Registration under section 12A of the Income Tax Act, 1961

This judgement concerns the Delhi Police Welfare and Recreational Club Fund's application for registration under Section 12A of the Income Tax Act, 1961. The Commissioner of Income Tax (Exemptions) rejected the application, stating that the club's primary objective was to benefit Delhi Police personnel, not the general public. The Tribunal considered whether providing benefits to a specific group constitutes a 'charitable purpose' as defined by the Act.

IN THE INCOME TAX APPELLATE TRIBUNAL
DELHI BENCH ‘B’ NEW DLEHI

BEFORE SHRI PRASHANT MAHARISHI, ACCOUNTANT MEMBER
AND
SHRI K. NARASIMHA CHARY, JUDICIAL MEMBER

 ITA No. 7653/Del/2018

Delhi Police Welfare and Recreational 
Club Fund, C/o Kapil Goel, Advocate New Delhi
F-26/124, Sector-7, Rohini,
PAN : AACAD8779Q
(Appellant) 

vs. 

CIT (Exemption),
New Delhi.
(Respondent)

 Appellant by : Sh. Kapil Goel, Advocate
 Respondent by: Ms. Nidhi Srivastava, CIT/DR

 Date of hearing: 28.06.2021
 Date of order : 28.06.2021

ORDER

PER K. NARASIMHA CHARY, J.M.

Aggrieved by the order dated 28/9/2018 passed by the Commissioner of Income Tax (Exemptions), New Delhi (“Ld. CIT(E)”) in the case of the Delhi Welfare And Recreational Club Fund, Delhi (“the appellant”) rejecting the application for grant of registration under section 12A of the Income Tax Act, 1961 (for short “the Act”), the appellant filed this appeal.

2. Brief facts of the case, relevant for the disposal of this appeal, are that the appellant is engaged in the activity to promote welfare and recreational activities of the personnel (gazette, subordinate police  officers, civilians and class IV employees of Delhi police) and the expenditure was to be incurred on articles of sports-indoor and outdoor games, cost of uniforms etc supplied to teams, magazines and periodicals, entry fee for tournaments, hiring of grounds, hiring, repair and purchase of furniture for the club, conveyance expenses incurred locally, entertainment (exclusive excursion trips), film shows, hiring of accommodation for the club’s functions, cultural and sports programs and interdepartmental meets. According to the appellant, sports activities are covered under the definition of “charitable purpose” as per section 2 (15) of the Act; that the fund is not engaged in any activity in the nature of trade, commerce or business, or any activity of rendering any service in relation to any trade, commerce or business, for a cess or fee or any other consideration, irrespective of the nature of use or application, or retention, of the income from such activity; and that the fund not earned any income from advancement of any other object of general public utility.

3. The assessee filed an application on 28/3/2018 in form No. 10 AA seeking registration under section 12 AA of the Act. Ld. CIT(E), however, rejected the said application on the ground that the objects of the club as mentioned in aims and objects of standing order No. 270 of Commissioner of Police, Delhi clearly establishes that the primary objective of the appellant club is to rescue the benefit to its members of Delhi police personnel only and are not to public at large or general public; that the income and expenditure accounts also establish the fact that the expenditure incurred for Delhi police personnel and not to public  at large or general public; and that it is the settled principle of law that providing benefits to individual or group of individuals would not be a charitable purpose, but providing benefit to general public or section of public would be termed as charitable purpose. On this premise, ld. CIT(E) held that provision of benefit only to its members of Delhi police violates the provisions of section 2(15) of the Act, the compliance of which is mandatory for registration under section 12A of the Act. Application of the appellant was, accordingly, rejected. 

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