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Facts
The assessee, Ahmedabad Engineering Manufacturers Association, applied for registration under Section 12AB of the Income Tax Act. The CIT(Exemption) rejected the application, holding that the trust's objects were for the benefit of its members and not for the general public.
Held
The Tribunal held that the assessee's objects were for the benefit of a specific section of society (members and employees) and not for the general public at large. Therefore, the CIT(E) was justified in rejecting the application.
Key Issues
Whether the objects of the assessee association are for the benefit of the general public, qualifying for registration under Section 12AB of the Income Tax Act.
Sections Cited
12AB, 2(15), 12A(1)(ac)(iii), 12AA, 2(15)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, AHMEDABAD “A” BENCH
Before: Ms. Suchitra Kamble & Shri Narendra Prasad Sinha
आदेश/ORDER PER : SUCHITRA KAMBLE, JUDICIAL MEMBER:-
This is an appeal filed against the order dated 30-03- 2024 passed by CIT(Exemption) for assessment year N.A.
The grounds of appeal
are as under:- “1.1 The order passed by U/s 12AB passed on 30.03.2024 by CIT(Exem), Ahmedabad rejecting the application for registration of the appellant trust u/s 124(1)(ac)(iii) of the Act and cancelling the A.Y. N.A. Page No.
2. The Ahmedabad Engineering Manufacturers Association vs. CIT(E) provisional registration is wholly illegal, unlawful and against the principles of natural justice. 2.1 The Id. CIT(Exem), has grievously erred in law and or on facts in not appreciating fully and properly the submissions made and evidence produced by the appellant in support of the contention that it was a public charitable trust within the ambit of sec.2(15) of the Act so that it was entitled to registration u/s 12AB of the Act. 3.1 The Id. CIT(Exem), has grievously erred in law and or on facts in rejecting the application for registration u/s 12AB of the Act holding that the appellant trust was not for the benefit of public, though the appellant trust had produced enough evidence to prove that it was established and also carrying on activities for the general public utility apart from medical relief etc. 3.2 That the in the facts and circumstances of the Id. CIT(Exem), ought not to have rejected the application for registration by mis- construing the object clause of the trust and disregarding the activities carried on by it which conclusively proved that the trust was established and carrying on for the advancement of general public utility and as such it was within the ambit of Sec. 2(15) of the Act. It is, therefore, prayed that the rejection of the application for registration and cancellation of the provisional registration by the CIT(Exem), may kindly be deleted.”
The applicant filed an application for registration of the trust u/s. 12AB of the Income Tax dated 29-09-2023. Date of provisional approval/registration as per Form 10AC was 05-04-2022. The CIT(E) issued notices dated 22-11-2023 and 22-12-2023 thereby calling upon the details and documents. The applicant submitted the reply dated 17-01-2023 along with the details/documents. The CIT(E) after going through the objects held that the objects of the applicant are not for the benefit of public at large but for the benefit of members and employees/ex-employees only. The applicant submitted that the objects are for general welfare and A.Y. N.A. Page No. 3 The Ahmedabad Engineering Manufacturers Association vs. CIT(E) development of total engineering industries of India but the CIT(E) gave a categorical finding that these objects are for members and members only and not for the benefit of public at large and this cannot be termed as charitable objects. Thus, the CIT(E) rejected the application of the assessee for grant of 12A(1)(ac)(iii) of the Act and also cancelled the provisional registration.
Being aggrieved by the order for rejection of registration dated 30-03- 2024, the applicant/assessee filed appeal before us.
There is a delay of 114 days in filing the present appeal for which the applicant/appellant has filed the detailed affidavit thereby stating that due to the medical exigency of one of the trust managing activities of the association (operated for left eye the cataract), the applicant/appellant could not file the present appeal within the statutory time. This reason appears to be genuine and therefore the delay is condoned.
The Ld. A.R. submitted that the Ahmedabad Engineering Manufactures Association is incorporated on 24.10.1959. The appellant association/trust had been granted the approval u/s 12AA from 22.11.1980 by ITO HQ II/A-12/80-8. This Association/Trust is established with the main object to provide a platform for micro, small and medium engineering enterprise to raise their issue with Government's department like GPCB, Sales Tax, ESI, PF, Labour Laws etc and give input in industrial policy maker decision, to arrange social programs for members and for their employees, to support member in industrial crises, upgrade/ educate member with government policies by arranging seminar with government agencies A.Y. N.A. Page No. 4 The Ahmedabad Engineering Manufacturers Association vs. CIT(E) and other bodies. The association work to protect rights of engineering industry. The appellant trust commenced its activities from 24.10.1959 and as such it was required to get registration u/s 12AB of new regime. Therefore, application for provisional registration was made and approval was granted on 05.04.2022. Thereafter, application in Form 10AB was made on 23.09.2023. The details of application are tabulated as under :-
Sl. Particulars Remarks No. 1 Date of application for registration or 23-09-2023 Section code: approval in FORM 10AB and section 12A(1)(ac)(iii) code. 2 Date of provisional 05-04-22 approval/registration as per Form 10AC 3 Section/Sub-section/Clause/Sub- Sub-Clause(vi) of clause/proviso in which provisional clause(ac) of registration is being granted subsection(1) of section 12A 3 Assessment year or year for which the From A.Y. 2022-23 to trust or institution is provisionally A.Y. 2024-25 approved.
