2017 (8) TMI 1065 - AT - Income Tax

Tribunal grants registration to society focused on uplifting farmers, citing charitable purposes under Income Tax Act

The tribunal allowed the appeal, setting aside the CIT(Exemptions)'s denial of registration to the assessee society under section 12A of the Income Tax ... Denying registration to the assessee society u/s. 12A(a) - objectives of assessee society as charitable in nature - Held that:- At the stage of granting registration u/s 12A the Ld. CIT(E) has required to see the objects of society and not required to examine on the application of income which will have to be undertaken by the Assessing Officer (AO) on a year to year basis after assessee files return of income claiming exemption u/s 11. This position is now well settled by several authoritative pronouncements on the subject. On the facts of present case there cannot be even an iota of doubt that the objectives of assessee society are charitable in nature being an objective of general public utility within the meaning of section 2(15) of the Act as detailed herein above. We are of the considered opinion that the assessee is entitled for registration u/s. 12A of the Act. Therefore, we set aside the impugned order passed by the Ld. CIT(Exemptions), Lucknow and accordingly, direct the Ld. CIT(E), Lucknow to grant registration under section 12A of the Act to the applicant. Appeal of the Assessee is allowed. Issues Involved:1. Denial of registration to the assessee society under section 12A(a) of the Income Tax Act, 1961.2. Alleged violation of principles of natural justice and fairness by the CIT(Exemptions).Issue-Wise Detailed Analysis:1. Denial of Registration under Section 12A(a):The primary issue revolves around the denial of registration to the assessee society under section 12A(a) of the Income Tax Act, 1961. The assessee had applied for registration on 07.04.2015, but the CIT(Exemptions) denied the application, stating that the society was not carrying out any charitable activities. The CIT(Exemptions) emphasized that the assessee failed to prove the object of charitable purpose and the genuineness of activities, which are prerequisites under section 12AA(1)(b) of the Act. The CIT(Exemptions) relied on various case laws to support the decision.2. Alleged Violation of Principles of Natural Justice and Fairness:The assessee argued that the denial of registration was in gross violation of the principles of natural justice and fairness. During the hearing, the assessee's counsel submitted two paper books containing various documents, including audited accounts, details of charitable works, and correspondences with government offices. The counsel argued that the society's activities, focused on the protection of farmers' interests, qualified as 'general public utility' under section 2(15) of the Act. The counsel also cited several judicial decisions supporting the claim that the objects of the society should be considered at the stage of granting registration, not the application of income.Condonation of Delay:The tribunal noted that the appeal was time-barred by 106 days. However, after reviewing the application for condonation of delay, the tribunal found the reasons genuine and condoned the delay.Tribunal's Findings:The tribunal examined the records and submissions, noting that the assessee society was registered under the Societies Registration Act, 1860, and was involved in various activities aimed at the upliftment of farmers. The tribunal highlighted the society's objectives, which included providing facilities to farmers, forming non-political organizations, introducing advanced agricultural techniques, and protecting the environment.The tribunal also reviewed the significant achievements of the assessee, such as securing government loans for farmers and relief measures for losses due to natural calamities. The tribunal found that the CIT(Exemptions) had erroneously concluded that the assessee did not submit the necessary details, despite the assessee providing comprehensive documentation.Legal Precedents:The tribunal referred to several authoritative pronouncements, including decisions from the Supreme Court, which established that an object beneficial to a section of the public qualifies as an object of general public utility. The tribunal also noted that at the stage of granting registration under section 12A, the CIT(Exemptions) should only examine the objects of the society, not the application of income, which is the responsibility of the Assessing Officer on a year-to-year basis.Conclusion:The tribunal concluded that the assessee's objectives qualified as charitable purposes under section 2(15) of the Act. The tribunal set aside the impugned order of the CIT(Exemptions) and directed the CIT(Exemptions) to grant registration under section 12A of the Act to the assessee society.Result:The appeal of the assessee was allowed, and the order was pronounced in the open court on 25/08/2017.