TaxTMI 
TaxTMI 
TaxTMI 
2025 (10) TMI 415
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.... in not granting registration under section 12AA of the following alleged reasons. • Assessee trust meant for the benefit of its members and not for public at large and violation of section 13(1)(c)& 12AA. • Business / commercial activities. • Non-genuineness of activities. The action of ld. CIT(E) is illegal, unjustified, arbitrary and against the facts of the case. Relief may please be granted by quashing the order of ld. CIT(E) and directing the grant of registration under section 12AA.'' 2.1 Besides above, the ld. AR of the assessee vide application dated 25- 06-2025 prayed under rule 29 of Income Tax (Appellate Tribunal) Rules, 1963 for admission of additional evidence which are as under:- "The Appellant most humbly prays for admission of the following additional evidences which is in supersession of the earlier Prayer for Additional Evidences filed on 04.06.2025. The present Prayer replaces the earlier one and, therefore, the earlier one may please be ignored. Request you to consider the following:- S.N. Particulars Page No. 1. Copy of approval of ISS (Deemed to be University) Trust u/s 12AA 1 2.....
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....he ld.DR has no objection. 3.1 Apropos grounds of appeal, it is noticed that the ld CIT(E) has rejected the claim of registration u/s 12AA of the Act of the assessee on following grounds:- 1. Assessee trust meant for the benefit of its members and not for public at large & violation of Section 13(1)(c)& 12AA. 2. Business / Commercial activities 3. Non-Genuineness of activities The relevant narration as made by the ld. CIT(E) in his order as to rejection of Ground Nos. 1,2 and 3 are reproduced asunder:- (Ground No. 1) "3.2. It is clear from the above reply that assessee is working only for the members of applicant, para B-3 of page-9 of the reply confirms this fact. Further the contention of the assessee that members are not covered under section 13(3) is not acceptable, as the benefit from objects is restricted for the members and not for the general public, this fact also makes institution as private not public. Apart from the above, assessee submitted in para 84 that applicant has membership of the students who have passed out from IIS University as well as International college for Girls (ICG) and both IIS & ICG are hav....
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....ost at margin. Further the decision of Hon'ble Apex court in case of Ahmedabad Urban Development Authority AUDA, supra has confirmed its position in Sole Trustee Loka Shikshana Sanshtan 101 ITR 234 that position of not meant for profit can be established only if mentioned in deed that assessee would conduct such activities on cost or nominal margin, as assessee failed to include such point in deed, same cannot be considered charitable. Assessee submitted in reply, that by any stretch of imagination library reading room's facilities are not commercial in nature. Above contention is acceptable only when there is provision in its constitution/MOA that these should done on free of cost or at margin only. These activities may involve generating revenue through means such as book sales, membership fees, but assessee has not clear in deed regarding charge and merely written submission in this regard is not acceptable as the institution governs through its MOA Similarly other objects mentioned above are also having business elements. Further assessee in para A-7, mentioned that provisions of section 8 company and clauses of MOA put enough restrictions on applicant....
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.... & 2021-22 that no expense related to any charitable activity is shown. Only expenditure of Rs. 15,000/-and 39,340/- shown in both years and that too related with audit fee, ITR fee, legal exp etc Further details of activities shown in FY 2022-23 it is seen that assessee not furnished complete details, amount spent column left blank. Also the assessee not furnished supporting evidences in respect of so called activities. In absence of amount spent details it is not clear whether any activity is done or not, whether expense made through bank account or on cash. Also to mention here that no expense related to any activity is shown in IVE account for the FY 2022-23, thus this shows that assessee has not done so called activities and details furnished are not proved. Thus, the so called activities seems non genuine. Further, assessee was also asked to furnish details of beneficiaries in above format, however assessee furnished the same but without mobile no. of beneficiary, which was specifically asked to get contact with so called beneficiaries and asked about genuineness of activities, Therefore, assessee claim of registration u/s 12AA is also liable to be ....
