PR. COMMISSIONER OF INCOME TAX, vs. SMT. PALLAVI MISHRA,

2025:CGHC:40694-DB

NAFR HIGH COURT OF CHHATTISGARH AT BILASPUR TAXC No. 10 of 2022 1 - The Commissioner Of Income Tax (Exemption) Room No. 201, Ii Floor, Income Tax Office , Ii Iii, Iv Floors, Metro Walk Building , E-5, Arera Colony. Bittan Market, Bhopal Madhya Pradesh 4620165

... Appellant (s) versus 1 - Confederation Of Pharma Dealers Association 11. G.E. Road, Bajrang Market, Raipur Chhattisgarh 492001.

... Respondent(s) For Appellant (s) : Shri Ajay Kumrani, Advocate For Respondent(s) : None

Division Bench Hon’ble Justice Shri Sanjay K. Agrawal, Hon'ble Justice Shri Sachin Singh Rajput Order on Board (13/08/2025) Sanjay K.Agrawal, J. 1. This case is listed on default for non-compliance of order dated 19/12/2022. Office objection is overruled.

2 2. This appeal under Section 260A of Income Tax Act, 1961 is listed on admission and formulating substantial question of law for admission. Heard on admission. 3. The respondent / assessee applied for registration under Section 12AA of the Income Tax Act, 1961 in form No.10A on 30/03/2019 which was rejected by the Commissioner, Income Tax (Exemption), Bhopal vide order under Section 12AA (1) (b) (ii) dated 27/09/2019 against which an appeal was preferred before the Income Tax Appellate Tribunal (ITAT) Indore Bench, Indore. Learned ITAT allowed the appeal vide order dated 27/10/2021 and set aside the order of the Commissioner, Income Tax (Exemption) and directed the Commissioner, Income Tax (Exemption)/competent authority to grant registration under Section 12AA of the Act. 4. Learned counsel for the appellant would submit that the ITAT was absolutely unjustified in granting the registration in favour of the assessee holding that the object and purpose of the assessee Trust are both charitable and religious in nature, whereas it is only religious in nature. Therefore, it is submitted that the appeal deserves to be allowed. 5. We have heard learned counsel for the appellant, considered the submission and also went through the material available on record minutely and thoroughly. 6. Section 12AA(1)(b)(i) of the IT Act states as under: - “12AA. Procedure for registration.—(1) The Principal Commissioner or Commissioner, on receipt of an application for registration of a trust or institution made under clause (a) or clause (aa) or clause (ab) of sub- section (1) of section 12A, shall — (a) xxx xxx xxx (b) after satisfying himself about the objects of the trust or institution and the genuineness of its activities as required under sub-clause (i) of clause (a) and compliance of the requirements under sub-clause (ii) of the said clause, he—

3 (i) shall pass an order in writing registering the trust or institution; (ii) xxx xxx xxx and a copy of such order shall be sent to the applicant:” 7. A careful perusal of the aforesaid provision would show that the Principal Commissioner or the Commissioner has to satisfy himself about the objects of the trust or institution and the genuineness of its activities as required under sub-clause (i) of clause (a) and compliance of the requirements under sub-clause (ii) of the said clause, and has to pass an order in writing registering the trust or institution and a copy of the order so passed will be sent to the applicant. 8. The Supreme Court in the matter of Ananda Social and Educational Trust v. Commissioner of Income Tax and another, (2020) 17 SCC 254 held that newly registered trust on basis of its objects, without any activity having been undertaken, is entitled for registration under Section 12AA of the Act, and observed as under: - “9. Section 12-AA undoubtedly requires the Commissioner to satisfy himself about the objects of the trust or institution and genuineness of its activities and grant a registration only if he is so satisfied. The said section requires the Commissioner to be so satisfied in order to ensure that the objects of the trust and its activities are charitable since the consequence of such registration is that the trust is entitled to claim benefits under Sections 11 and 12 of the Act. In other words, if it appears that the objects of the trust and its activities are not genuine that is to say not charitable the Commissioner is entitled to refuse and in fact, bound to refuse such registration. 10. It was argued before us that the Commissioner is required to be satisfied about two things — firstly that the objects of the trust and secondly, its activities are genuine. If there have been no activities undertaken by the trust then the Commissioner cannot assess whether such activities are genuine and therefore, the Commissioner is bound to refuse the registration of such a trust. 11. We have given our anxious consideration to the above

