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Facts
The assessee, a Public Charitable Trust, applied for registration under Section 12AB of the Income Tax Act. The Commissioner of Income Tax (Exemption) rejected the application, finding that the trust's objects involved commercial enterprise and profit motive, and were thus not charitable in nature.
Held
The Tribunal held that the interests of justice would be served by remanding the matter back to the Ld. CIT(E). The Ld. CIT(E) is to reconsider the application afresh, taking into account the submissions filed by the assessee.
Key Issues
Whether the Commissioner erred in rejecting the application for registration under Section 12AB by ignoring the charitable activities and considering the objects as not charitable in nature and having profit motive.
Sections Cited
12AB, 12A
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Income Tax Appellate Tribunal, “A” BENCH, AHMEDABAD
Before: DR.BRR KUMAR & SHRI SIDDHARTHA NAUTIYAL
Appellant by : Shri Mehul K Patel, A.R. Respondent by: Shri R.N Dsouza, CIT. DR Date of Hearing 27.02.2025 Date of Pronouncement 10.03.2025 O R D E R PER: DR. BRR KUMAR, VICE PRESIDENT:
The captioned appeal has been filed by the Assessee against the order passed by the Ld. Commissioner of Income Tax (Exemption), Ahmedabad, vide order dated 27.09.2024. 2. The Assessee has taken the following grounds of appeal:-
1. That on facts, and in law, the learned CIT(Exemptions) Ahmedabad has grievously erred in not considering the submission and in rejecting the application u/s.12AB of the Act.
2. That on facts, and in law, the learned CIT(Exemptions), Ahmedabad has grievously erred in rejecting the application for registration u/s.12AB of the Act by ignoring the charitable activities undertaken by the appellant. Asst.Year –NA - 2–
The brief facts of the case are the assessee is a Public Charitable Trust registered under Bombay Public Trust Act, 1950. The objective of the trust is to work in the interest of public and to work to achieve the goals without discrimination of cast, creed, religion. The trust is a non-profit organization. There were number of objects mentioned in its Trust Deed and objects clauses mentioned in trust deed was duly approved by Dy. Charity Commissioner and issued a registration certificate to the assessee. The trust had applied for registration u/s.12AB of the Act before Ld.CIT(E).
The Ld. CIT(E) declined to grant registration u/s.12A of the Act stating that the objects of the trust are not found to be charitable in nature and for public at large. The relevant findings of the Ld.CIT(E) is reproduced as under:
The objects of the applicant they are charitable in nature. The litmus test of a charitable institution is that it should primarily carry on charitable activities. Charity is the noble cause meant for the benefit and upliftment of the down trodden, poor and the needy. Charity is not a technical concept safeguarded by legal jargons. Charity is not an edifice built on logical deliberations. Charity is a divine reflection of human civilization which finds ways and means to help the needy, to protect the helpless, to support the poor and to work for the betterment of the society and mankind. So what is necessary is actual work of charity, howsoever humble it might be.
From perusal of above submission dated 26.08.2024, it is observed that the applicant itself has contended that for winning a government contract, it has to compete with the private businesses. which clearly establishes a commercial intent of the applicant to earn profits. It may also be noted that objects of the assessee reproduced at para 6 Asst.Year –NA - 3– unambiguously establishes that such objects involve actively participating in and competing for different State Government, Semi Government, Central Government, Local Governments and private organizations's projects/contracts. Thereby meaning-that assessee applicant is engaged /shall be engaged in commercial enterprise of bidding for various contracts/projects from different entities being both Government as well as Private. Such activities/objects cannot be charitable by any stretch of imagination.
Hence, it is evident that above referred objects clearly serve the profit motive of the applicant Trust and that hardly can be considered as charitable in nature, particularly when the essence of public service/charity is absent from the same.
As discussed above, the said objected are not found to be Charitable in nature at large. Therefore, I am of the considered opinion that the applicant/assessee is not eligible for registration u/s.12A of the Act. Therefore in the facts and circumstances of the case, the applicant/assessee cannot be granted registration u/s.12A of the Act.
In view of the above, the present application filed in For No.10AB u/s.12A(1)(ac)(iii) of the Act is rejected and provisional registration is also cancelled.
Aggrieved by the order of the Ld. CIT(E), the Assessee filed appeal before the Tribunal.
At the outset, the Ld. Counsel for the assessee submitted that the Ld.CIT(E) has rejected the application for grant of registration u/s. 12A(1) (ac) (iii) of the IT Act of the assessee without considering the submissions which have already been filed on 21.08.2024. Therefore, it was prayed that, given an opportunity, the same would be apprised to the Ld.CIT(E). Ld. Asst.Year –NA - 4– CIT(DR) argued that the assessee needs to furnish the proof of filing the submissions before the Ld. CIT(E). Rebutting the arguments of the Ld. DR, the Counsel for the assessee has produced the acknowledgement copy of the submissions made before the Ld. CIT(E). Having considered the facts on record, we hold that interests of justice would be well served by remanding the matter to the Ld. CIT(E) for consideration of the application afresh and to pass an order by taking into consideration the submissions filed by the assessee.
In the result, the appeal of the assessee is allowed for statistical purposes.