The ld. A.R. further submitted that while processing the aforesaid application, the respondent issued notice dtd. 22.11.2023 & 22.12.2023 requiring the appellant to furnish details/information/clarification relating to the establishment of the trust and activities undertaken by it. The appellant A.Y. N.A. Page No. 5 The Ahmedabad Engineering Manufacturers Association vs. CIT(E) submitted reply on 17.01.2024. Thereafter, once again a notice was issued on 15.03.2024 asking the appellant to furnish the details/documents and a detailed note on nature of activities of last three years etc. This notice called upon the details/documents which was identical to the earlier notice. The appellant furnished a detailed response on each point stated in the aforesaid notice of inquiry dtd 19.03.2024. Recently, the respondent has passed an order rejecting the application mainly for the reason that the perusal of the objects are for the benefit/welfare/ interest of the members of the association of the Ahmedabad Engineering Manufactures Association and not for the benefit of public at large which does not eligible for Registration u/s 12 of Act and could not be granted registration u/s 12 of the Act. The ld. A.R. submitted that when the activities as per the said object clause was for the benefit of Alumni of the prestigious institution and the Alumni would be the students of Indus University where, there would be reunion only without any discrimination of caste, creed or religion. The presence of the renowned Alumni would enhance the reputation of the University as well as social status of the members. Reliance is also placed on the decision in case of CIT vs Ahmedabad Rana Caste Association (140 ITR 1) (SC) which affirmed the decision of jurisdictional High Court holding that they were purposes covered by the expression "advancement of any other object of general public utility". "General" means pertaining to a whole class; "public" means the body of people at large including any class of the public; "utility" means usefulness. Therefore, the advancement of any object of benefit to the public or a section of the public as distinguished from an individual or group of individuals, would be a charitable purpose. Therefore, the ld. A.R. submitted that the impugned order passed by the respondent is illegal.
A.Y. N.A. Page No. 6 The Ahmedabad Engineering Manufacturers Association vs. CIT(E)
6.1 The ld. A.R. submitted that the Ahmedabad Tribunal in case of Indus Alumni Association vs. CIT(E) order dated 04-11- 2024 stated that the Tribunal has given the relief thereby directing the CIT(E) to grant final registration u/s. 12AB of the Act.
The ld. D.R. submitted that the assessee’s objects vis-à-vis work which is mentioned in para 6.2 of the order of the CIT(E) clearly mentions that the applicant will be benefiting the employees or ex-employees of the Ahmedabad Engineering Manufacturers Association and its members only and not public at large i.e. general public. Thus, the CIT(E) has rightly rejected the registration u/s. 12AB. The ld. D.R. also relied upon the decision of Hon’ble Punjab and Haryana High Court in case of CIT vs. Truck Operators Association (2010) 328 ITR 636.
We have heard both the parties and perused all the relevant materials available on record. It is pertinent to note that from the perusal of the objects, it is clear that the applicant/appellant is not working for the benefit of general public at large but to the specific section of the society. The objects as per memorandum of association of the Ahmedabad Engineering Manufacturing Association are reproduced and submitted at page 34 and 35 of the paper book submitted by the applicant/appellant. Thus, the CIT(E) has rightly rejected the registration u/s. 12AB of the Act. Beside this, the decision submitted by the applicant are also not identical to the present applicant’s/appellant’s case as in all the other cases, there was a specific object for working towards the welfare of the general public but the same is absent in the clause of the present applicant. The ld. A.R.’s contention that A.Y. N.A. Page No. 7 The Ahmedabad Engineering Manufacturers Association vs. CIT(E) the proviso to section 2(15) of the Income Tax, 1961 was not invoked by the CIT(A) is not proper as section 2(15) and proviso thereto is a definition clause/section and thus the same get imbibed while deciding the application for registration u/s. 12AB as the charitable purpose is the definition and how to deal with the charitable institute has to be determined by section 12AB of the Income Tax Act, and registration of the said trust accordingly. The decision relied by the ld. D.R. in case of Truck Operators Association (supra) is relevant to that effect. Thus, the appeal of the assessee is dismissed.
In the result, the appeal of the assessee is dismissed. Order pronounced in the open court on 16-01-2025 Sd/- Sd/- (NARENDRA PRASAD SINHA) (SUCHITRA KAMBLE) ACCOUNTANT MEMBER JUDICIAL MEMBER Ahmedabad : Dated 16/01/2025 आदेश क� ��त�ल�प अ�े�षत / Copy of Order Forwarded to:- 1. Assessee 2. Revenue 3. Concerned CIT 4. CIT (A) 5. DR, ITAT, Ahmedabad 6. Guard file.