2020 (7) TMI 278 - AT - Income Tax

Tribunal grants tax exemptions to Advocate Welfare Fund Trustee Committee, deems activities genuine and charitable.

Advocate Welfare Fund Trustee Committee Versus CIT (Exemption), New Delhi

The Tribunal held in favor of the Advocate Welfare Fund Trustee Committee, setting aside the rejection of its application under sections 12A and 80G of ... Exemption u/s 11 - rejecting the application filed by the Welfare Fund u/s 12A - applicant has not established genuineness of the activities of the fund when the memorandum and other documents clearly established the same - exemption u/s 80G - HELD THAT:- Following the order passed by the coordinate Bench of the Tribunal in the case of Bar Council of Delhi vs. CIT (E) [2020 (7) TMI 171 - ITAT DELHI] we are of the considered view that the appellant trustee committee being established under the Bar Council of Delhi being engaged in safeguarding the rights, privileges and interest of the advocates, its dominant purpose is the advancement of general public utility within the meaning of section 2(15) of the Act, as such, genuineness of its activities and object of charitable purpose is proved, thus entitled for registration u/s 12AA and consequent exemption u/s 80G, shall be exempt from the income-tax as provided u/s 23 of the Advocates Welfare Fund Act, 2001, hence entitled for registration u/s 12AA of the Act and subsequent exemption u/s 80G of the Act. CIT (E) is to provide the registration / exemption to the appellant accordingly. - Decided in favour of assessee. Issues:- Rejection of application under sections 12A and 80G of the Income Tax Act- Delay in filing the appeal before the Tribunal- Genuineness of activities of the Advocate Welfare Fund Trustee Committee- Power of the CIT (E) to reject registration and exemption due to non-furnishing of financials- Entitlement of the appellant for registration under section 12AA and exemption under section 80GAnalysis:1. Rejection of Application under Sections 12A and 80G:The Appellant, Advocate Welfare Fund Trustee Committee, sought to set aside the order rejecting its application under sections 12A and 80G of the Income Tax Act. The rejection was based on the failure to furnish the balance sheet and income & expenditure account for the financial year 2018-19. The Appellant contended that the activities of the fund were genuine and charitable, as evident from the memorandum. The Tribunal noted that the primary purpose of the fund was the advancement of general public utility, as established by legal precedents, and held that the rejection based solely on the non-furnishing of financials was not valid.2. Delay in Filing the Appeal:The Appellant filed a separate application to condone a one-day delay in filing the appeal due to the sudden sickness of their advocate. The Tribunal, considering the reasonable cause for the delay, condoned the delay and proceeded with the appeal.3. Genuineness of Activities of the Advocate Welfare Fund Trustee Committee:The Tribunal examined whether the Appellant, a statutory body established under the Bar Council of Delhi, had failed to establish the genuineness of its activities due to the non-furnishing of financials for the year 2018-19. The Tribunal emphasized that the object of the institution was charitable, and further scrutiny of financials was not necessary for registration under section 12AA. Legal precedents supported the view that examination of financials was not a prerequisite for registration, and the Tribunal held in favor of the Appellant.4. Power of the CIT (E) to Reject Registration and Exemption:The Tribunal considered whether the CIT (E) had the authority to reject registration and subsequent exemption under sections 12AA and 80G due to the non-furnishing of financials. It was established that the CIT (E) erred in declining registration solely based on the absence of financials for the year 2018-19, especially when the object of the Appellant was charitable and in line with legal provisions.5. Entitlement of the Appellant for Registration and Exemption:Based on the findings regarding the charitable nature of the Appellant's activities and the legal precedents supporting registration without stringent financial requirements, the Tribunal concluded that the Appellant was entitled to registration under section 12AA and subsequent exemption under section 80G. The Tribunal directed the CIT (E) to provide the necessary registration and exemption to the Appellant accordingly, allowing the appeal filed by the Appellant.