The Income Tax Appellate Tribunal (ITAT), Delhi Bench held that the assessee, Delhi Police Welfare And Recreational Club Fund is eligible for registration under section 12A so as to avail Income Tax exemption.
The Assessee, Delhi Police Welfare And Recreational Club Fund is engaged in the activity to promote welfare and recreational activities of the personnel (gazette, subordinate police officers, civilians and class IV employees of Delhi police) and the expenditure was to be incurred on articles of sports-indoor and outdoor games, cost of uniforms etc supplied to teams, magazines and periodicals, entry fee for tournaments, hiring of grounds, hiring, repair and purchase of furniture for the club, conveyance expenses incurred locally, entertainment (exclusive excursion trips), film shows, hiring of accommodation for the club’s functions, cultural and sports programs and interdepartmental meets.
According to the appellant, sports activities are covered under the definition of “charitable purpose” as per section 2 (15) of the Act; that the fund is not engaged in any activity in the nature of trade, commerce or business, or any activity of rendering any service in relation to any trade, commerce or business, for a cess or fee or any other consideration, irrespective of the nature of use or application, or retention, of the income from such activity; and that the fund not earned any income from advancement of any other object of general public utility.
The assessee filed an application on 28/3/2018 in form No. 10 AA seeking registration under section 12 AA of the Act. CIT(E), however, rejected the said application on the ground that the objects of the club as mentioned in aims and objects of standing order No. 270 of Commissioner of Police, Delhi clearly establishes that the primary objective of the appellant club is to rescue the benefit to its members of Delhi police personnel only and are not to public at large or general public
Assessee therefore filed an appeal stating that the appellant is incorporated for promotion of welfare and recreational activities amongst the personnel of Delhi police which object fulfils the test of section 2(15) and the reasoning of the CIT(E) that the appellant does not cater to the benefit of the general public or section of public is clearly misconceived as welfare of police personnel only.
On the other hand, as rightly found out by the CIT(E) the appellant is engaged in the activities which benefits only the police personnel of Delhi and none else, and, therefore, it cannot be said that the appellant is providing benefits to the general public or section of the public. On this premise, she submitted that the CIT(E) is justified in rejecting the application and no interference with such finding is warranted.
The coram of Accountant Member, Prashant Maharishi and Judicial Member, K.Narasimha Chary hold that the appellant, the Delhi Police Welfare And Recreational Club Fund is charitable in its objects and is a body that constitutes a section of the public, and so, the fund founded for the benefit of such section should be treated as charitable in its objects, attracting thereby the exemption from the exigibility to tax.
Therefore, the ITAT while setting aside the order of the CIT(E) held that the appellant is eligible for registration under section 12 A of the Act and directed its registration thereunder accordingly.
Subscribe Taxscan Premium to view the JudgmentSupport our journalism by subscribing to Taxscan AdFree. Follow us on Telegram for quick updates.
