Organizing meetings and giving awards is not charitable purpose

Income Tax Appellate Tribunal (ITAT) in a recent order dated: 13^th October 2017 [Sri Chukkapalli Pitchaiah Foundation Vs. CIT (Exemptions) (ITAT Visakhapatnam) Appeal Number: I.T.A. No. 126/Vizag/2016, All ITAT (4274) ITAT Visakhapatnam (25)] has held: “sole activity of organizing meetings and giving awards to eminent people do not fit into the definition of charitable purpose as per the Income Tax Act.”

The appeal was filed by the Sri Chukkapalli Pitchaiah Foundation against order of the Commissioner of Income Tax (Exemptions) {CIT}, Hyderabad, for refusal of registration u/s 12AA as also 80G of the Income Tax Act, 1961.

The objects of the trust were:

a) To honor outstanding personalities and those who have contributed in great measures to Entrepreneurship, Industry, Commerce, Economics, Science & Technology, Indian Culture, Heritage, Fine Arts, Literature, Sports Social Service, Indian Polity, Moral conduct, Philosophy or any other field which has an impact on the society in general.

b) To award a citation and cash prize to deserving individuals or institutions who have made a positive contribution to the society at large.

c) To organize and assist the organization of events or lectures in consonance with the objects for which this trust is founded, in memory of Late Chukkapalli Pitchaiah.

d) To inculcate interest, promote study & appreciation in the fields of Entrepreneurship, Industry, commerce, Economics, Science & Technology….”

Commissioner of Income Tax (Exemptions) after going through the above clauses took the view that the objectives do not indicate that they are charitable in nature as required u/s 2(15) of the Income Tax Act.

The Authorized Representative of the Foundation  argued that the by giving awards, felicitating eminent people and organizing public debates on various subjects the foundation is helping the country for public good and the activities falls under the category “any other object of general public utility”.

However, ITAT has taken the view that none of the objectives are charitable in nature and giving awards and felicitating eminent people and organizing public debates on various subjects cannot be held to be charitable activity for the purpose of Income Tax Act.

Our View/Inference:

1. ITAT has taken the view that the sole activity of organizing meetings and giving awards to eminent persons does not fit into the definition of charitable purpose as per the Income Tax Act. In other words, if organizing meetings and giving awards to eminent persons was in addition or incidental to furthering other objects such as education etc., it could perhaps have been more acceptable.

2.  Sri Chukkapalli Pitchaiah Foundation has the option to go into further appeal since “any other object of public utility” covers a fairly wide spectrum of activities. 

The statutory definition of ‘charitable purpose’ is neither exhaustive nor exclusive. Even industry and trade associations have been recognized as existing for ‘charitable purpose’ under the category “any other object of general public utility” albeit with certain restrictions on their business or commercial income.