2023 (2) TMI 803 - AT - Income Tax

Tribunal grants registration to assessee for charitable activities, emphasizes need for blood bank lab.

Vizianagaram Rotary Parvati Devi Anchalia Voluntary Blood Bank Trust C/o Balaji Associates Versus Commissioner of Income Tax (Exemptions) Hyderabad

The Tribunal allowed the appeals of the assessee, directing the CIT(E) to grant registration under section 12A based on the commencement of charitable ... Exemption u/s 11 - Charitable objects of the assessee society - denied registration u/s 12A - no charitable activity carried out by the assessee for grant of approval u/s 80G of the Act and rejected the application in Form No.10G - only grievance of the revenue is that the assessee has not started the activity on the date of filing of the application - HELD THAT:- We are of the firm view that without laboratory it is difficult to run a blood bank. There is no proof to establish that the assessee has been running a blood bank after issuance of license by the competent authorities. Therefore, we remit the matter back to the file of the CIT(E) to examine and grant 12A registration from the date of application, if the assessee is carrying the charitable activity from 13.12.2019, otherwise, the assessee is not entitled for grant of registration u/s 12A. Appeals of the assessee are allowed for statistical purpose. Issues:- Rejection of application under Form 10G for exemption u/s 80G of the Act- Denial of registration u/s 12A by the Ld.CIT(E)- Dispute regarding charitable activities carried out by the assessee society- Grant of registration u/s 12A based on the commencement of charitable activitiesAnalysis:1. The appeals were filed against the order of the Commissioner of Income Tax (Exemptions) [CIT(E)], Hyderabad regarding the rejection of the application under Form 10G for exemption u/s 80G of the Act. The Ld.CIT(E) dismissed the appeal citing no charitable activity by the assessee for the grant of approval u/s 80G and also rejected the application for registration u/s 12A, which is mandatory for granting approval u/s 80G.2. The assessee raised various grounds in the appeal before the Tribunal, asserting that they are indeed carrying out charitable activities as per the Trust's objects. They argued that the Ld.CIT(E)'s conclusions were erroneous and not based on the facts and evidence presented. The Tribunal noted the contentions and arguments put forth by both parties.3. The main contention revolved around the commencement of charitable activities, specifically running a blood bank. The revenue argued that there was no evidence of charitable activities being carried out by the assessee society as per the application, despite the license being granted later. The Tribunal acknowledged that running a blood bank is charitable but emphasized the necessity of a laboratory for its operation.4. The Tribunal observed that the assessee had completed the construction of the blood bank but faced delays in obtaining the necessary license due to the absence of a laboratory. The assessee claimed to have started charitable activities post obtaining the license. The Tribunal concluded that without a laboratory, it would be challenging to run a blood bank effectively. Consequently, the matter was remitted back to the CIT(E) to re-examine and grant 12A registration based on the commencement of charitable activities from a specific date.5. Ultimately, the Tribunal allowed the appeals of the assessee for statistical purposes, directing the CIT(E) to grant registration u/s 12A based on the commencement of charitable activities from a specified date. The order was pronounced in open court on 16th February 2023.