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TMI Blog2023 (11) TMI 694X X X X Extracts X X X X X X X X Extracts X X X X ..... at point 27 which is providing food for poor at free of cost or at concessional rates. Further. During physical verification at the given address, one temporary counter was set up near the entrance gate of building and one person was distributing small packets of Puri Sabji. The applicant society has been established with various charitable objects which inter alia included an object for providing free/subsidized food to patients in hospital, to aged, poor, deprived and other needy section of the Society and also to create awareness of eradication of hunger and malnutrition. The assessee has submitted a submission on 23/08/2020 by narrating the activities currently undertaken and future plans which have not been considered by the CIT(E). In our opinion, starting only one activity out of many may not be or a bar for registration so long that activity is charitable. Temporary counter and selling of food packets , it is the specific case of the assessee that there was neither any counter nor food packets were being sold as such. The food was distributed though a small window at the site. Society was found using domestic LPG cylinder for cooking of foods - It is found that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s, Bhopal, Agra [ Ld. CIT ( E ), for short], dated 03/11/2022. 2. The grounds of appeal are as under:- 1. That the Order dated 03.11.2022 of Ld CIT(E), Bhopal rejecting the registration of the Society u/s 12AB is arbitrary, unjust, illegal, based on extraneous considerations and is liable to be set aside. 2. That the Ld CIT(E), Bhopal is wrong to held that activity, by the Society, of providing concessional food packets to the needy people is in the nature of Trade, Commerce or business and is hit by the Proviso to Sec. 2(15) of the Income Tax Act, 1961. She has grossly failed to appreciate that providing food packets at concessional rates of Rs. 5/-, 10/- and 12/- does not meet even the cost of such packets and thus the activity is devoid of any profit motive essential to cast it as an activity of Trade, Commerce or business. 3. That, while invoking the proviso to Sec. 2(15), the Ld CIT(E), Bhopal totally failed to appreciate that the alleged activity of the Society does not qualify as advancement of an object of general public utility (GPU Charity) but qualify as Relief to Poor to which said proviso is not applicable; rendering the impugned order both inco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CIT(E) failed to appreciate that the assessee is providing food packages at concessional rate of Rs. 51,012/- which does not meet the cost of packets and there is no profit moto essential to cast it as activities of trade, commerce or business and submitted that The CIT(E) ought to have granted registration under 12AB of the Act. 5. Per contra, the Ld. Departmental Representative submitted that the assessee society has installed three different types of automatic machines for kneading dough rolling of puri and peeling potatoes but no machine has been shown as fixed asset in the balance sheet of Financial Year 2021-22, during the physical verification it is found that a temporary counter for selling small packets of puri sabzi was found and also the society is running food counter at 262, Jawali nagar providing concessional food and the income from the sale of food packages in various rate were shown in income and expenditure account. Therefore, the said activity is purely commercial in nature, thus it is rightly found that the assessee is engaged in commercial activities rather charitable activities. Therefore submitted that the order of the CIT(E) requires no interference. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eceipt of an application for registration of a trust to call for such documents as may be necessary to satisfy himself about the genuineness of activities of the trust or institution and make inquiries in that behalf; it empowers the Commissioner to thereupon register the trust if he is satisfied about the objects of the trust or institution and genuineness of its activities. In the present case, the trust was formed as a society on 30.05.2008 and it applied for registration on 10.07.2008 i.e. within a period of about two months. No activities had been undertaken by the respondent Trust before the application was made. The Commissioner rejected the application on the sole ground that since no activities have been undertaken by the trust, it was not possible to register it, presumably because it was not possible to be satisfied about whether the activities of the trust are genuine. The Income Tax Appellate Tribunal, Delhi (for short, the Tribunal ) reversed the orders of the Commissioner. The Revenue Department approached the High Court by way of filing an appeal. The High Court upheld the order of the Tribunal and came to the conclusion that in case of a newly register ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the registration of a Trust under sub-section (3) of section 12AA of the Act. There the Commissioner would be bound to record the finding that an activity or activities actually carried on by the Trust are not genuine being not in accordance with the objects of the Trust. Similarly, the situation would be different where the trust has before applying for registration found to have undertaken activities contrary to the objects of the Trust. We therefore find that the view of the Delhi High Court in the impugned judgment is correct and liable to be upheld. Ms. Bhati, learned Senior Counsel for the appellant, fairly drew our attention to a judgment of the Allahabad High Court in IT Appeal No.36 of 2013 titled as Commissioner of Income Tax-II vs. R.S. Bajaj Society which has taken the same view as that of the Delhi High Court in the impugned judgment. The Allahabad High Court has also referred to a similar view taken by the High Courts of Karnataka and Punjab Haryana. Apparently, a contrary view has been taken by the Kerala High Court in the case of Self Employers Service Society vs. Commissioner of Income Tax (2001) Vol.247 ITR 18. That view however does not c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of cost . On the other hand, it is found that the assessee was regularly providing free food Tiffin to all the patients of the cancer hospital, which can be corroborated from the submission made by the Assessee dated 10/10/2022. Thus, the above findings of the CIT(E) contrary to factual matrix. 7. Further, the observation of the CIT(E) also cannot be upheld on following reasons:- (a) The finding that the is found to be engaged primarily in business activities and in violation of proviso to Section 2(15) of the Act is incorrect as it is without appreciation of the nature of activities, intent of the society admittedly, appellant is not into trade, business commerce. (b) Providing food grains and food, free or of subsidized rates, to the victimised, harassed poor, helpless, sick and elderly people in hospitals and other places is one of the main object of the Society which can be corroborated Clause No. 27 of the Bye Lows. The aforesaid activities if considered in true perspective and in totality, falls under the Relief to the poor category and not under the GPU category. (c) The proviso to Sec. 2(15) of the Act is applicable only to GPU charity and not to Relief ..... X X X X Extracts X X X X X X X X Extracts X X X X
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