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Facts
The CIT (Exemptions) rejected the assessee's application for approval under section 12AB of the Income Tax Act, 1961, stating that the assessee's objects and activities did not benefit the general public. The CIT observed that the expenses incurred were administrative and the activities were primarily for the benefit of the members, not for public utility.
Held
The Tribunal held that the assessee's objects, when read in the proper perspective, were for charitable purposes within the meaning of section 2(15) of the Act. The Tribunal noted that the assessee operated on principles of mutuality, with benefits spread among its members, which did not preclude approval under section 12AB.
Key Issues
Whether the assessee's objects and activities, primarily benefiting its members, qualify as charitable for the purpose of registration under Section 12AB of the Income Tax Act, 1961, and if such benefits restricted to members prevent approval.
Sections Cited
12AB, 2(15)
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Income Tax Appellate Tribunal, “C’’ BENCH: BANGALORE
Before: SHRI CHANDRA POOJARI & SHRI KESHAV DUBEY
PER CHANDRA POOJARI, ACCOUNTANT MEMBER:
This appeal by assessee is directed against order of CIT(Exemptions) dated 20.6.2024 wherein ld. CIT(Exemptions) had rejected the application u/s 12AB of the Income Tax Act, 1961 (in short “The Act”) stating that assessee’s objects and activities do not benefit the general public, which is pre-requisite condition and the same deserves to be deleted under the facts and circumstances of the case. Against this assessee is in appeal before us.
Facts of the case are that the ld. CIT (Exemptions) has rejected the application u/s 12AB of the Act stating that the assessee’s objects and activities do not benefit the general public, which is prerequisite condition and the same deserves to be deleted under the facts and circumstances of the case. He has rejected the application stating that the assessee has not incurred any expenses towards "Charitable Kannada Film Producers Association, Bangalore Page 2 of 4 activities" but only in the nature of administrative expenses. He has also stated that the assessee's objects and activities are only meant for the benefit of members of the association and not for general public utility. Thus, he has rejected the application filed for approval u/s 12AB of the Act.
Before us, ld. A.R. submitted that assessee is duly formed by incorporating to carry out following objects: A. “To promote unity among the Kannada Film Producers of the State of Karnataka B. To promote and maintain highest standards of professional contact among the members. C. To foster cordial relationship between the producers and the other sectors of the film industry D. To protect and promote the privileges of members. E. To conciliate, mediate and arbitrate in all disputes that may be submitted for settlement by the members. F. To have dialogue with the State Government, Central Government or quasi government institutions about the problems of the members and seek redressal at the appropriate levels, to co-operate and co-ordinate wth any other professional organizations connected with the film industry in carrying on the aims of and objects of the association. G. To do all such other things as are incidental or conducive to the attainment of the above objects. H. If there arises any income or profit the same shall be utilized for the achievement of the objects and prohibit any dividend or distribution among the members. I. To endeavor to provide help against sickness, infirmity, old age, death and to secure compensation for its members in case of accidents under suitable applicable compensation act. J. To co-operate with organizations particularly those having similar objects in Karnataka, India and abroad. K. To obtain information with reference to the film industry in Karnataka, India and abroad. L. To publish and maintain papers, periodicals, journals and books for the purpose of propagating any or all the aims and objects of the association. M. To obtain for itself representation in state, National or International film and cultural delegations sponsored by the Government of India and Government of Karnataka or by any organization of the Indian film industry. N. To buy, sell, or otherwise, trade in goods of all kinds used in connection with film production, distribution, and exhibition and promotion of cinematographic films. O. To sell, assign, mortgage, lease, hire otherwise trade in movable or immovable properties or the interest therein, with the object of augmenting the funds of the association. Kannada Film Producers Association, Bangalore Page 3 of 4 P. To watch, protect and extend the rights and privileges of members of the association and to procure for them benefits, special advantages and concessions of all kinds wherever obtainable i. To look after the welfare of the persons engaged in Kannada Film Production. ii. To maintain a library for the benefit of the members. iii. To promote export of Kannada Films to other countries iv. To study business prospects, Fluctuations, angers and opportunities and to lay before the legislature the view of the association matters effecting the Kannada Film Production and Trade v. To invest and deal with monies of the association not immediately required, upon such securities and in such manner as may be determined from time to time. vi. To receive any benefits through gifts or by donations monies, properties, (movable or immovable) vii. To accept free film shows from members and other producers for raising funds for the association and to organize film Festivals, dramas and film exhibitions to raise funds for the association. viii. To form an academy and encourage for the technical improvement of the personal engaged in film production and trade, ix. To borrow or raise monies and or issue Debentures required for the purposes of the association upon such terms and in such manner as may be decided.”