INCOME TAX ACT, 1961

Section2(15), Proviso

Charitable purpose - Registration under section 12AA - Dissemination of knowledge and training in specialized subjects -

Assessee, a company incorporated under section 25 of Companies Act, 1956 applied for registration under section 12AA. CIT(E) denied registration on the ground that activity of assessee in the nature of rendering services to investor community amounted to rendering services to a particular trade/commerce/business. Further, there was a clear price/fee/consideration fixed for said services and quantum of consideration was always on commercial basis. Therefore, activity of assessee amounted to rendering services in relation to trade/commerce/business, for fee/consideration and such activity was specifically excluded from definition of 'Charitable purpose' as provided in Proviso to section 2(15).Held: Dissemination of knowledge and training in specialized subjects as was done by assessee was in the nature of education and could not be construed to be one of trade or commerce or business merely because assessee was collecting fee toward imparting financial education/awareness because assessee's memorandum clearly spelt out that surplus could not be distributed and was to be applied solely for promotion of objects as set forth in the memorandum. Accordingly, rejection of application filed by assessee for registration under section 12AA was erroneous.

Relied:Sole Trustee, Loka Shikshana Trust v. CIT (1975) 101 ITR 234 (SC) : 1975 TaxPub(DT) 0344 (SC), DIT v. Chartered Accountants Study Circle (2012) 23 taxmann.com 444 (Madras) : 2012 TaxPub(DT) 2094 (Mad-HC).

REFERRED :

FAVOUR : In assessee's favour.

A.Y. : 2016-17

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