Gramonnati Trust Vs CIT (Exemptions) (ITAT Chennai)
The assessee trust’s application for registration u/s 12AB was rejected by the CIT(E) on the ground that its activities (procurement, processing, and sale of agricultural produce) were commercial in nature and hit by section 2(15).
Before the Tribunal, it was demonstrated that the trust was engaged in rehabilitation of economically weaker sections (including widows and distressed persons) and environmental preservation by processing rejected agricultural produce through solar dehydration. The proceeds were fully reinvested into the project with no profit motive or private benefit.
The ITAT held that at the stage of registration u/s 12AB, the authority’s scope is limited to examining objects and genuineness of activities, and not to assess commercial aspects or application of income. The CIT(E) had exceeded this jurisdiction.
Applying the “predominant object test”, the Tribunal observed that merely because some sale activity exists, the trust does not become commercial if the dominant purpose is charitable. The activities clearly fell under relief of the poor and environmental preservation, and CSR funding could not be treated as commercial consideration.
Accordingly, the ITAT set aside the rejection and directed grant of registration u/s 12AB, allowing the appeal.
FULL TEXT OF THE ORDER OF ITAT CHENNAI
The present appeal is filed by the assessee against the order of the learned Commissioner of Income Tax (Exemption) dated 30.09.2024 (hereinafter referred to as the “ld.CIT(E)”) rejecting registration u/s.12AB of the Income Tax Act, 1961 (hereinafter referred as “the Act”).
