TMI Blog2021 (11) TMI 222X X X X Extracts X X X X X X X X Extracts X X X X ..... ws material for achievement of its objectives under section 12AA(a)(ii) Appellant company s application seeking registration u/s 12AA for undertaking the aforesaid objects of general public utility deserve to be accepted as falling within the purview of charitable purpose u/s 2(15) of the Act. In terms of examining the allowability of benefit u/s 11, 12 r/w section 13, it is a settled position that the same can be examined on year to year basis by the Assessing officer and he shall be free to take action, as per law including under section 13(8) as so provided in the statue, during the course of regular assessment proceedings. We accordingly direct the ld CIT(E) to grant approval to the assessee company u/s 12AA of the Act. - Decided in favour of assessee. - ITA. No. 49/JP/2021 - - - Dated:- 2-11-2021 - Shri Sandeep Gosain, JM And Shri Vikram Singh Yadav, AM For the Assessee : Sh. Rajeev Sogani (FCA) For the Revenue : Sh. B. K. Gupta (PCIT) ORDER PER: VIKRAM SINGH YADAV, A.M. This is an appeal filed by the assessee against the order of ld. CIT(E), Jaipur dated 30.03.2021 wherein the assessee has challenged the rejection of application seeking regist ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... develop Training and Research centre to facilitate Skill Development to the entire chain of work force engaged at various level in the Garment and Textiles Industry. The Memorandum of Association and Articles of Association are placed at APB 18-45. 6. It was submitted that an application seeking approval u/s 12AA in Form 10A was filed with the office of ld CIT(E) on 05.08.2020 which was however rejected by ld. CIT(E) vide his order dated 30.03.2021 for the sole reason that the object no. 1,2,4 5 as stated in the memorandum of association are having element of commercial/business nature. 7. It was submitted that running a Skill Development Centre is imparting education and which also helps the poor. Therefore, proviso to Section 2(15) is not applicable. It was submitted that promoting business/economic activities, alternatively, are charitable in nature falling under the last limb any other object of general public utility of the definition of charitable purpose u/s 2(15) of the Act. 8. It was submitted that the ld. CIT(E) has accepted the objects being charitable in nature and after having found the objects being charitable in nature, has rejected the application fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any registered under section 8 of the Companies Act, 2013 and having similar object. If upon a winding up or dissolution of the Company, there remains, after the satisfaction of all the debts and liabilities, any property whatsoever, the same shall not be distributed amongst the members of the Company but shall be given or transferred to such other Company having objects similar to the objects of the company and operating on non profits basis, subject to such conditions as the Tribunal may impose, or may be sold and proceeds thereof credited to the Rehabilitation and Insolvency Fund formed under section 224 of the Act. In view of the above, it was submitted that no commercial/business nature is possible while undertaking the activities by the appellant company. 9. Without prejudice to above, it was submitted that alleged commercial/business nature of activities cannot be a reason for rejection of the application u/s 12AA and in support, reliance was placed on the following judicial precedents: CIT vs Gujarat Maritime Board [2021] 123 taxmann.com 35 (Guj) Rajasthan Housing Board vs CIT [2012] 21 taxmann.com 77 (Jp) Mahatma Gandhi Charitable Society vs CIT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... u/s 12AA, has to independently apply seeking registration and file requisite documentation in support of its application, and the Commissioner has to consider its objects and genuineness of activities and then take appropriate action in terms of either accepting or rejecting its application seeking registration u/s 12AA of the Act. It was accordingly submitted that there is no infirmity in the findings of the ld. CIT(E) in rejecting application of the assessee company seeking registration u/s 12AA of the Act. 13. We have heard the rival contentions and perused the material available on record. It is observed that the precise reason for the rejection of assessee s application seeking registration u/s 12AA by the ld CIT(E) was basis his finding that on perusal of its memorandum of association, it is seen that the objects no. 1, 2, 4 5 are having elements of commercial/business nature and the appellant company failed to furnish valid explanation on why these activities should not be considered as commercial in light of section 2(15) of the Act. We find that in response to show-cause notice dated 13.03.2021 wherein this matter was initially enquired by the ld CIT(E), the assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... business enterprises. 3. To establish, set up, maintain, operate, advance and improve testing laboratories and conducting research in the field of Garment and Textile Industry. 4. To establish, set up, maintain, operate, advance and improve conference/meeting halls and provide a common platform to buyers and sellers for the promotion of Garment and Textile trade. To convene, when necessary or expedient, conferences, seminars, exhibitions/trade fairs or other kinds of meetings at such places and at such time as considered desirable. 5. To promote Rajasthan Traditional Hand Work, Art Word, Hand Block/Tie and Dye and other traditional techniques of Garment and Textile sector at national and international level. No objects of the Company shall be carried out without the permission of the competent authorities whomsoever and no objects of the Company shall be carried out on commercial basis. 15. The first object talks about facilitating setting up training and research centre for skill development of the work force engaged in the field of garment and textile industry. The second object talks about setting up business incubators to provide opportunity to the eligible ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es of achieving its objects and in the instant case, approval by the sanctioning authority and grant of registration under section 8 of the companies act is one such material requirement for achievement of its objectives which the assessee company has fulfilled and which should have been considered by the ld CIT(E) before rejecting the application seeking registration u/s 12AA of the Act. 18. We may clarify that merely because the assessee company has been registered u/s 8 of the Companies Act, we are not saying that the same by default mean that it shall be eligible for grant of registration u/s 12AA of the Act as the legislation is currently not worded to support the said proposition. All we are saying is that where another arm of the government administering the company law legislation has examined the objects and intended application of profits and has granted the registration as section 8 company, the said registration allows the assessee company to take necessary steps to seek separate and independent registration u/s 12AA and where such an approval is placed on record, as part of assessee s application u/s 12AA and supporting documentation as required under law, it shall ..... X X X X Extracts X X X X X X X X Extracts X X X X
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