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Facts
The assessee, an association promoting interaction and professional education for BAR members, applied for registration under Section 12A(1)(ac)(iii), which was rejected by the CIT(E). The CIT(E) held that its activities primarily benefited members, not the public, and that its constitutive documents lacked essential clauses for charitable status. The assessee appealed the denial of registration.
Held
The Tribunal observed that the assessee's Articles of Association allowed for a wide spectrum of members and that there were no allegations of spending funds contrary to its objects. It concluded that the assessee was entitled to registration under Section 12A(1)(ac)(iii). The appropriate authority was directed to grant the registration, allowing the revenue to scrutinize fund utilization during assessment.
Key Issues
Whether an association primarily benefiting its members, but also promoting professional education for public benefit, qualifies for registration as a charitable institution under Section 12A(1)(ac)(iii) of the Income Tax Act, given the scope of its membership and activities.
Sections Cited
12A(1)(ac)(iii), 2(15), Rule 34(4) of Income Tax (Appellate Tribunal) Rules, 1963
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Income Tax Appellate Tribunal, DIVISION BENCH, AMRITSAR
Before: SHRI MANOJ KUMAR AGGARWAL, AM & HON’BLE SHRI UDAYAN DAS GUPTA, JM
O R D E R Manoj Kumar Aggarwal (Accountant Member) 1. Aggrieved by rejection of an application seeking registration u/s 12A(1)(ac)(iii) vide impugned order dated 14-08-2024 as passed by learned Commissioner of Income Tax (Exemptions), Chandigarh [CIT(E)], the assessee is in further appeal before us.
The Ld. AR, Shri Parkshit Aggarwal, advanced arguments and drew attention to the Articles of Association to contradict the observation of Ld. CIT(E) in the impugned order. The Ld. CIT-DR also advanced arguments supporting rejection of application. Having heard rival submissions and upon perusal of case records, our adjudication would be as under.
The objects of assessee-association have been enumerated in para-4 of the impugned order. One of the primary objects is to promote interaction amongst members of the BAR by organizing meeting, seminars, talks, discussion & lectures etc. for dissemination of professional knowledge and education and to provide a forum and promote professional education for the benefit of public from time to time. As noted in para-4.1 of the impugned order, the assessee has incurred expenditure on conducting seminars and meetings for its members which are in consonance with the objects of the association.
The Ld. CIT(E), upon perusal of Sec.2(15), held that law recognizes no purpose as charitable purposes unless it is of public character. A purpose must be beneficial to the public at large and not for the benefit of private individuals. When the primary purpose of the society was to extend benefit to its members themselves, the society could not be held to be established for charitable purposes even if it was formed for the study of a particular science and that study leads to promotion of the education generally. From the nature of expenditure, it was not discernible as to how the expenditure was incurred for the purpose of general public utility. Since the activities of the society were restricted to its own members, it was not a public charitable trust. Secondly, the assessee did not have utilization clause, investment clause, beneficiary clause and dissolution clause. The absence of these important clauses makes a society revocable not enuring to the benefit of general public and open to any possibility of society property being utilized for the benefit of the members of the society. In this background, the registration was denied. Aggrieved, the assessee is in further appeal before us. 5. We find that the assessee-association is in existence since the year 2017. It is holding provisional registration for AYs 2023-24 to 2025-26. The copies of financial statements for FYs 2019-20 to 2021- 22 have also been placed on record. Upon perusal of the same, it could be seen that the assessee has incurred expenditure mainly to conduct seminar and meeting expenses. The assessee is duly registered with the