Registration can’t be Denied merely because Few Objects of Society are meant for benefit of Members: Rajasthan High Court [Read Judgment]

Rajasthan HC - Reassessment Notices - Income Tax Act - taxscan

While dismissing the appeal filed by Commissioner of Income Tax-Exemption, Rajasthan High Court recently ruled that registration under Section 12AA of the Income Tax Act 1961 cannot be denied merely because of few objects of the society are meant for the benefit of its members.

Assessee Vyapar Sangh has filed an application for the approval of registration under section 12AA of the Act during the financial year.

After analyzing the aims and objectives of the society the CIT(E) denied the registration by holding that the activities of the society cannot be held as charitable as the benefit of the society is sought to be given to the limited group of persons such as its members and their business establishments only.

On appeal the Tribunal observed that out of the objects of the Society, few objects are meant for the benefit of the members and their establishment but at the same time the benefits also extend to other associations, women, children, old persons, education and social health and other objects in the interests of public at large.

The division bench also noted that the CIT(E) wrongly observed that the benefits extended only to the members and their business establishment. Accordingly, the Tribunal directed the authority to grant registration under section 12AA and under Section 80G (5) (6) of the Income Tax Act.

Aggrieved by the order passed by the Tribunal the Revenue approached the Court by appeal and contended that the Tribunal is not in consonance with law because it has been passed without application of mind, therefore, a substantial question of law emerges for consideration as to whether on the facts and circumstances of the case the Income Tax Appellate Tribunal (ITAT) was right in law in allowing the application under Section 12AA for registration.

The division bench comprising of Justice Gopal Krishan Vyas and Justice Ramchandra Singh Jhala also upheld the order passed by the Tribunal and held that while perusing the available material facts on records it is clear that out of the objects of the society few objects are meant for the benefit of the members and their establishment but at the same time the benefits also extend to other associations, women, children, old persons, education and social health and other objects in the interests of public at large. Therefore the society is eligible to get approval for registration under section 12AA of the Act.

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