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Facts
The assessee, a society established in 1968, applied for registration under section 12A(1)(ac)(iii) of the Income Tax Act. The CIT(E) rejected the application, deeming its activities to be restricted to members and professionals, thus not qualifying as a charitable purpose under section 2(15) and akin to a mutual organization carrying on business.
Held
The Tribunal, considering the assessee's amended Memorandum of Association (MOA), its broad membership base, and activities promoting general public utility, along with relevant precedents, found that the assessee's activities fell within the definition of charitable purpose. It concluded that the activities were not for business but in support of its main object, making it eligible for registration. The appropriate authority was directed to grant the registration.
Key Issues
Whether the activities of a society, promoting trade and industry and providing services to its members and the public, qualify as "advancement of general public utility" under Section 2(15) of the Income Tax Act for registration under Section 12A.
Sections Cited
12A(1)(ac)(iii), 2(15), 11, 12AB, Companies Act, 2013, Rule 34(4) of Income Tax (Appellate Tribunal) Rules, 1963
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Income Tax Appellate Tribunal, ‘DB’, AMRITSAR BENCH, AMRITSAR
Before: HON’BLE SHRI MANOJ KUMAR AGGARWAL, AM & HON’BLE SHRI UDAYAN DAS GUPTA, JM
Chamber of Industrial and CIT (Exemptions) बनाम/ Commercial Undertakings Chandigarh C/o Shri Tejmohan Singh (Advocate) Vs. # 527, Sector 10-D Chandigarh 160011 �थायीलेखासं./जीआइआरसं./PAN/GIR No. AAATC-3924-H (अपीलाथ�/Appellant) : (��थ� / Respondent) अपीलाथ�कीओरसे/Appellant by : Shri Tejmohan Singh (Advocate) – Ld.AR ��थ�कीओरसे/Respondent by : Smt. Vandana Vijay Mohite (CIT) – Ld. DR सुनवाईकीतारीख/Date of Hearing : 24-04-2025 घोषणाकीतारीख /Date of Pronouncement : 10-06-2025 आदेश / O R D E R Manoj Kumar Aggarwal (Accountant Member) 1. Aggrieved by rejection of registration application as filed by the assessee seeking registration u/s 12A(1)(ac)(iii) vide impugned order dated 05-06-2024 of Ld. CIT(Exemptions), Chandigarh [CIT(E)], the assessee is in further appeal before us. The Ld. AR advanced arguments on the strength of various documents as placed on record. It has been stated that the amended objects have not, at all, been considered by Ld. CIT(E). The Ld. CIT-DR also advanced arguments in support of rejection of impugned registration. Having heard rival submissions and upon perusal of case records including the papers as kept before us, the appeal is disposed-off as under.
The assessee-society was created on 30-06-1968, inter-alia, to provide services to its members, advise on taxation matters and provide assistance and guidance in import and export formalities. Upon perusal of various documents & explanations as furnished by the assessee, Ld. CIT(E) observed that the main activities of the assessee society was to conduct industrial / technical meeting and seminars for its members and to provide services to its members. Enhancing the skill and knowledge of the member of the society and whose outcomes do not manifest in any immediate tangible effect on public at large would not qualify as charitable purpose. The activities of the appellant were restricted to members of the society who were professional / business undertakings and not the general public. The assessee was a mutual organization whose activities were restricted to contribution and participation of its members only. None of the activities was covered under any of the limbs of charitable purposes as envisaged u/s 2(15). The activities were restricted to specific group of professionals. The major expenditure was incurred on industrial meeting and training expenses. The main source of income was gross contribution for industrial meeting. Accordingly, the registration was denied against which the assessee is in further appeal before us.
