ITAT directs Income Tax Dept to re-examine Kolkata Police Pre-Paid Taxi Booth Society’s claim for 12AA Registration [Read Order]

In a major relief to the Kolkata Police Pre-Paid Taxi Booth Society, the Income Tax Appellate Tribunal (ITAT)has directed the income tax department to reconsider the claim of the society for the registration under section 12AA of the Income Tax Act, 1961.

The assessee-society earns income by way of a collection of subscriptions from the operation of pre-paid taxi services at Sealdah and Kolkata railway stations. The objectives of the society are to establish, operate, and manage pre-paid taxi booth and providing the facility to passengers at designated stations.

The Commissioner of Income Tax (Exemptions) has denied the request for granting registration to the society by observing that the activities of the assessee are not genuine.

The Tribunal, after considering the arguments from both the sides, observed that the department failed to dispute that the CIT(Exemption) herein has nowhere recorded a specific finding as to whether the assessee’s dominant activity of providing prepaid taxi booths to railway passengers prima facie involves any profit-making or not.

Directing the Commissioner to reconsider the claim, the Tribunal observed that “we observe in view of the facts and circumstances involved in the instant list that such an establishment of prepaid taxi booths is a collaboration with local taxi operators; and that too at the local Police level, indeed brings the sense of security amongst the general public. Mr. Meena has sought to highlight the old. CIT(Exemption)’s findings that the setting up of prepaid taxi booths in the name of assessee society amounts to a violation of the scheme of the constitution (supra). And also the assessee’s aggregate receipts indicate its profit motive whilst earning a surplus of income over expenditure right from the assessment year 2013-14 to 2016-17. We find no reason to sustain the Revenue’s foregoing objections. We make it clear that Hon’ble Gujarat high court‘s decision in CIT(E) vs. Sabarmati Ashram Gaushala Trust Tax Appeal No. 1162 of 2013 dated 15.01.2014 holds that it is the concerned predominant activity that has to be considered as to whether it was in the nature of trade or commerce regarding general public utility limb u/s 2(15) of the Act. Hon’ble apex court’s latest decision in M/s. Ananda Social and Educational Trust vs. CIT Civil Appeal No. 5437 and 5438 of 2012 dated 19.12.2020 holds that commencement of charitable activities is not a mandatory condition for claiming 12AA registration.”