Tribunal grants exemption under Section 12AA to Indian Society benefiting the public.

The Tribunal allowed the appeal, setting aside the Director of Income Tax (Exemptions)'s decision and directing the grant of exemption to the assessee under Section 12AA of the Income Tax Act, 1961. The Tribunal found that the Society's activities are confined to India, benefit the larger public, and are not engaged in trade, commerce, or business. The order was pronounced on 17th September 2013 in Chennai.

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Issues Involved:
1. Whether the activities of the Trust extend beyond India.
2. Whether the benefits of the Trust are confined only to the Members of the Society.
3. Whether the Society is engaged in trade, commerce, or business activities under the proviso to Section 2(15) of the Income Tax Act, 1961.

Detailed Analysis:

Issue 1: Activities of the Trust Extending Beyond India
The Director of Income Tax (Exemptions) rejected the application for registration under Section 12AA on the grounds that the activities of the Trust would extend to Japan. The Tribunal examined Rule 1.4 of the Rules and Regulations of the Society, which specifies that the Society shall function under the jurisdiction of the Registrar of Societies, Chennai Central. Additionally, Rule 4.1 indicates that membership is open to Japanese corporations, their subsidiaries, joint venture companies, and Indian individuals in Chennai. The Tribunal found that it is highly improbable for the benefits of the activities to extend to Japan and deemed the Director's view as misconceived. The Tribunal concluded that the activities of the Society are restricted to the State of Tamil Nadu and are subject to scrutiny under the Act.

Issue 2: Benefits Confined to Members
The Director of Income Tax (Exemptions) contended that the benefits of the Trust would not be available to the general public but only to the Members of the Society. The Tribunal referred to the Delhi Bench of the Tribunal's decision in a similar case, which held that promoting trade and commerce between India and Japan would benefit the Indian public at large. The Tribunal agreed with this view, stating that the benefits of the activities of the Trust are not confined to a select segment but would flow to a larger section of society.

Issue 3: Engagement in Trade, Commerce, or Business
The Director of Income Tax (Exemptions) argued that the Society is charging fees for services related to trade, commerce, or business, which falls under the proviso to Section 2(15) of the Act. The Tribunal, however, noted that the Society charges admission fees, monthly subscriptions, and registration fees for seminars and conferences, which are utilized solely for the promotion of the Society's aims and objects. The Tribunal emphasized that Clause-1 of the aims and objects puts a complete embargo on earning profit from any activities. The Tribunal cited the CBDT Circular No. 11 of 2008, which clarifies that the proviso to Section 2(15) applies where the object of 'general public utility' is a mask for trade, commerce, or business. The Tribunal concluded that the activities of the Society are not hit by the newly added proviso to Section 2(15) as they are conducted without profit motive.

Conclusion:
The Tribunal set aside the impugned order dated 28-02-2013 and directed the Director of Income Tax (Exemptions) to grant exemption to the assessee under Section 12AA of the Income Tax Act, 1961. The Tribunal found that the activities of the Society are restricted to India, benefit the larger public, and are not engaged in trade, commerce, or business. The appeal of the assessee was allowed, and the order was pronounced on 17th September 2013 at Chennai.

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