PRINTECH PARK CLUSTER BANGALORE,BENGALURU vs. COMMISSIONER OF INCOME TAX (EXEMPTIONS), BENGALURU
Income Tax Appellate Tribunal, ‘B’ BENCH : BANGALORE
Before: SHRI LAXMI PRASAD SAHU & SHRI SOUNDARARAJAN K.Assessment Year : 2025-26
PER SOUNDARARAJAN K., JUDICIAL MEMBER
This is an appeal filed by the assessee challenging the order of the Ld.CIT(E) in which the registration sought for u/s. 12A of the Act was denied by the Ld.CIT(E) vide order dated 31/03/2025 and raised the following grounds:
Grounds of Appeal
Tax effect relating to each ground of appeal (see note below)
1
Ground No.1 On the facts and circumstances of the case and in law, the Ld.CIT (Exemptions) has Rs. 0
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rejected the appellant society's
Application for renewal of registration u/s12AB, which is Void and Illegal
2
Ground No.2 On the facts and circumstances of the case and in law, the Ld.CIT (Exemptions) has rejected appellant society's
Application u/s I2AB, holding that the activities of appellant society are 'non-charitable in nature', without properly analyzing the activities of the appellant society.
The appellants activities are very much coining within the meaning of charitable activity as defined in the act. The explanations given by the appellant and financial statements furnished, are not properly analysed by the Ld.C1T(exemptions). .
Rs. 0
3
Ground No.3 On the facts and circumstances of the case and in law, the Ld.CIT (Exemptions) has rejected appellant society's
Application u/s 12AB, on the basis of Report of AO dated 28.02.2024
and the copy of the report is not confronted to the appellant society.
The AO findings mentioned in the Order, is vague and irrelevant to the renewal of registration u/s 12A of the Act, as it is not a case of cancellation of registration u/s 12AB(4).
Rs. 0
4
Ground No.4 On the facts and circumstances of the case and in law, the Ld.CIT (Exemptions) has rejected appellant society's
Application u/s 12AB, by saying "I concur with the AO", and hence rejection order passed by the Ld.CIT(exemptions)is without application of mind, as he simply concurs with the AO without giving reasons.
Rs. 0
5
Ground No.5 On the facts and circumstances of the case and in law, the Society's Objectives &
Activities remains charitable since
Rs. 0
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its inception.
The Learned
CIT(Exemptions) erred in rejecting the application u/s 12AB, despite the decision of the Hon'ble ITAT
Bangalore, in appellant's own case rendered for Asst Year 2014-15 that the activities of the society are charitable in nature and eligible for registration u/s 12A. The Hon'ble
High Court of Karnataka, order dt:10.02.2021, has upheld the decision of the Hon'ble
ITAT-
Bangalore. The co-ordinate bench decision of this Hon'ble
ITAT-
Bangalore, dated 28.06.2024, has held in favour of the appellant society. Thereafter, there is no change in law or nature of activities of the appellant society and hence the Ld CIT (Exemptions) cannot reject the appellant society's application u/s 12AB
6
Ground No. 6 On the facts and circumstances of the case and in law, the Ld CIT (Exemptions) has not given reasonable opportunity of being heard, before issue of rejection order, to meet the natural justice. No Show cause notice is issued. Reasonable opportunity of being heard, is not afforded, as required by the provisions of section 12AB(1)(b) of the Income Tax Act.
Rejection order in Form LOAD, Point
No.10, is kept blank, and reasonable opportunity of being hear, is not afforded to the appellant society
Rs. 0
7
Ground No.7 The appellant craves leave to add, alter, modify or delete one or more grounds of appeal before or at the time of hearing of the appeal. The aforesaid grounds of appeal are without prejudice to each other.
