2018 (9) TMI 1410 - AT - Income Tax

Tribunal directs reevaluation of society's tax exemption request for fair assessment

The Tribunal partially allowed the appeals, directing the Commissioner of Income Tax (Exemptions) to reevaluate the registration and exemption requests ... Grant of Registration u/s 12A rejected - none of its object are covered within the definition of charitable purpose as given in Section 2(15) - Held that:- Since, before the CIT(Exemptions), the assessee has not elaborated the documentary evidences in respect of aims and objects of the assessee Institute regarding education provided to the general public order of the CIT(Exemptions) is also not elaborate as to how the assessee fail to conduct the object of the assessee Institute. The contentions taken by the Ld. DR are the principles of law but it can be followed when the proper adjudication of the matter is done. In the present case CIT(Exemption) has not taken proper cognizance of the correct state of the assessee society’s purpose and object. Thus, it will be appropriate to remand back these issues before the CIT (Exemptions) for looking into the same and the assessee also should provide all the required evidences before the CIT(Exemptions). - Decided in favour of assessee for statistical purpose. Issues involved:- Registration u/s 12A and exemption u/s 80G of the Income Tax Act, 1961 for a society.Detailed Analysis:1. The appeals were filed by the assessee against an order by the Commissioner of Income Tax (Exemptions) regarding registration u/s 12A and exemption u/s 80G. The grounds for appeal included the contention that the society's objects were not covered within the definition of charitable purpose, leading to the denial of registration and exemption.2. The assessee, a society registered under the Societies Registration Act, 1860, applied for registration u/s 12A and exemption u/s 80G. The Commissioner held that the society was not eligible for registration as its objects did not align with the definition of charitable purpose under Section 2(15) of the Income Tax Act, 1961. Consequently, both requests were rejected.3. The Assessing Officer argued that the concept of profit motive and dominant purpose theory evolved over the years, affecting the criteria for charitable status. The dominant purpose theory, introduced in A.Y. 1984-85, replaced the profit motive concept for objects of general public utility. Subsequent amendments and clarifications refined the criteria for charitable activities, emphasizing primary purpose and incidental activities.4. The Tribunal observed that the CIT (Exemptions) did not adequately consider the society's purpose and objects. As the assessee had not provided sufficient documentary evidence regarding its educational aims for the public, the order lacked detailed analysis. Therefore, the Tribunal remanded the issues back to the CIT (Exemptions) for proper adjudication, emphasizing the need for a comprehensive review based on evidence and principles of natural justice.5. The Tribunal partially allowed both appeals for statistical purposes, directing the CIT (Exemptions) to reevaluate the registration and exemption requests after thorough examination of the society's objectives and provided evidence. The decision highlighted the importance of due process and full opportunity for the assessee to present their case effectively.