2021 (9) TMI 579 - AT - Income Tax

Tribunal Grants Appeal, Overturns Registration Rejection Under Income Tax Act

The Tribunal allowed the Assessee's appeal, setting aside the rejection of the registration application under Section 12AA of the Income Tax Act, 1961. ... Exemption u/s 11 - Rejection of application moved for registration u/s 12AA - Charitable activity u/s 2(15) - whether activities of the assessee society were oriented towards the achievement of its objects of alleviation of poverty and preservation of environment and its operations fall under the limb “advancement of other objects of general public utility” U/s 2(15)? - HELD THAT:- In the present case, it appears that the ld. CIT(E) while rejecting the application moved by the assessee for registration u/s 12AA of the Act held that there was no expense that has been shown by the assessee which could qualify as utilization for charitable purposes - he had not asked the explanation from the assessee that how and in what manner, its objects were not charitable in nature. On the contrary, the claim of the assessee was that its activities were charitable in nature and its operations fall under the limb “advancement of other objects of general public utility” as mentioned in Section 2(15) of the Act, the said contention of the assessee was not considered by the ld. CIT(E) in right perspective - Appeal of the assessee is allowed for statistical purposes. Issues:- Rejection of application for registration under Section 12AA of the Income Tax Act, 1961Detailed Analysis:1. Grounds of Appeal and Grievance of the Assessee:The Assessee appealed against the order of Ld. CIT(E), Chandigarh, raising concerns about the rejection of the application for registration under Section 12AA of the Income Tax Act, 1961. The Assessee contended that the orders were passed hastily, ignoring crucial aspects, causing undue hardship.2. Facts of the Case and Initial Application:The Assessee applied for registration under Section 12A of the Act, outlining its objectives related to economic analysis, policy advice, and sustainable development goals. The ld. CIT(E) requested additional documents and clarifications, which the Assessee provided. The Assessee argued that its operations aligned with the advancement of general public utility.3. Observations and Rejection by CIT(E):The ld. CIT(E) determined that the Assessee's operations did not directly benefit the general public, especially regarding a project with the United Nations Development Programme (UNDP). The CIT(E) concluded that the society's activities did not qualify as charitable under Section 2(15) of the Act, citing the lack of charitable expenses and the nature of the society's objects.4. Assessee's Response and CIT(E)'s Decision:The Assessee explained that expenses were for professional services related to SDG goals in Haryana, emphasizing charitable nature and public utility. However, the CIT(E) found the expenses insufficiently charitable and rejected the registration application based on the society's role as an intermediary for government projects.5. Appeal and Tribunal Decision:In the appeal, the Assessee argued that its activities were charitable and fell under the public utility umbrella. The Tribunal noted the lack of proper consideration by the CIT(E) regarding the charitable nature of the Assessee's activities. Consequently, the Tribunal set aside the case for reconsideration, emphasizing the need for a fair hearing and proper evaluation of the Assessee's claims.6. Conclusion:The Tribunal allowed the Assessee's appeal for statistical purposes, highlighting the importance of a thorough assessment of charitable activities and public utility in determining eligibility for registration under Section 12AA of the Income Tax Act, 1961.