Rs. 0
Total Tax Effect
Rs. 0
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2. The brief facts of the case are that the assessee is a society registered under the Karnataka Societies Act. The assessee applied for registration under the provisions of section 12A of the Act which was rejected by the DIT(E) on 17/09/2014. The Ld.DIT(E) had rejected the said application on the ground that the society was formed for the mutual benefits of the members and the objects pursued were not charitable in nature. The said order was under challenge before the Tribunal and the Tribunal vide its order dated 07/10/2015 in ITA No. 1386/Bang/2014 had allowed the appeal filed by the assessee. Subsequently, the revenue challenged the said order of the Tribunal before the Hon’ble Karnataka High Court which was also dismissed on 10/02/2021 in ITA No. 308 of 2016 without going into the merits of the case. Pending the revenue’s appeal before the Hon’ble High
Court, the assessee society filed another application in form 10A on 21/12/2020 seeking approval u/s. 12A of the Act. The Ld.CIT(E) had granted the provisional registration. Thereafter the assessee submitted an application seeking the renewal of registration on 27/09/2023 which was rejected by the Ld.CIT(E), Bangalore vide order dated 23/03/2024. The Ld.CIT(E) also cancelled the provisional registration obtained by the assessee society. The assessee filed an appeal before this Tribunal and the Tribunal vide its order dated 28/06/2024 in ITA No. 840/Bang/2024 had set aside the order of the Ld.CIT(E) and directed the Ld.CIT(E) to examine the matter afresh in the light of the observations made in the said order and also after confronting the report of the AO to the assessee.
From the report of the AO dated 28/02/2024, it is observed that the establishment of common facility centre is to the benefit of the member and non-members in the printing industry by paying the user charges. Therefore, the society is established for the mutual benefits of the fraternity from the printing industry and the benefits are extended to both the members and non-members in the printing industry. Therefore the AO arrived a conclusion that whether the industry or trade associations claim both to be charitable institution as well as mutual organisation and their activities are restricted to contributions from the participation of their
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members only, such an organisation would not fall under the purview of proviso to section 2(15). The AO further held that the activity of developing the land and distribution of plots to the members / non-members are not defined in the Memorandum of Association / byelaws as the objects of the society and therefore the AO had come to the conclusion that the activities of the society cannot be held to be a charitable nature and towards the objects of the society as claimed by it. The AO also reported that the activities done by the assessee and the payments received from the members and non-members are in the nature of commercial and therefore it could not be treated as a charitable organisation. The AO further held that the benefits of the activities would not be open to the general publics and therefore the same is hit by the provisions of section 2(15) of the Act.
Therefore the AO had concluded that the assessee’s application for renewal of registration as a charitable organisation is not fit for approval and also requested that the earlier provisional registration treating the assessee as a charitable organisation may also be cancelled as per the provisions of the law.
The assessee filed their objections on 30/09/2024 and also the copy of the order of the Coordinate Bench of this Tribunal dated 07/10/2015 and 28/06/2024 in its own case in which it was held that the assessee is a charitable organisation entitled for registration u/s. 12A of the Act. The Ld.CIT(E) again arrived the very same conclusions and held that the activities of the society are focussed only towards the predefined members and non-members / professionals of printing industry and therefore the receipts and expenses generated from the activities are non-charitable in nature. The Ld.CIT(E) had concurred with the view of the AO and again rejected the application for renewal of registration as well as cancelled the registration and provisional registration already granted.
As against the said order, the present appeal has been filed before this Tribunal.
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6. At the time of hearing, the Ld.AR submitted that the assessee was granted a provisional registration on 27/05/2021 and later on when the Ld.CIT(E) had denied the registration on the ground that the assessee is not doing any charitable activities, the same was challenged before this Tribunal and the Tribunal also in its order dated 07/10/2015 in ITA No.
