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2025 Supreme(Online)(ITAT) 22065
INCOME TAX APPELLATE TRIBUNAL (BANGALORE BENCH)
Laxmi Prasad Sahu, Accountant Member, Soundararajan K., Judicial Member
Printech Park Cluster – Appellant
Versus
Commissioner of Income Tax – Respondent
ITA No. 1065/Bang/2025
Important Points
An institution established by the government to provide public utility services to a specific industry, where profits are mandatorily reinvested and not distributed as dividends, qualifies as a charitable organization eligible for registration under Section 12A of the Income Tax Act.
Subject
Tax Law - Income Tax - Charitable Registration
Act Referred
Headnote
(A) Income Tax Act, 1961 - Section 2(15) - Section 12A - Section 12AB - Charitable purpose - Advancement of general public utility - Whether a Special Purpose Vehicle (SPV) established by Government of India and Karnataka to operate a common facility center for the printing industry qualifies for charitable registration - The Tribunal noted previous cycles of litigation where it was established that the assessee's objects were for the advancement of general public utility and that registration authorities should examine objects and genuineness, not activities, at the registration stage. The Court found that the profits are mandatorily reinvested, and the institution is not driven by profit motive, equating it to a Section 8 Company structure.
Facts of the case:
The assessee is a society registered under the Karnataka Societies Act, serving as an SPV for the printing industry. Its registration was repeatedly rejected by the revenue authority on the ground that its activities were non-charitable and commercial in nature, despite previous Tribunal findings holding it to be a charitable institution under Section 2(15).
Findings of Court:
The Tribunal observed that the revenue authority failed to respect the finality of previous Tribunal orders which had already determined the charitable nature of the assessee's objects. The Tribunal directed the registration to be granted as the institution operates under government control with profits ploughed back for industry welfare.
Issues: Whether the assessee’s objects qualify as 'charitable' under Section 2(15) of the Income Tax Act and whether the revenue authority is permitted to ignore previous binding Tribunal findings on the same facts.
Ratio Decidendi: When objects of a society are for the advancement of general public utility and not driven by profit motive, it qualifies as a charitable institution. Authorities cannot ignore established findings of fact by the Appellate Tribunal in previous rounds of litigation. Result : Appeal allowed.
Facts of the case:
The assessee is a society registered under the Karnataka Societies Act, serving as an SPV for the printing industry. Its registration was repeatedly rejected by the revenue authority on the ground that its activities were non-charitable and commercial in nature, despite previous Tribunal findings holding it to be a charitable institution under Section 2(15).
Findings of Court:
The Tribunal observed that the revenue authority failed to respect the finality of previous Tribunal orders which had already determined the charitable nature of the assessee's objects. The Tribunal directed the registration to be granted as the institution operates under government control with profits ploughed back for industry welfare.
Issues: Whether the assessee’s objects qualify as 'charitable' under Section 2(15) of the Income Tax Act and whether the revenue authority is permitted to ignore previous binding Tribunal findings on the same facts.
Ratio Decidendi: When objects of a society are for the advancement of general public utility and not driven by profit motive, it qualifies as a charitable institution. Authorities cannot ignore established findings of fact by the Appellate Tribunal in previous rounds of litigation. Result : Appeal allowed.
Advocates:
For the Appellants/Petitioners: Kupendra Setty
For the Respondents: Murali Mohan M
For the Appellants/Petitioners: Kupendra Setty
For the Respondents: Murali Mohan M
| Table of Content |
|---|
| 1. procedural background and history of the registration application. (Para 1 , 2 , 3 , 4 , 5) |
| 2. previous judicial findings and binding nature of itat orders. (Para 6 , 7 , 8 , 9 , 10 , 11) |
| 3. government-backed spvs functioning for public utility are charitable. (Para 12 , 13 , 14 , 15) |
ORDER
PER SOUNDARARAJAN K., JUDICIAL MEMBER
This is an appeal filed by the assessee challenging the order of the Ld.CIT(E) in which the registration sought for u/s. 12A of the Act was denied by the Ld.CIT(E) vide order dated 31/03/2025 and raised the following grounds:
| Grounds of Appeal | Tax effect relating to each ground of appeal (see note below) | |
|---|---|---|
| 1 | Ground No.1 On the facts and circumstances of the case and in law, the Ld.CIT (Exemptions) has rejected the appellant society's Application for renewal of registration u/s12AB, which is Void and Illegal | Rs. 0 |
| 2 | Ground No.2 On the facts and circumstances of the case and in law, the Ld.CIT (Exemptions) has rejected appellant society's Application u/s I2AB, holding that the activities of appellant society are 'non-charitable in nature', without properly analyzing the activities of the appellant society. The appellants activities are very much coining within the meaning of charitable activity as defined in the act. The explanations given by the appellant and financial statements furnished, are not properly analysed by the Ld.C1T(exemptions). . | Rs. 0 |
| 3 | Ground No.3 On the facts and circumstances of the case and in law, the Ld.CIT (Exemptions) has rejected appellant society's Application u/s 12AB, on the basis of Report of AO dated 28.02.2024 and the copy of the report is not confronted to the appellant society. The AO findings mentioned in the Order, is vague and irrelevant to the renewal of registration u/s 12A of the Act, as it is not a case of cancellation of registration u/s 12AB(4). | Rs. 0 |
| 4 | Ground No.4 On the facts and circumstances of the case and in law, the Ld.CIT (Exemptions) has rejected appellant society's Application u/s 12AB, by saying "I concur with the AO", and hence rejection order passed by the Ld.CIT(exemptions)is without application of mind, as he simply concurs with the AO without giving reasons. | Rs. 0 |
| 5 | Ground No.5 On the facts and circumstances of the case and in law, the Society's Objectives & Activities remains charitable since its inception. The Learned CIT(Exemptions) erred in rejecting the application u/s 12AB, despite the decision of the Hon'ble ITAT Bangalore, in appellant's own case rendered for Asst Year 2014-15 that the activities of the society are charitable in nature and eligible for registration u/s 12A. The Hon'ble High Court of Karnataka, order dt:10.02.2021, has upheld the decision of the Hon'ble ITAT Bangalore. The co-ordinate bench decision of this Hon'ble ITAT Bangalore, dated 28.06.2024, has held in favour of the appellant society. Thereafter, there is no change in law or nature of activities of the appellant society and hence the Ld CIT (Exemptions) cannot reject the appellant society's application u/s 12AB | Rs. 0 |
| 6 | Ground No. 6 On the facts and circumstances of the case and in law, the Ld CIT (Exemptions) has not given reasonable opportunity of being heard, before issue of rejection order, to meet the natural justice. No Show cause notice is issued. Reasonable opportunity of being heard, is not afforded, as required by the provisions of section 12AB(1)(b) of the Income Tax Act. Rejection order in Form LOAD, Point No.10, is kept blank, and reasonable opportunity of being hear, is not afforded to the appellant society | Rs. 0 |
| 7 | Ground No.7 The appellant craves leave to add, alter, modify or delete one or more grounds of appeal before or at the time of hearing of the appeal. The aforesaid grounds of appeal are without prejudice to each other. | Rs. 0 |
| Total Tax Effect | Rs. 0 | |
2. The brief facts of the case are that the assessee is a society registered under the Karnataka Societies Act . The assessee applied for registration under the pro
