Registration u/s 12AA of Income Tax Act, 1961

This case concerns an appeal by the BWSSB Retired Employees Medical Welfare Association against the rejection of their application for registration under Section 12AA of the Income Tax Act, 1961. The Commissioner of Income Tax (Exemptions) rejected the application, stating that the association's benefits were not for the general public. The association argued that providing medical care to retired employees, who face higher medical costs in Bangalore, is a charitable cause and benefits a distinct section of the public.

IN THE INCOME TAX APPELLATE TRIBUNAL
“A” BENCH : BANGALORE

BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER
AND SMT. BEENA PILLAI, JUDICIAL MEMBER

ITA No.179/Bang/2019
Assessment year: 2018-19

BWSSB Retired Employees
Medical Welfare Association,
Room No.911, Kaveri Bhavan,
BWSSB, K G road,
Bangalore – 560 009.
PAN: AAEAB 7561L
APPELLANT 

Vs. 

The Commissioner of
Income Tax (Exemptions),
Bangalore.
RESPONDENT

Appellant by : None
Respondent by : Shri Devarathna Kumar, CIT(DR)(ITAT), Bengaluru.

Date of hearing : 12.07.2021
Date of Pronouncement : 12.07.2021

O R D E R

Per Chandra Poojari, Accountant Member

 This appeal by the assessee is directed against the order dated 26.9.2018 of the CIT (Exemptions) [CIT(E), Bangalore rejecting registration u/s. 12AA of the Income-tax Act, 1961 [the Act].

2. The assessee has raised the following grounds:-

“1. The Learned Assessing Authority rejected the application for Registration U/s 12AA of Income Tax Act, 1961.

2. While rejecting the Application for registration the Learned Assessing Authority stated that "The Object and Activities of the association is for the welfare of its retired  employees, who subscribed to the association and any association wherein the benefits do not ensure for the general public cannot be considered as a Public charitable Trust".

3. However, the Learned Assessing Authority erred in ignoring the very fact that the employees of the organisation post their retirement will not be in a position to bear their cost of medical expenses since most of these retired employees stay in the city of Bangalore where the cost of Medical Expenses is much higher. Therefore, BWSSB retired employee's medical welfare association has been registered to provide medical care to its retired employees and their spouses.

4. The Learned Assessing authority did not consider the fact that Providing Medical Care to retired BWSSB Employees is a Charitable cause and falls within the definition of Charitable Activity and needs to be considered.

5. The Appellant submits that it is pertinent to point here that just because the organisation intends to give medical relief to a particular section of the society it cannot be said that it is not carrying out charitable activities.

6. The Appellant Submits in the Bangalore Urban & Rural District Co-operative Milk Producers Societies Members & Employees Welfare Trust Bangalore Milk Union Ltd. Vs Deputy Commissioner of Income (Exemptions) case, the Honourable High Court of Karnataka had decided the matter in favour of the Appellant as under:

"WHEREAS, the SETTLOR/EXECUTOR with an intention to safeguard the interests of the Milk Producers and the employees of the Milk Producers Co-operative Societies of the District and to help the Milk Producers, has come forward to constitute this Trust to safeguard the interests and to promote the health and education of the Member Milk Producers, their families/dependent children and the employees working in the Milk Producers Co-operative and their families/dependent children."

7. The Appellant also submits in the case of the Trust created for the benefit of Rana Caste or community of City of  Ahmedabad, the Apex Court in Ahmedabad Rana Caste Association v. CIT [19711 82 ITR 704 has held thus:

"It is well settled by now, and the High Court also has rightly taken that view, that an object beneficial to a section of the public is an object of general public utility. To serve a charitable purpose, it is not necessary that the object should be to benefit the whole of mankind or all persons in a particular country or State. It is sufficient if the intention to benefit a section of the public as distinguished from a specified individual is present."

8. The Appellant humbly submits that based on above facts and circumstances appeal may be allowed.”

To know more in details find the attachment file