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Facts
Siddhaanta Saraswati Foundation applied for registration under Section 12AA of the Income Tax Act. The Commissioner of Income-tax (Exemptions) denied the registration, citing that the assessee's objects were not charitable as per Section 2(15), no actual charitable activities had been carried out, and the filing of ITR-6 instead of ITR-7 indicated business operations. The assessee subsequently filed an appeal against this denial.
Held
The Income Tax Appellate Tribunal upheld the decision of the CIT(Exemptions), finding no flaw or infirmity in the order. The Tribunal concurred that the assessee's objects did not qualify as charitable, the absence of activities made genuineness unverifiable, and the incorrect ITR filing further supported the denial of 12AA registration.
Key Issues
Whether the assessee's stated objects were charitable under Section 2(15), whether the genuineness of its activities could be ascertained given no operations, and whether the filing of ITR-6 instead of ITR-7 justified the denial of Section 12AA registration.
Sections Cited
12AA, 2(15), 11
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, DELHI BENCH “B”: NEW DELHI
Before: SHRI KUL BHARAT & SHRI BRAJESH KUMAR SINGH
O R D E R PER KUL BHARAT, JM:
This appeal, preferred by the assessee, is directed against the order of the learned Commissioner of Income-tax (Exemptions), Chandigarh, dated 28.01.2019 passed u/s 12AA(1)(b)(ii) of the Income-tax Act, 1961 (hereinafter referred to as the “Act), denying registration u/s 12AA of the Act. The assessee has raised following grounds of appeal:
2 “1. That based on the facts and in the circumstances of the case and in law, the learned CIT (E), has erroneously rejected the registration application made by the appellant company u/s 12A of Income tax Act, on July 19 2018.
2. That The CIT(E) has erred in holding that the below objects of the appellant company do not fall under the term 'charitable' as envisaged in section 2(15) of the Act.
a. To open, found, establish, run, maintain institutions, lecture hall and other establishments for advancement of spiritual education and of knowledge in Vedic arts, Vedic science, Vedic literature humanities and all other useful subjects in all their manifestations. b. To disseminate spiritual education, vedic science and vedic art using different mediums such as by conducting seminars or programmes, putting on seminars and educational forums as well as cultural exhibits, publishing and distributing pamphlets, periodicals and papers for the benefit of general public and society.
3. That the learned CIT(E) has erred by interpreting conducting seminars or exhibitions, etc in isolation from dissemination of spiritual education, vedic science and vedic art, whereas they form part of the same object sub-clause.
That the learned CIT(E) has erroreneously held that the objects covering organizing seminars, exhibitions and opening lecture hall by the appellant company do not enure to the benefit of the public at large and that the appellant entity intends to cover it's motive under the provisions of exemptions, whereas the object clearly states that seminars etc should be held for the benefit of the general public and society and object number 13 of the Memorandum of Association of the appellant company provides that "None of the objects would be carried out on commercial basis and all the activities will be purely non-profit."
5. That the learned CIT(E) has erred in holding that as no activity has been carried out by the appellant company so it is also impossible to ascertain the genuineness of activities and thus, the applicant company would not enure benefit to the general public.
That the learned CIT(E) has erred in holding that the decisions cited by the appellant company in it's registration application refer to the registration process where objects are more relevant than the genuineness of activities at the initial stage.
The learned CIT(E) has wrongfully safely concluded that the applicant company would not enure to benefit for the general public whereas all the objects of the Memorandum of Association of the appellant company, direct the company to carry out it's objects for the benefit of general public and society as the only motive, specifically object number 13, which states "None of the objects would be carried out on commercial basis and all the activities will be purely non-profit."
8. That the learned CIT(E) has wrongfully concluded that ITR-6 can only be filed by companies involved in business operations, whereas ITR-6 is to be filed by companies other than the companies claiming exemption under section 11 of the act. Since the company wasn't eligible to claim exemption under section 11 it had to file ITR-6.”
Facts, in brief, are that assessee e-filed an application in form No. 10A on 19.07.2018 before the Commissioner of Income-tax (Exemptions), Chandigarh, seeking Registration u/s 12A of the Income Tax Act, 1961. The assessee company is stated to be in operation since 01.12.2017. As per assessee, the aims and objects of the company are to establish, promote, set-up, run, maintain, assist/finance, support and/or aid to or help in the setting up and/or maintaining and/or running ashrams, educational facilities, ayurvedic medical facilities schools, orphanages, widow homes, lunatic asylums, poor houses or other establishments for relief and/or help to the poor, old and infirm people and/or destitute. After making detailed inquiries the learned CIT(Exemptions) concluded that objects of the u/s 2(15) of the Act, necessary for granting registration u/s 12AA of the Act.
Accordingly, the learned CIT(Exemptions) rejected assessee’s application for registration u/s 12AA of the Act. Aggrieved against it the assessee is in appeal before this Tribunal.
No one appeared on behalf of the assessee at the hearing despite issue of notice for hearing. From the perusal of record it is revealed that there is no representation on behalf the assessee since 02.05.2022. Notices of hearing sent to the assessee through registered post have been returned with postal remarks “no such person at given address”. No new address, if any, has been furnished by the assessee. Under these circumstances we proceed to dispose of the appeal, ex parte, qua the assessee after hearing learned DR and perusing the material available on record.
4. Learned CIT(DR) relied on the order of learned CIT(Exemptions), denying registration u/s 12AA of the Act.
After hearing learned DR and perusing the material on record we find that the learned CIT(E) has rejected assessee’s application for registration u/s 12AA of the Act, inter alia, by observing as under:
5 “Conducting seminars and exhibitions in no sense gets covered under the definition of charity as defined u/s 2(15) of I.T. Act. Such objects can't be ignored at the time of registration particularly when the genuineness of activities cannot be ascertained. The applicant also cited a plethora of decisions citing that these decisions succinctly cover the cases whose objects are genuine and have not commenced any activity. It is pertinent to mention here that the cited decisions refer to the registration process where objects are more relevant than the genuineness of activities at the initial stage. In the present case, it is clear from the above stated objects that the objects of the applicant company do not fall under section 2(15) of the act which is essential for granting registration u/s 12AA of the Act and to that extent the objects of the applicant can't be established as charitable. The presence of such objects in MoA clearly leads one to conclude that the applicant entity intends to cover its motive of organizing seminars, exhibitions and opening lecture hall that too do not enure to the benefit of the public at large, under the provisions of exemptions. Moreover, perusal of financial statements reveal that no activity has been carried out by the applicant so far. In the absence of same, it is also impossible to ascertain the genuineness of activities. To that extent, it is safely concluded that the applicant company would not ensure to benefit for the general public.
It is another issue that returns of income for the AY 2018-19 have been filed in Form No. ITR-6 that is required to be filed by the company other than a company income of which arise from any property for religious or charitable purposes. It is pertinent to mention that as per rule 12(1) of the IT Rules, 1962, the returns of income of the society/trust/company which works on the principal of 'no profit no loss, are required to be filed in Form No. ITR-7. Filing of return of income in Form No. ITR-6 clearly indicates that the applicant company is involved in business operations.
Keeping in view all of the above, I have no option but to deny the registration to the applicant u/s 12AA of Income Tax Act, 1961.”
6. A perusal of the order of learned CIT(E) reveals that in arriving at his conclusion the learned CIT(E) has conducted detailed inquiry and passed an elaborate order. We see no flaw or infirmity in the order of learned CIT(E) to take
6 a different view in the matter. Accordingly, order of learned CIT(E) is upheld. Grounds are rejected. 7. Assessee’s appeal is hereby dismissed. Order pronounced in open court on 28th June, 2024.