9911796707
TMI Blog2024 (11) TMI 1259X X X X Extracts X X X X X X X X Extracts X X X X ..... w. The Ld. CIT(E) is not disputing the Medical Equipments, Machines donated to various institutions to carry out medical relief to the needy and poor. Hon ble High Court in UNITED WAY OF BARODA [ 2020 (3) TMI 233 - GUJARAT HIGH COURT ] on an identical issue wherein the trust organizing Garba event at Baroda during Navratri period by selling tickets and the surplus out of that Garba event is used for charitable purposes which was held to be not in the nature of trade commerce or business. The Hon ble High Court confirmed the Coordinate Bench decision of this Tribunal and dismissed the appeal filed by the Revenue stating the object of introducing the first proviso is to exclude the organizations which are carrying on regular business from the scope of charitable purpose . An activity would be considered 'business' if it is undertaken with a profit motive, but in some cases, this may not be determinative. Normally, the profit motive test should be satisfied, but in a given case the activity may be regarded as a business even when the profit motive cannot be established/ proved. In such cases, there should be evidence and material to show that the activity has continued on soun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... R :- This appeal is filed by the Assessee as against the denial of registration under section 12AB of the Income Tax Act, 1961 (hereinafter referred to as the Act ) vide order dated 29.08.2023 passed by the Commissioner of Income Tax (Exemption), Ahmedabad [hereinafter referred as CIT(E)]. 2. Brief facts of the case is that the assessee is a public charitable trust, came into existence on 24-09-2020 and registered under the Bombay Public Trust Act, 1950 with the Charity Commissioner, Ahmedabad. The assessee was granted provisional registration by the Ld. CIT(E) by order dated 27-05-2021 for the Asst. Years 2020- 21 to 2023-24. The assessee filed final registration u/s. 12AB in Form No. 10AB on 05-04-2023. The same was rejected by this impugned order on the ground that the fund raising programme carried out by the assessee trust by way of coupon sales and mega lucky draw were in the nature of business activities which is not identical to carry out the object of the trust and violation of conditions specified in Section 12AB(4) of the Act. Thus CIT(E) denied the registration u/s. 12AB of the Act and also cancelled the provisional registration granted to the assessee trust. 3. Aggriev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Ld. CIT(E) of violation u/s. 12AB(4) of the Act, the assessee submitted there is no such violation within the meaning of definition as follows: Clause of explanation Criteria Assessee s Submission 1 2 3 (a) Application of income of a trust for other than object of the trust. (a) as may be verified from the ledgers of expenses under different heads filed vide appellants letter dated 12.08.2023, the income derived has been essentially utilized for implementing various service projects as enumerated at para 2 of the referred letter. (b) Having income which is not incidental to attainment of its objects or not maintain separate books of accounts by the trust. (b) as may be verified from the audited income and expenditure account, the trust has raised income by donations through coupon subscription, FD interest and other direct donations from entities, which has been essentially incidental to attainment of its objects. Hence there is no requirement to maintain separate books of accounts. (c) Application of part of its income for private religious purposes not for the benefit of public As may be perused from the table appearing on page 7 of the impugned order, there is no such income hav ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and Rajasthan. Ld. CIT(E) has elaborately considered fund raising programme in his impugned order, but to failed address the activities carried out by the assessee trust and thereby denied registration u/s. 12AB of the Act which is in our considered opinion is against the provisions of law. The Ld. CIT(E) is not disputing the Medical Equipments, Machines donated to various institutions to carry out medical relief to the needy and poor. 6.1. The Hon ble High Court on an identical issue wherein the trust organizing Garba event at Baroda during Navratri period by selling tickets and the surplus out of that Garba event is used for charitable purposes which was held to be not in the nature of trade commerce or business. The Hon ble High Court confirmed the Coordinate Bench decision of this Tribunal and dismissed the appeal filed by the Revenue by observing as follows: 11. The Appellate Tribunal, while dismissing the appeal of the Revenue held as under: 4. There are thus two issues requiring our adjudication in this appeal first, whether or not the CIT(A) was justified in holding that proviso to Section 2(15) will not have any application on the facts of this case and thus benefit of Se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd to apply them for strengthening the services in education, health and human care and other social sectors existing in Baroda and State of Gujarat and assessing on a continuing basis the need for human service programs, to seek solution to human problems, to assist in the development of new or the expansion or modification of existing human services programs, and to foster cooperation among local, state and national agencies for providing service to the community. It was also pointed out that the assessee contributes by strengthening the services in education, by providing vocational training to the disabled, helping orphans, empowering women through various programs and providing mid meal to poor students. The details of the eye camp and thalassemia screening and detection camp conducted by the assessee were also furnished. The assessee also gave details of how the monies are spent to these ends. As regards the application of proviso to Section 2(15), it was pointed out that only when the institutions are carrying out activities on commercial lines with profit motive, this provision comes into play. It was pointed out that surplus funds are purely incidental and the institution ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g the event of Garba including the sale of tickets and issue of passes etc. cannot be termed as business. The two authorities have taken the view that the profit making is not the driving force or the objective of the assessee. This is indicative of the fact that any income generated by the assessee from events like Garba does not find its way into the pockets of any individual or entities. It is to be utilized fully for the purposes of the objects of the assessee. As held in many pronouncements, the expression trade , commerce' and business as occurring in the first Proviso to Section 2(15) of the Act must be read in the context of the intent and purport of section 2(15) of the Act and cannot be interpreted to mean any activity which is carried on in an organized manner. The purpose and the dominant object for which an institution carries on its activities is material to determine whether the same is business or not. The object of introducing the first proviso is to exclude the organizations which are carrying on regular business from the scope of charitable purpose . An activity would be considered 'business' if it is undertaken with a profit motive, but in some cases ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n.com 93/138 ITD 519 (Lucknow), the ITAT held that since provisions of Sections 11, 12 and 13 are intended for exercise of jurisdiction by an Assessing Officer in an assessment proceedings, Commissioner is not competent to invoke such provisions for purpose of declining registration under Section 12AA. In the case of St. Joseph Academy (2014) 50 taxmann.com 216 (Hyderabad-Trib), the ITAT held that provisions of Section 13 can be invoked by Assessing Officer, while framing assessment and not by Commissioner while considering application for registration under Section 12AA of the Act. Our view is further supported by the decision of the Hon'ble jurisdictional High Court in the case of CIT (Exemptions) v. Bayath Kutchhi Dasha Oswal Jain Mahajan Trust (2016) 74 taxmann.com 199 (Gujarat) wherein on the issue of denial of grant of registration us 12A of the Act by invoking Section 13(1)(b) of the Act, it was categorically held that the provisions of Section 13 would be attracted only at the time of assessment and not at the time of grant of registration. 8. In the case of United Way of Baroda (cited supra) the Hon ble High Court held that sales of tickets for Garba events during Navr ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