1386/Bang/2014 had set aside the order of the Ld.CIT(E) and held that an object beneficial to the section of the public is an object of general public utility. The Tribunal further held that the authorities would examine the objects for which the trust was formed and its genuineness when the trust sought for registration and not its activities. The Tribunal further relied on the Circular No. 11/2008 dated 19/12/2008 and held that the assessee has established the society for achieving the objects of advancement of general public utility and therefore the society is a charitable institution eligible for the benefits u/s. 2(15) of the Act. The Ld.AR submitted that this Tribunal being a final fact finding authority had held that the activities are charitable in nature which was challenged by the revenue but the said appeal was withdrawn by the revenue by citing the fact that the assessee had filed a fresh application for registration. Therefore the Ld.AR submitted that the detailed findings given by the Tribunal in its order dated 07/10/2015 was not disturbed and in fact the finding is binding on the authorities when the facts are similar in nature. The Ld.AR further submitted that the Ld.CIT(E) without considering the said findings of the Tribunal had again rejected the application on the very same grounds which were affirmed by the Hon’ble
Juri ictional High Court. The Ld.AR further submitted that subsequently an order u/s. 143(3) was also made by the AO on 24/03/2022 for the A.Y.
2022-23 in which no adverse comment has been made by the AO. The Ld.AR also submitted that the application filed subsequent to the provisional registration was again rejected by the Ld.CIT(E) on 23/03/2024
which was challenged before the Tribunal and the Tribunal again set aside the said order and directed the Ld.CIT(E) to consider the issue afresh in the light of the observations made by the Tribunal in its order dated
07/10/2015 and also after providing a copy of the assessment order to the assessee. The assessee subsequently filed an application on 30/09/2024
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and again extracted the findings of the AO and the submissions made by the assessee and finally the Ld.CIT(E) agreed with the finding of the AO and rejected the application for registration and also cancelled the provisional registration granted earlier which is not in accordance with the earlier findings of the ITAT and therefore prayed to allow the appeal.
The Ld.DR relied on the order of the Ld.CIT(E).
We have heard the arguments of both sides and perused the materials available on record.
From the facts available on record, it is evident that the issue was already decided by the Coordinate Bench of this Tribunal in ITA No. 1386/Bang/2014 vide order dated 07/10/2015 in assessee’s own case. In the said order, this Tribunal had held that the society is for the benefit of the members who are engaged in printing and other related activities and has an object beneficial to the section of the public who are all associated with the printing industry and therefore the same would be an object of general public utility as specified u/s. 2(15) of the IT Act. This Tribunal had relied on the judgment of the Hon’ble Apex Court reported in 82 ITR 704, 140 ITR 1 and 246 ITR 188 to arrive the above said conclusion. In the said order, the Tribunal also held that the authorities ought to have examined the objects of the trust while considering the application for registration and examined the genuineness of the said objects and not its activities at the time of granting the registration. The Tribunal also found that the assessee society was conducting its activities with its objects viz., for the benefit of the members who are engaged in printing and other related business activities. To arrive such a conclusion, the Tribunal had also relied on the Hon’ble Juri ictional High Court judgement reported in (2013) 40 Endowment Trust. Further, this Tribunal had considered section 2(15) and also considered the Circular No. 11/2008 dated 19/12/2008 in which it was explained the definition of charitable purpose u/s. 2(15) of the Act and Page 8 of 12 arrived a conclusion that the assessee trust was established with the objects of advancement of general public utility and therefore the activities carried on by the assessee trust will come under the charitable purpose. The Tribunal apart from the provision and the circular issued by the CBDT, had also relied on the Hon’ble Kolkata Tribunal order in the case of Indian Chambers of Commerce reported in (2014) 52 Taxmann.com 52 in which the Tribunal had relied on the judgement of Hon’ble Supreme Court in the case of CIT vs. Andhra Chamber of Commerce reported in (1965) 55 ITR 722. The Tribunal further relied on the judgement of the Hon’ble Delhi High Court in the case of India Trade Promotion Organization vs. Director General of Income-tax (Exptns.) & Others reported in (2015) 371 ITR 333 in which it was explained that if an institution is not driven primarily by a desire or motive to earn profits, but to do the charity through the advancement of general public utility, it can be regarded as an institution established for the charitable purposes. Therefore on an earlier occasion, this Hon’ble Tribunal had considered the facts and observed that the assessee is a charitable organisation and its objects are for the advancement of general public utility. This finding was not disturbed by any of the higher forums. Even though the revenue had withdrawn the appeal challenging the said order, before the Hon’ble Juri ictional High Court, these facts were not reversed by the Hon’ble High Court but the said appeal was withdrawn only on the technical ground that the assessee had filed an application when the appeal was pending before the Hon’ble High Court.
