The Raipur Bench of Income Tax Appellate Tribunal (ITAT) held that mere leasing of developed plots to members on basis of contributions does not make the assessee i.e. Confederation of Pharma Dealers Association ineligible for registration as a charitable entity.
The assessee has essentially challenged the denial of registration under s.12AA of the Act on the ground that activities undertaken by the assessee do not fall within the definition of Section 2(15) of the Act.
4. The assessee society claims to be engaged in the charitable activities falling within the ambit of expression ‘the advancement of any other object of general public utility’ as contained under section 2(15) of the Act. Based on this premise, the assessee filed an application electronically before the CIT(E) seeking registration of the society under s. 12AA of the Act to enable it to avail the benefits of Section 11 and Section 12 of the Act. After raising queries on the application, the CIT(E) passed the impugned order under section 12AA(1)(b)(ii) of the Act and rejected the application of the assessee for registration under section 12AA of the Act.
The coram of Judicial Member, Pawan Singh and Accountant Member, Pradeep Kumar Kedia ruled that merely leasing of developed plots to its members on the basis of their respective contributions does not make the assessee ineligible for registration as a charitable entity per se.
“We also do not find merit in the contention of the CIT(E) that land purchased by the society is not appearing in the balance sheet. As pointed out on behalf of the assessee, the land purchased by the assessee society has been duly disclosed in the Schedule ‘A’ ‘Land and Land Development’ of the balance sheet and thus disclosed in a particular manner,” the ITAT observed.
The court said that the objects of the assessee society are for charitable purposes within the meaning of Section 2(15) of the Act and the assessee is entitled in law for registration under section 12AA of the Act. Consequently, the Tribunal set aside the impugned order of the CIT(E) and directed the CIT(E) / competent authority to grant registration under section 12AA of the Act as sought by the assessee society.
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