4 submissions made by Ms Aishwarya Bhati, the learned Senior Counsel appearing for the appellant Director of Income Tax and find that it is not possible to agree with the same. The purpose of Section 12-AA of the Act is to enable registration only of such trust or institution whose objects and activities are genuine. In other words, the Commissioner is bound to satisfy himself that the objects of the trust are genuine and that its activities are in furtherance of the objects of the trust, that is equally genuine. 12. Since Section 12-AA pertains to the registration of the trust and not to assess of what a trust has actually done, we are of the view that the term “activities” in the provision includes “proposed activities”. That is to say, a Commissioner is bound to consider whether the objects of the trust are genuinely charitable in nature and whether the activities which the trust proposed to carry on are genuine in the sense that they are in line with the objects of the trust. In contrast, the position would be different where the Commissioner proposes to cancel the registration of a trust under sub-section (3) of Section 12-AA of the Act. There the Commissioner would be bound to record the finding that an activity or activities actually carried on by the trust are not genuine being not in accordance with the objects of the trust. Similarly, the situation would be different where the trust has before applying for registration been found to have undertaken activities contrary to the objects of the trust.” 9. The principle of law laid down in Ananda Social and Educational Trust (supra) has been followed by Supreme Court with approval in the matter of Commissioner of Income Tax Exemptions v. M/s International Health Care Education and Research Institute, Special Leave Petition (Civil) Diary No.19528/2018 in which it has been held in paragraphs 14 and 15 as under: - “14. We may agree to a certain extent with the learned ASG that the very purpose for any assessee to seek registration under Section 12AA of the Act is to claim exemption under Sections 10 and 11 respectively of the Act, as the case may be. Therefore, before seeking registration, it is essential that the Trust should adduce cogent material to the satisfaction of the Commissioner that the activities are genuinely charitable in nature.

5 15. To the aforesaid extent there is no problem. We may only say that mere registration under Section 12-AA automatically does not entitle any charitable trust to claim exemption under Section 10 and 11 respectively of the Act, 1961. When a return is filed by any trust claiming exemption it is for the assessing officer to look into all the materials and satisfy itself whether the exemption has been claimed genuinely or not. If the assessing officer is not convinced it is always open for him to decline grant of exemption.“ 10. In the case in hand, the ITAT, vide impugned order observed that the object of the assessee trust meant for benefit of pharma dealers would undoubtedly fall within the fourth limb of Section 2 (15) of the Act. Some of the observations are quoted below - 8.7 We find that the Hon’ble Supreme Court in CIT v. Gujarat Maritime Board (2007) 295 ITR 561 has held that “when an object is to promote or protect the interest of a particular trade or industry that object becomes an object of public utility. Similar view expressed in CIT v. Andhra Chamber of Commerce (1965) 55 ITR 722 (SC). 8.8 In the light of ratio of various decisions, some of which have been quoted above, it is evident that the objects of the assessee trust meant for benefit of pharma dealers would undoubtedly fall within the fourth limb of Section 2 (15) of the Act i.e. ‘the advancement of any other object of general public utility’ which has been held to be very wide in its connotation in several judicial pronouncements noted above. The assessee society in the instant case is stated to be engaged in promotion of trade and commerce related to pharma business, protecting the rights and interest of its members, making its members aware about their duties, conducting seminars and workshops and organizing awareness camps and educating them about health and safety, cleanliness and also creating awareness about the legal provisions and duties and obligations under Income Tax Act and other laws to help them becoming a law abiding citizens. In this background, we are of the opinion that endeavors of the assessee society

6 tantamounts to advancement of public utility and hence making such objects charitable in nature and susceptible to s.2(15) of the Act. Significantly, we simultaneously notice from the judicial precedents referred to in preceding paragraphs that it is not necessary that object of general public utility should be beneficial to the whole mankind. The object beneficial to a section of the public is also an object of general public utility. Hence, the case of the assessee gets covered in the fourth limb of Section 2 (15) of the Act i.e. ‘the advancement of any other object of general public utility’. This being so, the assessee would be entitled to the benefit meant for charitable trust as contemplated in the scheme of the Act. 11. In the considered opinion of this Court, the ITAT is absolutely justified in granting registration under Section 12AA of the Income Tax Act to the assessee by holding that assessee’s case is covered by fourth limb of Section 2 (15) of the Act. Therefore, we do not find any substantial question of law involved in this appeal. The appeal deserves to be and is accordingly dismissed without issuing notice to the other party. Sd/- Sd/- (Sanjay K. Agrawal) (Sachin Singh Rajput)

Judge Judge Deepti

DEEPTI HARIKUMAR Digitally signed by DEEPTI HARIKUMAR Date: 2025.08.14 18:07:02 +0530