Subsequently, the assessee’s application was again rejected by citing a report of the AO which was not furnished to the assessee and therefore this matter was again decided by this Tribunal and the Coordinate Bench of this Tribunal relied on the earlier order of this Tribunal dated 07/10/2015 and also the fact that the assessee had not provided with the copy of the report of the AO, had again set aside the rejection order and remitted the same to the Ld.CIT(E) for fresh consideration. Now, the Ld.CIT(E) based on the application filed on 30/09/2024, had again extracted the report of the AO and the submissions made by the assessee and finally observed that he has Page 9 of 12 accepted the finding of the AO and therefore rejected the application for renewal as well as cancelled the provisional registration already granted.
From the facts narrated above, we came to the conclusion that the Ld.CIT(E) had not inclined to grant registration even though the Tribunal had on facts held that the assessee is doing charitable activity and its objects are towards the advancement of general public utility. When the Coordinate Bench of this Tribunal had in detail elaborately discussed this issue and gave a finding, the Ld.CIT(E) had again rejected the application after extracting the findings of the AO and again arrived a conclusion that the assessee is not entitled for registration u/s. 12A of the Act. We are also surprised to note that the present order of the Ld.CIT(E) is also not in accordance with the earlier order of this Tribunal dated 28/06/2024 in which it was clearly held that the findings of the Tribunal order dated 07/10/2015 has attained finality and also in respect of the A.Y. 2022-23, the AO had made the assessment u/s. 143(3) in which no adverse comment has been passed by the AO against the assessee. The Tribunal further directed the Ld.CIT(E) to furnish the copy of the report of the AO and thereafter decide the application afresh. The Tribunal also made it clear that the authorities could have examined the nature of the general public utility services at the time of assessment and not at the time of seeking the registration. Therefore the Tribunal had not approved the reasoning given by the Ld.CIT(E) for rejecting the application for registration and only for the purpose of providing the copy of the report of the AO to the assessee, the matter was remitted for consideration afresh. The Ld.CIT(E) while considering the application had not discussed anything about the findings given by the Tribunal in the earlier round of litigation dated 07/10/2015 and also the latest order dated 28/06/2024 but simply extracted the report of the AO and gave a finding that she had concurred with the report of the AO and therefore rejected the said application for renewal and cancelled the provisional registration granted earlier.
