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Facts
The assessee, JPP Alumni Foundation, a non-profit company, applied for registration under Section 12AB of the IT Act. The CIT, Exemption, rejected the application and cancelled provisional registration, finding certain objects in the Memorandum of Association (MoA) to be commercial rather than charitable. The assessee appealed, contending a lack of proper opportunity and stating they had subsequently amended their MoA.
Held
The Tribunal condoned a 176-day delay in filing the appeal. Recognizing that the assessee had removed the objectionable clauses from its MoA and produced the registered amended MoA, the Tribunal set aside the CIT, Exemption's order. The matter was remanded back to the CIT, Exemption for a fresh decision, directing the assessee to comply with notices and provide the amended MoA without seeking adjournments.
Key Issues
Whether the CIT, Exemption was justified in rejecting the registration application under Section 12AB due to commercial objects in the MoA, and if the assessee should be granted an opportunity to present its amended MoA.
Sections Cited
12AB, 12(1)(ac), 12A(1)(ac)(iii)
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Income Tax Appellate Tribunal, PUNE BENCH “A”, PUNE
Before: SHRI MANISH BORAD & SHRI VINAY BHAMORE
JPP Alumni Foundation, Vs. CIT, Exemption, Pune 510, Sadashiv Peth, Hatti Ganpati, Pune- 411030. PAN : AAFCJ1183P Appellant Respondent Assessee by : Shri Abhay Avachat Revenue by : Shri Amol Khairnar Date of hearing : 17.02.2025 Date of pronouncement : 28.03.2025 आदेश / ORDER
PER VINAY BHAMORE, JM:
This appeal filed by the assessee is directed against the order dated 30.06.2023 passed by Ld. CIT, Exemption, Pune rejecting the application for registration u/s 12AB of the IT Act.
There is a delay of 176 days in filing of the present appeal. In this regard, the assessee company has furnished application for condonation of delay duly supported with an affidavit. We are satisfied with the reasons mentioned in application for condonation of delay and in the interest of justice as well as with the consent of Ld. DR, we condone the delay of 176 days and admit the appeal for adjudication.
Facts of the case, in brief, are that the assessee is a non-profit company registered under the provisions of section 8 of the Companies Act, 2013. The asseseee company filed application for registration in Form No.10AB under clause (iii) of section 12(1)(ac) of the IT Act on 30.12.2022. With a view to verify the genuineness of activities of the assessee and compliance to requirements of any other law for the time being in force by the trust/institution as are material for the purpose of achieving its objects, a notice was issued by Ld. CIT, Exemption, Pune through ITBA portal on 15.03.2023 requesting the assessee to upload certain information/clarification. The desired information was furnished by the assessee. On verification of said information, Ld. CIT, Exemption, Pune found that object nos.17 to 24 are prima-facie commercial in nature and not for charitable purposes. In response to above notice, the assessee company furnished reply and assured that the company will get the memorandum of association amended. After considering the reply of the assessee, Ld. CIT, Exemption, Pune rejected the application for registration and also cancelled the 12AB read with section 12A(1)(ac)(vi) of the IT Act by observing as under :- “The response of the assessee has been carefully perused. The assessee has contingent that the objects of the company and other lawful things are to distinct things. Though, it is understood that the other lawful things are defined separately than the objects, the very body of MoA at 3B clearly specifies such other lawful things to be necessary for furtherance of objects of the company. It is needless to mention that the objects and the means to achieve the said objects are expected to go hand in hand especially when aimed at arriving a charitable purpose. A careful perusal of all the objects especially from object no. 17 to object no. 20 and the ones mentioned at Sl. No. 23 and 24 clearly indicates that the same can clearly construed to be the objects aimed at commercial intent. The object no. 17 provides to sell, manage, improve, develop, exchange, loan, let, sublet, mortgage and even dispose off any property of the company. The object no. 18 provides for purchase or otherwise acquired contract and sub-contract. The object no. 19 directly provides acquisition for patents, rights and trademarks. The object no. 20 again provides for acquisition, holding, purchase and convergence in stocks, shares and securities. Object no. 24 goes to the extent of creation of the fund for redemption of debentures or redeemable preference shares. The way these objects and the activities for furtherance of the objects have been termed and worded is clearly indicative of a futuristic commercial intent. The very fact that the assessee company in the submission itself has stated to amend the MoA by deleting some of the clauses is a sufficient reason to establish that a sizeable number of the MoA have clearly drifted away from the charity and charitable purpose as defined in IT Act, 1961. The objects and other lawful things in its present form and forming part of the MoA can't be stated to be the ones aimed at charitable purpose. Hence, the undersigned is of the belief that the same do not qualify to be registered u/s 12AB of the IT Act, 1961. In view of the discussion above, the application filed by the assessee trust u/s 12A(1)(ac)(iii) of the IT Act, 1961 is hereby rejected and the provisional registration granted is also cancelled.”
It is this order against which the assessee is in appeal before this Tribunal.
5. Ld. AR appearing from the side of the assessee submitted before us that Ld. CIT, Exemption, Pune has not provided proper opportunity to the assessee and, therefore, the impugned order of Ld. CIT, Exemption, Pune is not justified. It was submitted that the assessee company has now got the memorandum of association amended and also got it registered with the Registrar of Companies, Pune. In this regard, the amended memorandum of association is furnished before the Bench in the paper book and certificate of registration issued by Registrar of Companies, Pune in this regard is also produced before the Bench. It was the sole prayer of the counsel of the assessee company to provide one opportunity to appear before Ld. CIT, Exemption with regard to registration u/s 12AB of the IT Act since the memorandum of association has already been amended. Accordingly, it was requested before the Bench to set-aside the impugned order passed by Ld. CIT, Exemption, Pune with a direction to provide at least one more opportunity to furnish the requisite documents/information and amended memorandum of association in support of application for registration u/s 12AB of the IT Act.
6. Ld. DR appearing from the side of the Revenue relied on the order of Ld. CIT, Exemption, Pune and requested to confirm the same.
We have heard Ld. Counsels from both the sides and perused the material available on record. We find that admittedly there were certain clauses in memorandum of association regarding which objection was raised by Ld. CIT, Exemption, Pune. Since the assessee company has removed those clauses from memorandum of association and has produced before us the registered amended memorandum of association, therefore, in the interest of justice, we deem it appropriate to set-aside the order passed by Ld. CIT, Exemption, Pune and remand the matter back to him with a direction to decide the application for registration afresh as per fact and law after providing reasonable opportunity of hearing to the assessee. The assessee is also hereby directed to comply with the notices issued by Ld. CIT, Exemption, Pune and produce requisite documents/information/ submissions and amended memorandum of association in support of the application for registration u/s 12AB of the IT Act without taking any adjournment under any pretext, otherwise, Ld. CIT, Exemption, Pune shall be at liberty to pass