A society formed with the primary object of construction of chambers for its members and their allotment is eligible to be registered u/s 12AA since the objects amount to advancement of object of general public utility within the meaning of Section 2(15) of the Income Tax Act

FACTS
Assessee-society applied for registration u/s 12AA. However, the CIT (Exemption) rejected the application of the assessee inter alia holding that genuineness of the activities of the assessee could not be established; and that the assessee had not incurred any expenditure for activities of general public importance. Main ground for rejecting the application was that purpose for which the society was formed was for the benefit of specific group of professionals which does not come within the purview of ‘advancement of object of general public utility’ under Section 2(15) of the Act.

Aggrieved, the assessee filed appeal to the ITAT.

HELD
The ITAT analysed the case on hand in the context of provisions of Section 2(15) which define ‘charitable purpose’ and Section 12AA which provide for grant of registration.

The ITAT observed that the bye-laws of the society provided that society was established for the welfare, construction and allotment of chambers in the District Court Complex, Barnala for the members of District Bar Association, Barnala. It further provided that all the incomes/earnings would be solely utilized and applied towards the promotion of its aims and objectives only as set forth in the memorandum of association, and that the society will work on no profit and no loss basis. Bye-laws also provided social welfare activities such as growing of trees for environments, de-addiction drug campaign, welfare of girl child, and also provide legal awareness among the general public.

The CIT (Exemptions) proceeded only on the basis that since the society was formed for construction of building for members, benefits thereof only restricted to the members, and not to the general public at large and failed to comprehend the role of Bar Association in judicial dispensation. Attainment of justice for all the parties of the case and the society at large is the main object of our judicial system.

The Bench and Bar were the essential partners in judicial dispensation, and therefore, considering the importance of Bar Association in every adjudicating body, particular space was being earmarked and maintained for Bar Association and for litigants. Thus, since working space for professionals was an integral part of infrastructure for judicial dispensation, the ITAT held that the CIT (Exemptions) was wrong in rejecting the assessee’s application u/s 12AA, disregarding the bye-laws and not considering the object of the assessee from a larger perspective.