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.... ITA No. 47.JP/2021 dated 02.11.2021 set aside the case to the file of the CIT(E). The relevant extracts of the directions of Hon'ble ITAT are as under [PB 199, 200]: "We therefore find that while examining the assessee's application seeking registration u/s 12AA, the ld. Pr. CIT has raised broadly two issues which require deeper examination. Firstly, certain objects of the assessee company have been stated to be having elements of commercial/business nature and secondly, whether the objects sought to be achieved were for the benefit of Alumnae ICG-IISU and whether the same qualify as benefiting the public at large and can therefore be classified as object of general public utility. Though the assessee claims to have submitted the requisite explanation, however, in absence of findings by the ld. Pr. CIT, we deem it appropriate that matter is set aside to the file of the ld. Pr. CIT to examine the same afresh as per law after taking into consideration the submissions so filed by the assessee company and calling for any further information/ clarification as may be deisired and after providing reasonable opportunity to the assessee company." VI. Round II- Registratio....
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.... word "Public" does not mean humanity as a whole, but means some indefinite class of persons, across section of the Public. The basic requirement, to fall in the definition of Public, is that the common quality which unites such individuals within the class concerned is essentially impersonal." 1.7 The expression 'public' includes cross section of public. It is well settled that for satisfying the requirements of Section 2(15), it is not necessary that the benefit should reach each and every poor person in the state or country. The court in the case of Girijan Co-operative Corporation Ltd vs. CIT [1989] 178 ITR 359(AP) held that it is sufficient if it reaches a sizable number of members of public. 1.8 In the case of CIT vs. Indian Sugar Mills Association [1974] 97 ITR 486 (SC) it was held that "the expression object of general public utility' is not restricted to objects beneficial to the whole of mankind or even all people living in particular country or province. It is sufficient if the intention is to benefit a section of the public as distinguished from specified individuals. The Section of the public sought to be benefited must undoubtedly be suff....
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....ects being charitable in nature and after having found the objects being charitable in nature, rejected the application for the reason of "elements of Commercial/Business nature". 2.2 Issue of business/commercial objects is being dealt with by ld. CIT(E) at para 4, pages 9 to 15 of his Order. The reply of the Assessee before ld. CIT(E) is also appearing at para 4.2 at pages 10 to 14 of the Order. The submissions before ld. CIT(E) may please be appreciated in correct perspective. 2.3 It is most humbly submitted that for the activities conducted by the Assessee no fee is charged from its members. The activities are held in the college using its infrastructure. The Income and Expenditure Accounts produced before ld. CIT(E) do not depict any significant surplus (out of three years there was deficit in two years) therefore allegation of business or commercial nature is absolutely baseless. 2.4 Without prejudice to above, alternatively, it is submitted that alleged commercial/business nature of activities cannot be a reason for rejection of the application u/s 12AA. Reliance is placed on the following judicial precedents: • • Hon'ble G....
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....ted to any activity is shown in IVE account for the FY 2022-23, thus this shows that assessee has not done so called activities and details furnished are not proved. Thus, the so called activities seems non genuine. Further, assessee was also asked to furnish details of beneficiaries in above format, however assessee furnished the same but without mobile no. of beneficiary, which was specifically asked to get contact with so called beneficiaries and asked about genuineness of activities, Therefore, assessee claim of registration u/s 12AA is also liable to be rejected on ground of not proving its genuineness of activity. 3.3 It is submitted that the main grievance is that the Assessee has not incurred any expenses for charitable activity as appearing in the audited financial statements. It is most respectfully submitted that the nature of activity is in the form of meetings and workshops held at the premises of the college itself and, therefore, practically no expenses are incurred for conducting these activities as is evident from the report submitted before ld. CIT(E). 3.4 Another objection raised by ld. CIT(E) is that mobile numbers of benefici....
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....wo institutions and, therefore, it is not for public at large. The expression 'public' includes cross section of public. It is well settled that for satisfying the requirements of Section 2(15), it is not necessary that the benefit should reach each and every poor person in the state or country. The court in the case of Girijan Co-operative Corporation Ltd vs. CIT [1989] 178 ITR 359(AP) held that it is sufficient if it reaches a sizable number of members of public. It is also pertinent to mention that the Coordinate Bench at Ahmedabad in the case of Parul University Alumni Association v. CIT (E) in ITA No. 70/Ahd/2024 has allowed the grant of registration under section 12AA holding that the Alumni Association cannot be said to be working for the benefit of its members only and the same will amount for the benefit of public at large. Otherwise also it is meant for the students passing from the two education institutions which both institutions have been granted registration under section 12AA. 3.4.1 Another grievance of ld. CIT(E) is that the activities of the Assessee Appellant are having elements of business/commercial nature. However, it is noticed that no fees is char....