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2013 (10) TMI 1126 - AT - Income TaxEligibility of registration u/s 12AA of the Income Tax Act - The Director of Income Tax (Exemptions) has held that the activities of the Society are not restricted to India alone – Held that:- Director of Income Tax (Exemptions) has erred in taking such a view. In rule 1.4 of the Rules and Regulations of the Society, it has been specifically mentioned that the Society shall function under the jurisdiction of the Registrar of Societies, Chennai Central. Thus, the activities of the Society cannot extend beyond the State of Tamil Nadu. A further perusal of Rule 4.1 of the Rules makes it clear that the membership is open to Japanese Corporations and their subsidiaries & joint venture companies and Indian individuals in Chennai. With these rules, it is highly improbable to say that the benefit of the activities would extend to Japan. It is abundantly clear that the view of Director of Income Tax (Exemptions) that the benefits of the activities of the assessee-society would flow outside India is misconceived. Aims and objects of the society are not hit by the newly introduced proviso to sub-section (15) of Section 2 of the Act. The assessee is charging admission fee and monthly subscription fee from its Members. Apart from this, the assessee is also accepting grants and special contributions, admission/registration fee for seminars/conferences conducted by the Society. The assessee is not charging any fee for the services rendered by it. The fees charged by way of admission fee, monthly subscription, admission and registration fee etc., are utilized only for the promotion of the aims and objects of the Society. Clause-1 of the aims and objects put complete embargo on earning profit from any of the activities of the Society. Profit is the essence of trade, commerce or business. When services are rendered without profit motive, the element of trade, commerce or business disappears from such activities. Therefore, it can be safely construed that the activities of the assessee are not hit by the newly added proviso to Section 2(15) of the Act - Assessee deserves to be registered under the provisions of Section 12AA of the Act – Decided in favor of Assessee.
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