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M/s. Tiruchirappalli Multipurpose Social Service Society Versus The Assistant Commissioner of Income Tax, Circle-I (2) , Trichy

2016 (4) TMI 1233 - ITAT CHENNAI

Cancelling the registration granted to the assessee under section 12AA - assessee is indulging in religious activities and also engaged in commercial activities - Collecting fees from students for imparting education - Held that:- Collecting fees from students for imparting education through Government recognized ITI or collecting nominal rent for hostel accommodation from women cannot be considered to be commercial activities. Further, if the society violates its objects by indulgencing in any .....

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le. However, in the interest of justice, we remit the matter back to the file of the learned Commissioner of Income Tax to examining the paper book filed before us by the assessee and to verify the activities conducted by the assessee and also any other relevant material which was not before the learned Commissioner of Income Tax on the earlier occasion to justify the stand of the assessee and thereafter decide the matter in accordance with merit and law. Appeal of the assessee is allowed for st .....

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er section 12AA of the Act. 2. The assessee in its appeal has raised several grounds, however, the crux of the issue is as follows:- i) The learned Commissioner of Income Tax has erred in cancelling the registration granted to the assessee under section 12AA of the Act. ii) The learned Commissioner of Income Tax has erred in rejecting the application of the assessee society for renewal under section 80G of the Act. 3. Brief facts of the case are that the assessee is a society registered under se .....

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mercial basis and no separate books of accounts were maintained for those activities. iii) The society had incurred expenditure on diocese functions which is religious in nature. 4. After further examination of the activities of the assessee trust the learned Commissioner of Income Tax, decided to cancel the registration granted under section 12A(a) of the Act due to the following reasons:- a) In the show cause notice, it was mentioned that the society has mentioned in Form-C as Christian. This .....

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counts were maintained for the commercial activities of society. The CIT in his show cause notice has clearly mentioned that no such books were maintained and even during the hearing before the undersigned, the assessee society has not produced the same to dispute the contention raised by the Department. e) In para 2.5 of the show cause notice, it was clearly mentioned that activities carried out by the society are only generating surplus out of running a school, hostel, etc for being utilized t .....

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T Act, which presupposes that at least 85% of the income of the society is applied for charitable purposes in India during the relevant previous year. This statutory condition has, therefore, not been met for any of these three financial years. This fact of non-compliance of the statutory condition was not disputed by the assessee society in its reply. The same implies that the society has violated the condition and hence the society is not entitled for Registration under section 12AA of the IT .....

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ere is no charity and in the garb of charitable activities the organization should not be allowed to carry out the commercial activity and take advantage of benefits attached with the word "charitable" under various provisions of the law. In the same order, the Hon'ble ITAT, Chennai has further mentioned that the CIT has passed a very reasoned order. Since, the Hon'ble ITAT has confirmed the contention of the Department that there is no charity in this society and huge surplus .....

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ishable and hence these case laws are not applicable to the facts of this case. In all these cases the Hon'ble ITAT has upheld the "contention of charity" of the trust and hence favoured the assessee, whereas in our case, Hon'ble ITAT has already come to a conclusion that there are no charitable activities in this society and has rightly denied the benefit of See 12AA of the Society. In the cases-law relied on by the assessee society, they have not incurred expenditure towards .....

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rned Commissioner of Income Tax also took cue from the orders of the Chennai Bench of the Tribunal cited supra that when an organization contributes towards religious functions and conducts its activities on commercial basis rather than in the nature of charity, registration granted under section 12AA ought to be cancelled, and accordingly he cancelled the registration granted to the assessee under section 12A(a) of the Act. 6. The learned Authorized Representative submitted before us that the o .....

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iterating his findings. 8. We have heard the rival submissions and carefully perused the materials available on record. On examining the objects of the assessee society, it is obvious that the society exists for charitable purposes. The objects of the society are reproduced herein below for reference:- a) To perform works of charity for those in need irrespective of caste, race, community or creed. b) To engage in social service activities aimed at improving the living conditions and general wel .....

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en the objects of the society are only for the purpose of charity, then the registration granted under section 12A(a) of the Act cannot be withdrawn unless the activities of the society are not genuine and not carried out in accordance with the objects of the institution. In the case of the assessee, the grievance of the learned Commissioner of Income Tax is that the assessee is indulging in religious activities and also engaged in commercial activities. However, he has not explained as to how t .....

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