ITAT allows Bar Council of Delhi's appeal for registration as Charitable Trust and consequent Section 80G tax exemption [Read Order]
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ITAT allows Bar Council of Delhi's appeal for registration as Charitable Trust and consequent Section 80G tax exemption [Read Order]

A Bench of members RK Panda and Kuldip Singh passed an order to this effect on July 2, while setting aside a September 2019 ruling to the contrary by the Commissioner of Income-tax (Exemption), New Delhi.

Meera Emmanuel

The Income Tax Appellate Tribunal (ITAT) recently concluded that the Bar Council of Delhi was entitled to registration as a charitable trust under Section 124AA of the Income Tax Act, 1961 and to consequent tax exemptions under Section 80G of the Act (Bar Council of Delhi v. CIT Exemption).

A Bench of RK Panda (Accountant Member) and Kuldip Singh (Judicial Member) passed an order to this effect on July 2, while setting aside a September 2019 ruling to the contrary by the Commissioner of Income-tax (Exemption), New Delhi (CIT (E)).

"... the appellant (Bar Council of Delhi) being engaged in safeguarding the rights, privileges and interest of the advocates, its dominating purpose is the advancement of general public utility within the meaning of section 2(15) of the Act, as such, genuineness of its activities and object of charitable purpose is proved, thus entitled for registration u/s 12AA and consequent exemption u/s 80G."
the ITAT has held.

The CIT (E) had earlier rejected an application moved by the Bar Council of Delhi seeking registration as a charitable institution on grounds that,

  • financials of the FY 2018-2019 were not submitted and in their absence the genuineness of the Bar Council's activities could not be established; and

  • the Bar Council of Delhi is not an institution notified by the Government of India.

The question before the ITAT was whether the activities of the Bar Council of Delhi would constitute charitable activities as defined under Section 2(15) of the Income Tax Act.

In its appeal, the Bar Council of Delhi referred to a 1966 notification which showed that it was a notified/ approved institution for the purpose of Section 10 (23) of the Income Tax Act.

Notably, the Delhi Bar Council argued that the CIT (E) had erred in citing the absence of financial statements to reject the application. It was contended that the CIT (E) is only expected to satisfy himself about the object of the trust/ institution and genuineness of its activities.

The ITAT concurred with this submission noting that,

"It is settled proposition of law that for the purpose of registration u/s 12AA of the Act, the threshold condition i.e. genuineness of the activities is to be decided with the object clause of institution. In other words, when the object of the institution, the appellant in this case, is proved to be charitable within the meaning of section 2(15) of the Act ... further scrutiny of the financials of the appellant are not required because it is otherwise within the purview of AO to examine at the time of assessment if the appellant is entitled to exemption u/s 11 of the Act. "

As such, the ITAT proceeded to allow the Bar Council's appeal, given the nature of its statutory duties.

Consequently, the CIT (E) was directed to provide the Bar Council of Delhi registration under Section 124AA of the Income Tax Act and the consequent tax exemption under Section 80G of the Act.

The Bar Council of Delhi was represented by Senior Advocates CS Agarwal and Prem Lata Bansal with Advocates RP Mall, Madhur Agarwal and Divyanshu Agarwal. CIT DR Sanjay Goel appeared for the Revenue authority.

Read the Order:

Bar Council of Delhi v CIT (E) - July 2 order.pdf
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