By TIOL News Service

NEW DELHI, SEPT 04, 2017: THE issues before the Bench are - Whether activities undertaken to safeguard and promote the interests of farmers qualify as 'general public utility' within the meaning of Sec 2(15) and Whether while graning registration u/s 12A the CIT (Exemption) is not required to examine the application of income which AO alone can discuss. And the verdict goes in favour of the assessee.

Facts of the case

The Assessee, a registered society, was involved in the upliftment of farmers by way of providing them various facilities and protecting their interests at the national level. The Assessee had applied for registration u/s. 12A(a). In response, the CIT(E) issued a notice seeking various types of details. The Assessee submitted a copy of Application in Form 10A for registration alongwith list of Management Committee; Audited accounts for Financial Year 2011-12, 2012-13 and 2013-14; Registration Certificate under Societies Registration Act, 1860; Memorandum & Articles of Association together with English translated version of objects clause as per Memorandum; Details of Charitable works undertaken with respect to protection of interest of farmers; correspondences with the offices of President of India & PMO with respect of protection of interest of farmers and letter before the Parliamentary Committee with respect to protection of interests of farmers. The CIT(E) perused the records and observed that the Assessee society was not carrying out any charitable activities and that as per the provisions of section 12AA(1)(b), two factors namely the object of charitable purpose and the genuineness of activities had to be proved before granting the registration, but, the Assessee failed to prove the same and therefore, CIT(E) rejected the application.

On appeal, the Tribunal held that,

++ the Assessee’s main objective is to carry out charitable activities. The Assessee carried several activities directed towards protection of interests of farmers at a national level. The Assessee society has been making representations before the highest level i.e. before the President of India & the PMO in furtherance of the objectives of the society;

++ the CIT (E) has made an allegation to the effect that the Assessee has not submitted books of accounts. However, the necessary details were very much submitted. Apart from the same the Assessee has again submitted its submission. All details are very much a part of record and the CIT(E) could not point out any sort of discrepancy in the same;

++ the expression "general public utility" has been well established from authoritative pronouncements from the Apex Court. The Supreme Court in its significant decisions in the case of Ahmedabad Rana Caste Association Vs CIT and CIT Vs Andhra Chamber of Commerce has held that an object beneficial to a section of public is an object of general public utility. Therefore, the Assessee's objectives duly qualify within the purview of "general public utility" being a charitable purpose under section 2(15), since, it defines charitable purpose in an inclusive manner;

++ the section of public to whom benefit is intended is farmers constituting about 60% - 70% of population of country and the protection of interests of farmers will invariably confer several benefits. These points were clearly highlighted vide submission before the CIT(E) which establishes beyond any doubt that the object of Assessee is of "general public utility" within the meaning of section 2(15);

++ at the stage of granting registration u/s 12A, the CIT(E) has required to see the objects of society and is not required to examine on the application of income which will have to be undertaken by the AO on a year to year basis after Assessee files return of income claiming exemption u/s 11. This position is now well settled by several authoritative pronouncements on the subject. On the facts of present case there cannot be even an iota of doubt that the objectives of Assessee society are charitable in nature being an objective of general public utility within the meaning of section 2(15);

++ we are of the considered opinion that the Assessee is entitled for registration u/s. 12A. Therefore, we set aside the impugned order passed by the CIT(E) and accordingly, direct the CIT(E) to grant registration u/s 12A to the applicant.

(See 2017-TIOL-1211-ITAT-DEL)