GOWALIS INDUSTRIES ASSOCIATION,THANE vs. PR CIT (E), PUNE

In the captioned appeal, the assessee is aggrieved by rejection of application for registration u/s 12A of the Income Tax Act for approval of assessee Trust [Trust] by Pr.CIT (Exemption) [PCIT(E)] order dated 25/03/2015.

Briefly stated, the assessee was an association of entrepreneurs and businessmen carrying on specified business in industrial units and traders connected with industries in certain specified areas. It was registered as society under Societies Registration Act, 1860 vide certificate dated 27/05/1998. Claiming itself as a public charitable trust, it applied for registration in the prescribed manner u/s 12A(a) of the Income Tax Act, 1961 before appropriate authority vide application dated 03/09/2014 by furnishing various documents. The Ld. PCIT(E) after examining the documents and appreciating the various explanations furnished by the assessee, concluded that the main object of the society was to carry out the activities for the promotion of trade and commerce. A perusal of various clauses revealed that it was setup for the purpose of the benefit of its members and hence the primary objective of the society was not of charitable nature within the meaning of Section 2(15) and hence the society was not entitled for the said exemption. Aggrieved, the assessee is in appeal before us. 3. The Ld. Counsel for Assessee [AR] drew our attention to various documents placed in the paper-book to assert that the society was formed to benefit the particular section of the society at large and the main objective of the society was of charitable nature within the meaning of Section 2(15) and hence the assessee was entitled for the said exemption. At the application stage, the only thing required to be examined by the lower authorities was that the objects of the trust were broadly of charitable nature and nothing beyond. The primary objective of the assessee trust was to undertake activities of charitable nature only and it was ITA No.3336/Mum/2015 Gowalis Industries Association. Thane working like any other trade associations who were granted similar registrations. Further, there were wide powers in the act to cancel the registration of the assessee if the assessee violated any of the registration conditions. Reliance was placed on the order of Mumbai Tribunal in The Bengal Foundation Vs DIT(E) order dated 30/09/2015 and Shree Vile Parle Vardhman Sthanakvasi Jain Foundation Vs. DIT(E) 43 Taxmann.com 377, the copies of which has been placed before us, for the contention that having mixed objectives do not vitiate the registration application of the assessee.

Per Contra, the Ld. Departmental representative, drew our attention to the fact that the assessee was formed way back in the year 1998 and a perusal of its financial statements for various financial years placed in the paper-book reveal that it has not undertaken any charitable activity of single rupee over all these years despite earning surplus. The case laws relied upon by the assessee were distinguishable on the fact that the assessee in the present case was already in existence for several years whereas in the case laws relied upon, the assessee was newly created, the financial statements of which were not available at the time of registration application. Further, the assessee was working like a club to serve business interest of its members. The membership was restricted to particular section of the society and that too after payment of membership fees. It is well established that to get registration, the trust must be created for the benefit of public at large and its objective must primarily be of charitable nature, which is not the case here.

We have heard rival contentions and perused relevant material on record including cited case laws. The basic facts are not in dispute. A perusal of the Memorandum of Understanding reveals that the society was an association of businessmen and traders working in specified business and in specified areas. The main objective of the society was to promote industry, diffusion of knowledge and solving common problems and difficulties faced by the members. Further, its aim was to aid, advise and guide the members in the method of marketing and sale of their products and similar other objectives as contained in