We find that the assessee-society is in existence since the year 1968. It is registered with the Registrar of Societies since 1972. It is holding provisional registration for AYs 2024-25 to 2026-27. Upon perusal of assessee’s amended Memorandum of Association (MOA) & Articles of Association, it could be seen that it has multiple objectives and all of its incomes / earnings was to be applied towards promotion of its aims and objects only. The assessee, as per its amended MOA, seeks to fulfill the following objectives: - 1. Aims & Objects of Chamber/Society i) To represent interests of business, industry and trade with state governments ii) To invite top mentors, industrials, other government dignitaries for the development of industries to provide platform for interaction. iii) To organize useful Seminars, Workshops and Competitions for the members of the Chambers. iv) To lead overseas business delegation and to provide business opportunities for the members. v) To sign MoUs with fantabulous companies which help our members to get benefit out of it. vi) To organize exhibitions for the industries of latest technologies. vii) To provide skilled manpower to the industry & employment youth having passed out in engineering & management from recognized institutions. viii) To interact, Discussions/Seminars/Training Programs of all important issues relating to the development of all sectors of industry. ix) To take genuine issues of Industries with the State & Central Government(s) x) To organizing Exhibitions & Trade Fairs xi) To interact with Delegations of foreign countries xii) To depute delegations(s) to Foreign Countries for Technology up gradation & promotion of business. xiii) To organize industrial sports activities like T-20 Corporate Cricket Tournament, Chess Competition, Kaizen Competition etc. xiv) To take initiative to promote export, issue Certificate like Origin of Exports etc. xv) To run a Skill Development Centre. xvi) To form a special group called ‘Young Business Leaders forum’ “YBLF” xvii) To Educate, Encourage and Support the members towards problems connected directly or indirectly with Environment Improvement working with Statutory and Non Statutory agencies xviii) To organize awareness camps for educating the members on Cleanliness and Hygiene. xix) To open branch office of Chamber/Society anywhere in India. xx) To receive Financial and Non Financial assistance from Government, Non-Government organizations, International and Foreign Agencies, Banks and any other Legal Entity or Individuals to Finance the work.
xxi) To accept Donations, Presents, Gifts, Loans and other Offerings in the shape of Moveable or Immoveable properties for the attainment of the Aims and Objective of the Society. xxii) To Establish and Strengthen Partnership with similar National and International groups and exchange information and advice wth them. xxiii) To accept the funds/donation in monetary or non monetary terms under CSR (Corporate Social Responsibility Activities ) activities from corporate entities for the purpose of Education/skill development activities, job fair for unemployment/under employed youth, any charitable activities, relief to poor, environment protection, promotion of yoga seminars, training /awareness program and workshops for updating the knowledge of industrialist at large. Trade fairs for development of market for the industry advancement of any other object of General Public utility/industry. xxiv) To receive funds from the organizations/companies/Business houses who wish to conduct Corporate Social Responsibility (CSR) activities like Social welfare programmes, through Chamber, in compliance with the provisions of the Companies Act, 2013. It may include activities such as social empowerment, employ generation, vocational skills for women and the youth of our country, child welfare and various livelihood enhancement projects for differently-abled people (divyang) or any other as defined in the Companies Act, 2013 and its amendments thereof.
Further, all the incomes, earnings, moveable or immoveable properties of the assessee society was to be utilized and applied towards the promotion of its objects only and no portion thereof was to be paid or transferred directly or Indirectly to the present or past members of the society or to any person claiming through any one or more of the present or past members. No member of the society would have any personal claim in any moveable or immoveable property of the society or make any profit whatsoever by virtue of his membership.
It could further be seen that the assessee-society could have ordinary members, associate members and honorary members and as such there are no restrictions on admission of members from wide spectrum of public. The perusal of financial statements for FY 2023-24 would show that it is receiving contribution for various purposes which are being utilized towards promotion of its objects only. Considering the fact that the assessee could admit members from wide spectrum, it could not be said that it was a mutual organization which was running merely for mutual benefit only. The ‘advancement of general public utility’ as provided u/s 2(15) would be wide enough to cover such kind of activities. The Ld. AR has placed on record date-wise details of charitable activities along with evidences from April, 2023 to March 2024 on Page Nos. 162 to 265 of the paper-book. The perusal of the same would show that the assessee is conducting various programs of general utility for the benefit of society at large. The assessee’s registration application finds support from various decisions of this Tribunal.