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12. Further the assessee is a special purpose vehicle constituted for the purpose of setting up, operating and maintaining the common facility centre by the Government of India as well as by the Government of Karnataka. We have also seen the proceedings of the Development Commissioner, Ministry of Micro, Small and Medium Enterprises, Govt. of India, New Delhi dated
11/04/2017 in which the final approval for setting up the common facility centre in printing cluster at Chamarajapet, Bangalore was communicated to the Commissioner for Industrial Development, Govt. of Karnataka,
Bangalore. In the said proceedings, it was clearly stated that the Govt. of India will share the project cost at 70% and the Govt. of Karnataka 15% and the balance 15% by the Special Purpose Vehicle contribution. In the said proceedings, various guidelines and the administration of the said Special
Purpose Vehicle was clearly mentioned. In clause 11(viii), it was clearly mentioned that the profits shall be ploughed back to the reserve and surplus account of the Special Purpose Vehicle for future use / expansion and not for any dividends. From the above said proceedings, it is clear that the establishment of the common facility centre was for the benefit of the entrepreneurs in the printing industry and therefore it is for the welfare of the printing industry persons. Subsequent to the said proceedings, there is a tripartite agreement between the Special Purpose Vehicle, State
Government and Govt. of India in which it was mentioned that the scheme introduced by the Govt. of India as Micro and Small Enterprises -Cluster development programme with the objective of capacity building of Micro and Small Enterprises and their collectives in the country. In the said agreement, it was also mentioned that the all plant, machinery, fixtures or equipments procured for the purpose of common facility centre (CFC) out of or with the support of the Govt. of India or State government grant shall be exclusive property of the State Govt., though in the custody and use of the Special Purpose Vehicle. In the said agreement, it was also mentioned that the aim of running the CFC shall be to provide common services to the enterprises in the cluster at affordable cost as well as to generate enough income to meet all its running expenditure, depreciation and provision for replacement / expansion of capital assets. From the proceedings issued by Page 11 of 12
the Govt. of India as well as the tripartite agreement executed between the SPV, Govt. of India and the Govt. of Karnataka, the said SPV was established for the welfare of the printing industry and also to facilitate the said industries in the printing cluster. It does not prohibit any other persons also to avail the CFC and therefore it is for the welfare of the particular class of people and not restricted to any group of individuals.
Further the said establishment was jointly developed by the Govt. of India and the Govt. of Karnataka and its incomes should not be used for any other purpose like declaring dividends but the same should be used for future use / expansion. Therefore, the profits earned by the assessee could not be treated as a profit earned through the commercial venture and it could not be treated as an income in the hands of the assessee. Therefore the assessee is acting like a Section 8 Company and all the administrative controls are done by the Govt. authorities and therefore the assessee could not be equated with any other business concerns whose aim is to only earn profits. In these circumstances only, the Coordinate Bench of this Tribunal vide its order dated 07/10/2015 had given a finding that the assessee is doing a charitable activity.
The Ld.CIT(E) without considering the material facts available in support of the assessee’s case had mechanically rejected the registration sought for by the assessee. By giving the registration, the incomes derived by the assessee would not be automatically eligible for exemption and in fact the liability or otherwise would be decided at the time of assessment. Therefore the Ld.CIT(E) could not have, at the threshold, rejected the application for registration sought for by the assessee. The Ld.CIT(E) without conducting any enquiry, had relied on the report of the AO and rejected the application several times. The facts and the circumstances available to the assessee would entitle them for registration u/s. 12A of the Act.
From the finding of the said order, we are of the view that the Ld.CIT(E) had made up her mind not to grant registration even though the Page 12 of 12 facts are considered by the Tribunal and finding to that effect was given in the earlier round of litigation which was not reversed by any of the forums. This shows the attitude of the Ld.CIT(E) for not giving due respect to the earlier findings of the Tribunal even though in the hierarchy, the authorities are bound by the findings given by the Appellate Tribunal. When the facts are already considered by this Tribunal and findings to the said effect was given, we do not find that the present order of the Ld.CIT(E) in rejecting the application for registration u/s. 12A of the Act by citing the very same report of the AO is correct. Since the issue is a long pending issue and also covered by the earlier orders of this Tribunal, we are of the view that no purpose would be solved if the order rejecting the application for registration has been again set aside and remitted to the file of the Ld.CIT(E) for fresh consideration. We, therefore of the view that the order of the Ld.CIT(E) is not a well considered one and therefore in the interest of justice, we are setting aside the same and direct the Ld.CIT(E) to grant the registration u/s. 12A of the Act to the assessee society.
In the result, the appeal filed by the assessee is allowed. Order pronounced in the open court on 14th October, 2025. (LAXMI PRASAD SAHU) Judicial Member
Bangalore,
Dated, the 14th October, 2025. /MS /
Copy to:
1. Appellant
Respondent 3. CIT
DR, ITAT, Bangalore
Guard file
CIT(A)
By order