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Facts
The assessee, a Chartered Accountants Association, appealed the rejection of its application for registration under Section 12A(1)(ac)(iii) by the CIT(E). The CIT(E) held that its objects primarily benefited its members rather than the general public and that its organizational documents lacked certain essential clauses for a public charitable trust.
Held
The Tribunal ruled that the assessee was indeed entitled to the registration, noting its long existence, provisional registration, and Articles of Association allowing for diverse membership. It found no evidence of funds being used for non-object purposes and directed the CIT(E) to grant the registration.
Key Issues
Eligibility for registration under Section 12A(1)(ac)(iii) of the Income Tax Act, particularly regarding the nature of activities (public vs. member benefit) and organizational clauses.
Sections Cited
Section 12A(1)(ac)(iii), Section 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
Chartered Accountants Association Income Tax Officer, बनाम/ Model Town Road, Near Skylark Hotel Ward No.4(2), Vs. Jalandhar-144001. Jalandhar �थायीलेखासं./जीआइआरसं./PAN/GIR No. AADAC-9242-Q (अपीलाथ�/Appellant) : (��थ� / Respondent) अपीलाथ�कीओरसे/ Appellant by : Shri Parikshit Aggarwal (CA) – Ld. AR ��थ�कीओरसे/Respondent by : Dr. Vedanshu Tripathi (CIT) – Ld. DR सुनवाईकीतारीख/Date of Hearing : 25-03-2025 घोषणाकीतारीख /Date of Pronouncement : 06 -06-2025 आदेश / 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 association 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 students 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.
We find that the assessee-association is in existence since the year 2010. 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 Registrar of Societies. In the impugned order, there is no allegation that the assessee has spent any money for any purposes other than for its objects. The copy of Memorandum of Association and Articles of Association has also been placed on record. As per Articles of Association, the assessee could have different categories of members and the assessee admit members from wide spectrum of people. On these facts, the assessee, in our considered opinion, is entitled for said registration. Needless to add that it is always open for the revenue to examine the utilization of funds at the time of assessment proceedings. Therefore, the appropriate authority is directed to grant the said 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.