The Income Tax Appellate Tribunal (ITAT), Ahmedabad bench, set aside the order of the Commissioner of Income Tax (Exemption) denying registration to Bhavnagar Mandap Contractors Association under Section 12AA of the Income Tax Act, 1961.
The assessee, Bhavnagar Mandap Contractors Association, filed an application for registration, before CIT(E).The Trust submitted its application for registration in Form No. 10A under Rule 11AA, along with necessary details and documents.
The CIT(E) observed that the assessee’s Memorandum of Association indicated that its objectives were primarily for the benefit of Mandap Contractors operating in Bhavnagar.
Become PF & ESIC Pro: Basic to Advance Course – Enroll Today
The CIT(E) sought clarification from the assessee regarding its registration status with the Charity Commissioner or any other competent authority, which the association claimed was not mandatory.
Upon reviewing the details and documents submitted by the Trust, the CIT(E) identified that the association’s activities were primarily for the benefit of its members, rather than the general public.
Further reviewing the application, the CIT(E) noted that the association’s activities were primarily focused on knowledge sharing, organizing events, and encouraging trades amongst its members, which were deemed not charitable in nature.
Become PF & ESIC Pro: Basic to Advance Course – Enroll Today
Dissatisfied with the CIT(E)’s rejection of its registration application, the assessee appealed to the tribunal, seeking relief under Section 12AA.
The Tribunal set aside the CIT(E)’s order and restored the issue to the file of the CIT(E) for fresh consideration, directing the CIT(E) to give due opportunity to the appellant Trust to present its case on merits.
The arguments on behalf of Bhavnagar Mandap Contractors Association was raised by their counsel Sarju Mehta.The CIT(E) was represented by A. P. Singh,the Department Representative.
Become PF & ESIC Pro: Basic to Advance Course – Enroll Today
The Tribunal observed that the appellant’s application for registration under Section 12AA was rejected due to the CIT(E)’s finding that the trust’s activities were governed by the principle of mutuality, rather than charitable purpose.
After careful consideration of the facts and circumstances of the case, the Tribunal comprising Siddhartha Nautiyal (Judicial Member) and Annapurna Gupta (Accountant Member) observed that the CIT(E) had incorrectly denied registration to the Bhavnagar Mandap Contractors Association under Section 12AA of the Act and remitted the matter back to the file of the CIT(E) for fresh consideration.
Subscribe Taxscan Premium to view the JudgmentSupport our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates
