E) as erroneous and direct him to grant the registration. Ground no. 2 Considering the objects as non-charitable 6. The ld. CIT(E) has issued show cause notice proposing to reject the application for registration. The show cause notice was as under (PB 78-79)- . On perusal of the MOA, it is noticed that object nos. A-1,2,3,B-10,11,15,19,21,22,23,29,31,34,37,39 40 are having elements of commercial/business nature and various objects are related to the activiti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 10. It is submitted that the foundation is a company registered under section 8 of the Companies Act, 2013. The definition or meaning of charitable purpose are almost similar in the section 8(1) of the companies Act, 2013 and section 2(15) read with section 11 and 13 of the Income Tax Act, 1961. The Registrar of Companies issues the incorporation certificate and licence u/s 8 only after drawing satisfaction that the company s object are not of commercial nature and surplus if any will be applied for promotion of objects and surplus will not be distributed as dividends to its members. 11. Now kindly see the MOA para 5 (PB 21-22) and also see the licence u/s 8 (PB-13). The MOA and licence clearly mandates that the company will not distribute its surplus to its members i.e. the company s motive is to run without profit. It also contains mandate that surplus if any will be applied solely for the promotion of the objects. There is no element of self intrest. The fact that the carrying on of charitable activities results in a surplus does not mean that Assessee exists for profit. Profit means that owners have a right to withdraw the surplus for any purpose including personal purpos ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erused the materials available on record. From the record, it is noted that the assessee M/s. Keeday Makuday Foundation is a company with charitable objects registered u/s 8 of the Companies Act, 2013. The certificate of incorporation was issued on 20/04/2021 by Ministry of Corporate Affairs (PB-12) and licence u/s 8(1) of the Companies Act was issued on 20/04/2021 by the Registrar of Companies (PB-13). The company was granted provisional registration by the ld. CIT(E) vide order dated 22-11-2021. The assessee company applied for permanent registration u/12AB on 31/03/2022 in form 10AB (PB 5-11). The ld. CIT(Exemptions) called for certain details vide notice dated 18/08/2022 (PB 26-30), which were submitted in physical form by Shri Manvendra Singh Inaniya (Director of the company) (PB 31-77) on 12/09/2022 and he further furnished the five documents on 13/09/2022. One final show cause notice dated 19/09/2022 (PB 78-79) was duly replied electronically (PB 81-83).The ld. CIT(Exemptions) rejected the application for registration u/s 12AB on the basis of following findings13 Sufficient opportunity has been provided to the applicant to produce details and furnish explanations in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... amated only with another company registered under section 8 of the Act and having similar objects; and.. The Bench also took 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 ld. 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 whic ..... X X X X Extracts X X X X X X X X Extracts X X X X
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