Trade association leasing plots to members is eligible for Sec. 12A registration: ITAT

Case Details: Confederation of Pharma Dealers Association v. CIT (Exemption) - [2022] 137 taxmann.com 117 (Raipur - Trib.)

Judiciary and Counsel Details

• • Pradip Kumar Kedia, Accountant Member and Pawan Singh, Judicial Member
  • Veekaas S. Sharma, C.A. for the Appellant. 
  • R.K. Singh, CIT DR. for the Respondent.

Facts of the Case

The assessee-society claims to be engaged in charitable activities falling within the ambit of the expression ‘the advancement of any other object of general public utility’ as contained under section 2(15). It filed an application seeking registration of the society under section 12AA of the Act to enable it to avail of the benefits of section 11 & section 12.

The Commission (Exemption) rejected the application on the grounds that the assessee was a mutual concern and the benefits of the assessee society are limited to its members. The assessee had developed the marketplace after purchasing the land in its name, and the land so purchased was leased out to its members.

The contribution from the members is just like a donation, and the members have derived the benefit from the donation by way of land/developed plots leased out to the members. The assessee filed the instant appeal before the Tribunal.

ITAT Held

The Tribunal held that merely leasing developed plots to its members based on their respective contributions does not make the assessee ineligible for registration as a charitable entity per se.

While the assessee is mutual concern and operating on the principles of mutuality, this would not place any embargo on registration under section 12AA and to avail associated benefits under section 11 and section 2(15).

The objects of the assessee-society, when read in the light of judicial precedents expounding the law in this regard, the conclusion is inescapable that the assessee objects were for charitable purposes within the meaning of section 2(15). Thus, the assessee was entitled in law to registration under section 12AA.

Case Review

• • CIT v. Chhattisgarh Urology Society [2018] 303 CTR (Chhattisgarh) 299 (para 8.1)
  • All India Rubber Industries Association v. Addl. CIT [2018] 100 taxmann.com 7/173 ITD 615 (Mum. – Trib) (para 10) followed.

List of Cases Referred to

• • DIT v. Bharat Diamond Bourse [2003] 126 Taxman 365/259 ITR 280 (SC) (para 6.1)
  • Addl. CIT v. Surat Art Silk Cloth Manufacturers Association [1979] 2 Taxman 501/[1978] 121 ITR 1 (SC) (para 6.1)
  • Ahmedabad Rana Caste Association v. CIT [1971] 82 ITR 704 (SC) (para 6.1)
  • CIT v. Federation of Indian Chambers of Commerce and Industries [1981] 6 Taxman 7/130 ITR 186 (SC) (para 6.1)
  • All India Rubber Industries Association v. Addl. CIT [2018] 100 taxmann.com 7/173 ITD 615 (Mum. – Trib) (para 6.1)
  • CEO Clubs India v. DIT (Exemption) [2012] 25 taxmann.com 217/53 SOT 488 (Mum.) (para 6.1)
  • Agricultural Produce & Market Committee v. CIT [2006] 100 ITD 1 (Nagpur) (para 6.1)
  • CIT v. Chhattisgarh Urology Society [2018] 303 CTR 299 (CG) (para 6.1)
  • CIT v. Gujarat Maritime Board [2008] 166 Taxman 58/[2007] 295 ITR 561 (SC) (para 6.4)
  • Shri Sarafa Association v. CIT [2007] 163 Taxman 228/294 ITR 262 (MP) (para 6.4)
  • Chhattisgarh State Cricket Sangh v. Dy. CIT (Exemption) [2019] 106 taxmann.com 347/177 ITD 393 (Raipur – Trib) (para 6.4)
  • Confederation of Real Estate Developers Association of India v. Asstt. CIT [2020] 119 taxmann.com 491/185 ITD 90 (Mum. – Trib) (para 6.4)
  • Japanese Chamber of Commerce & Industry v. DIT (Exemption) [2014] 50 taxmann.com 45/[2015] 153 ITD 690 (Chennai – Trib) (para 8.5)
  • Japan Chamber of Commerce & Industry in India v. DIT (Exemptions) [2008] 119 ITD 37 (Delhi) (para 8.5)
  • Asstt. CIT v. Gujarat Hira Bourse [2021] 130 taxmann.com 355 (Surat – Trib) (para 9).