The Kolkata Tribunal in the case of Indian Chamber of Commerce (162 Taxmann.com 43) has rendered decision in case of similarly placed assessee. In this decision, the bench observed that the activity of organizing meetings, conferences and seminars were only towards attainment of and in support of main object of the assessee. The assessee, in order to protect and promote trade, commerce and industry had been organizing the activities of seminars, meetings and conferences in order to disseminate knowledge on specialized issues to members and non-members on the subject with specialized knowledge. During such events, the experts on the subjects would be invited to speak on the occasion and also participative discussion and interactions would be held during such meetings, conference and seminars. The bench further observed that the assessee was organizing general meetings, conferences and seminars to discuss and debate issues in current topics, amendments of Income Tax Act, MSME Act, Foreign Trade Policy and other issues having concerns for trade, commerce and industries so that the interest of trade, commerce and industries are promoted and protected. The bench duly considered the decision of Hon’ble Apex Court in the Ahmedabad Urban Development Authority (449 ITR 389) to observe that in this decision, it was nowhere been held that the activities carried on by the charitable entity which were supportive to the attainment of main object are to be treated as non-charitable activities. The Hon'ble Court has even held that activities of charging of any amounts towards consideration for any activity (advancing general public utility) which is on cost basis or nominally above cost, cannot be considered to be trade, commerce or business or any services in relation thereto in Para 253 page 82. The Hon'ble Court held as under:- "A.3. Generally, the charging of any amount towards consideration for such an activity (advancing general public utility), which is on cost-basis or nominally above cost, cannot be considered to be trade, commerce or business or any services in relation thereto, It is only when the charges are markedly or significantly above the cost incurred by the assessee in question, that they would fall within the mischief or cess, or fee, or any other consideration towards trade, commerce or business. In this regard, the Court has clarified through illustrations what kind of services or goods provided on cost or nominal basis would normally be excluded from the mischief of trade, commerce or business, in the body of the judgment."
Considering the margins of the assessee, the bench finally held that the assessee was not carrying on any activity for business purpose but only in support of its main object. Therefore, the assessee was held entitled for exemption u/s 11 of the Act as the activities of the advancement of main object was not hit by the proviso to Section 2(15) of the Act even post amendments.
Similar is the decision of Raipur Tribunal in the case of Chhattisgarh Re-Rollers Association (168 Taxmann.com 621). The bench, after considering various judicial decisions, rendered identical finding in case of similarly placed assessee. It was held by the bench that that the assessee association was established for the purpose to organize and unite the manufactures of steel Re-Rollers and people of similar business and certain other connected / incidental / ancillary objects. The association was set up to safeguard the interest of its members and to deal with matters having common interest of the trade. The bench further observed that there was no benefit derived by specified individual. The Hon'ble Apex Court in the case of CIT v. Bar Council of Maharashtra (6 Taxman 1) held that trading bodies constituted with a view to advance an object of general public utility would be eligible for exemption u/s 11 because their primary purpose was to promote and protect industry, trade and commerce. The bench also considered various other judicial decisions and finally held that the assessee’s activities fall within the charitable purpose as defined u/s 2(15) and therefore, it was entitled for registration u/s 12AB. We find that we are faced with similar facts. The objects of present assessee are quite similar. Therefore, in the light of aforesaid decisions, the appropriate authority is directed to grant the impugned registration to the assessee. We order so.
The appeal stand allowed in terms of our above order. Order pronounced u/r 34(4) of Income Tax (Appellate Tribunal) Rules, 1963. Sd/- Sd/- (UDAYAN DAS GUPTA) (MANOJ KUMAR AGGARWAL) JUDICIAL MEMBER ACCOUNTANT MEMBER Dated: 10-06-2025 आदेश की �ितिलिप अ�ेिषत / Copy of the Order forwarded to : 1. अपीलाथ�/Appellant 2. ��थ�/Respondent 3. आयकरआयु�/CIT 4. िवभागीय�ितिनिध/DR 5. गाड�फाईल/GF ASSISTANT REGISTRAR
ITAT AMRITSAR