Tribunal grants appeal for cancer awareness Trust registration under Income Tax Act, emphasizing charitable activities alignment

The Tribunal allowed the appeal, directing the Commissioner of Income Tax (Exemption) to grant registration under Section 12AA of the Income Tax Act, 1961 to the appellant Trust. It held that the Trust's activities focusing on cancer awareness and preventive care were genuinely charitable, emphasizing that the Commissioner should assess whether the Trust's objects align with its proposed activities. The Tribunal highlighted that the commencement of activities is not a prerequisite for registration. However, it cautioned that if the Trust's activities deviate from its objects, the Commissioner can take action under Section 12AA(3) independently.

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Issues Involved:
1. Rejection of Application for Registration u/s 12AA of the Income Tax Act, 1961.
2. Nature of activities and contributions being charitable or commercial.
3. Delay in filing the appeal and condonation of delay.

Detailed Analysis:

1. Rejection of Application for Registration u/s 12AA of the Income Tax Act, 1961:
The assessee appealed against the CIT(E)'s order dated 27/06/2019, which rejected the application for registration under Section 12AA of the Income Tax Act, 1961. The CIT(E) held that the activities of the Foundation were not charitable but predominantly commercial, driven by sponsorships from multinational pharma companies. The CIT(E) emphasized that the nature of contributions made by these companies, termed as "sponsorships," and the deduction of TDS on these contributions indicated a profit motive for the sponsors, thus disqualifying the activities as charitable under Section 2(15) of the Act.

2. Nature of Activities and Contributions Being Charitable or Commercial:
The assessee contended that the CIT(E) did not consider the charitable objects of the Trust, which focused on cancer awareness and preventive care. The Trust's activities were aimed at educating the public about cancer, its dangers, and preventive measures, without any profit motive. The assessee argued that the commencement of activities is not a pre-condition for granting registration under Section 12AA, as supported by various judicial precedents, including the Supreme Court's decision in Ananda Social & Education Trust [2020] 114 taxmann.com 693 (SC). The Tribunal concurred, stating that the CIT(E) failed to consider the Trust's objects and overall intent, which were charitable in nature.

3. Delay in Filing the Appeal and Condonation of Delay:
The assessee filed the appeal with a delay of 9 days, attributing the delay to the preoccupation of their tax consultant with filing ITRs. The Tribunal considered the rival submissions and relevant material on record, applying the principle that courts should take a liberal approach in interpreting "sufficient cause" for condonation of delay. Citing the Supreme Court's decision in Collector, Land Acquisition Vs. Mst. Katiji (1987) 167 ITR 471, the Tribunal condoned the delay, emphasizing that the explanation provided was bona fide and not an attempt to cover up any ulterior purpose.

Judgment:
The Tribunal found that the CIT(E) did not consider the charitable objects of the Trust and the overall scheme and theme of its activities. The Tribunal emphasized that the term "activities" in Section 12AA includes "proposed activities," and the Commissioner should consider whether the Trust's objects are genuinely charitable and whether the proposed activities align with these objects. The Tribunal held that the Trust's activities, aimed at cancer awareness and preventive care, were charitable in nature. The Tribunal set aside the CIT(E)'s order and directed the CIT(E) to grant registration under Section 12AA of the Act to the appellant. However, the Tribunal noted that if it is later found that the Trust's activities are not genuine or not in accordance with its objects, the CIT(E) can invoke the provisions of sub-section (3) of Section 12AA independently.

Conclusion:
The appeal was allowed, and the Tribunal directed the CIT(E) to grant registration under Section 12AA of the Income Tax Act, 1961, to the appellant Trust. The Tribunal emphasized the importance of considering the Trust's objects and overall intent, rather than the nature of contributions or the commencement of activities, in determining eligibility for registration.

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