The Chennai Bench of Income Tax Appellate Tribunal ( ITAT ) upheld the rejection of Tax exemption by Commissioner of Income Tax (Exemption),citing non-compliance with charitable trust criteria as the appellant Fails to Meet Charitable Purpose Criteria Under Section 2(15) and 80G of the Income Tax Act,1961.
The Historical Cars Association of India,appellant-assessee filed an application on December 15, 2023, in Form 10AB under Rule 11AA of the Income Tax Rules, seeking approval under Section 80G(5)(iv)(B) of the Income Tax Act.
The CIT(E) asked the association to provide additional information, including details about their activities, annual accounts, and other important documents for verification. Upon reviewing the submitted information, the CIT(E) found some inconsistencies and issued a show-cause notice, asking why the application should not be rejected.
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The association explained that preserving historic places and objects, like vintage cars that are 50-100 years old, could be considered similar to preserving ancient monuments and should be treated as a charitable activity. However, the CIT(E) disagreed. He explained that organizing historic car rallies doesn’t fall under the definition of “charitable purposes” as per Section 2(15) of the Income Tax Act.
Additionally, the CIT(E) pointed out that the association’s earlier application for registration under Section 12AB of the Act was rejected. Since the association did not have the required registration, the application for approval under Section 80G was also rejected.
Even though the assessee appealed against CIT(E) order,there was no representation from appellants side when it was considered by ITAT.Hence the Tribunal proceeded in hearing the respondent in order to decide on the appeal.The appellant was called absent begin ex-parte.
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The assessee did not provide any evidence to challenge the CIT(E)’s decision to reject their application for approval under Section 80G or the rejection of their registration under Section 12A/12AA/12AB of the Income Tax Act. Upon reviewing the order, it was noted that the assessee argued that preserving historic places or objects, like vintage cars, should be considered a charitable purpose. However, they did not provide any supporting evidence for this claim.
The CIT(E) also referred to the relevant provisions introduced by the Finance (No.2) Act, 2009, which defines an “ancient monument” as any structure, monument, or site of historical, archaeological, or artistic interest, including things like caves, inscriptions, and rock sculptures. It also includes the land around the monument needed for preservation and the access to it, as per the Ancient Monuments Preservation Act, 1904.
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The two member bench composed of S.S. Viswanethra Ravi(Judicial Member) and Jagdish(Accountant Member) observed that the activity of the assessee, such as organizing historic car rallies, does not qualify as a “charitable purpose” as defined under Section 2(15) of the Income Tax Act,1961 as the CIT(E) pointed out. The assessee did not provide any evidence to support their claim. Additionally, since the assessee does not have registration under Section 12AB, they cannot receive approval under Section 80G. Therefore, based on the reasons provided by the CIT(E), we find no issue with the rejection of the application in Form 10AB for 80G approval. As a result, the assessee’s appeal is dismissed.
In Conclusion,the appeal was dismissed.
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