Dharwad Growth Center Industries Association Vs CIT (Exemptions) (ITAT Bangalore)
ITAT Bangalore Restores 12AB & 80G Rejection of Industrial Association, Says No Donation Is No Ground to Deny Charitable Status
The Bangalore ITAT set aside the rejection of registration u/s 12AB and approval u/s 80G granted earlier to Dharwad Growth Center Industries Association and restored the matter to the file of CIT(E) for fresh consideration. Assessee, a society registered under Karnataka Societies Registration Act, 1960, is an industrial association formed to promote development of industrial areas, resolve disputes of member industries and make representations before Government authorities, and was earlier granted registration u/s 12AB from AY 2021-22 to 2025-26.
CIT(E) rejected renewal application filed in Form 10AB primarily on the ground that Assessee had not received donations during AY 2023-24 and that expenditure was allegedly not incurred towards charitable activities. Tribunal held that absence of donations cannot be a reason to deny registration, particularly when activities are funded through membership fees and surplus is not distributable to members. Tribunal noted that CIT(E) failed to specify which documents were not furnished or how activities were not genuine, despite Assessee producing Memorandum, activity reports, and audited accounts showing expenditure incurred for industrial area development.
Relying heavily on the Supreme Court decision in Ahmedabad Urban Development Authority, Tribunal held that industrial and trade promotion bodies functioning on non-profit basis fall within “advancement of general public utility” u/s 2(15), subject to statutory limits, and mere collection of membership fees does not convert such activities into commercial ventures. Tribunal therefore restored both matters to CIT(E) to re-examine Assessee’s activities and accounts afresh in light of Supreme Court law, after granting due opportunity of hearing, and to decide registration u/s 12AB and recognition u/s 80G in accordance with law. Appeals were allowed for statistical purposes.
FULL TEXT OF THE ORDER OF ITAT BANGALORE
