Society Granted 12A Registration for Charitable Activities, Overturning Commissioner's Rejection

The Tribunal granted 12A registration to the society, overturning the Commissioner's rejection. The society, engaged in charitable activities like providing shelter and food for destitutes, was found to operate solely for charitable purposes, relying on public donations and interest income. The Tribunal emphasized the actual charitable activities over the clause in the gift deed, allowing the appeal and pronouncing the order on March 18, 2020.

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Issues: Rejection of 12A registration by the Commissioner of Income Tax (Exemptions)

Analysis:
The appeal was against the rejection of 12A registration by the Commissioner of Income Tax (Exemptions), Hyderabad. The assessee, a society registered under the Societies Registration Act, sought registration under section 12AA of the Income Tax Act, 1961. The Commissioner observed that the trust's Memorandum of Association stated that the land would revert to the heirs of the donors on dissolution, which was deemed contrary to the law. The Commissioner rejected the registration based on this observation. On appeal, the assessee argued that it was engaged in charitable activities such as running an old age home, providing free education, and aiding individuals affected by leprosy. The Income Tax Officer (Exemptions) submitted a report supporting the rejection. However, the Tribunal found that the society, named "Prema Samajam," was indeed involved in charitable activities, including providing shelter and food for destitutes above 50 years of age. The Tribunal noted that the organization's income sources were donations from the public and interest income from bank deposits. It concluded that the society operated solely for charitable purposes, deserving registration under section 12A.

Conclusion:
The Tribunal disagreed with the Commissioner's reasoning for rejecting the registration based on a clause in the gift deed, emphasizing that the society's actual charitable activities should have been the primary consideration. Since the society was clearly engaged in charitable endeavors without any profit-making activities, the Tribunal granted the 12A registration to the assessee, overturning the Commissioner's decision. The appeal filed by the assessee was allowed, and the order was pronounced in open court on March 18, 2020.

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