Trade-promotion bodies qualify as charitable institutions, as long as their dominant purpose is not profit-making: ITAT

The assessee, Federation of European Business in India (FEBI), is a Section 8 company formed as a non-profit entity engaged in policy advocacy and trade-promotion activities between the European Union business community and Indian public authorities. It applied for regular registration under Section 12A(1)(ac)(vi) in Form 10AB after having been granted provisional registration for AYs 2024-25 to 2026-27.

The CIT(E), however, rejected the application and simultaneously cancelled the provisional registration. As per CIT(E), FEBI existed only to promote and protect the interests of its EU-business members, and it failed to show charitable activities or beneficiaries to the public at large. The CIT(E.) also held that FEBI had not incurred any charitable expenditure and had only administrative costs, concluding that its activities did not fall within the definition of “charitable purpose” under Section 2(15). Aggrieved, FEBI approached the ITAT.

Main Issue: Whether FEBI’s objects and activities amount to “advancement of any other object of general public utility” under Section 2(15), thereby entitling it to registration under Section 12A.

Tribunal Held: The Tribunal held that FEBI’s core objects squarely fall under the limb of “general public utility.” Relying on Supreme Court and High Court precedents, including Andhra Chamber of Commerce, FICCI, India Trade Promotion Organisation, Ahmedabad Urban Development Authority, and the recent ITAT ruling in Indian Chamber of Commerce, the Bench observed that trade-promotion bodies do qualify as charitable institutions so long as their dominant purpose is not profit-making. The CIT(E) did not show that FEBI was engaged in any commercial or business activity, nor that its advocacy efforts were restricted exclusively to private gains of its members.

The Tribunal restored the provisional registration and directed the CIT(E) to grant regular registration under Section 12A forthwith, based on FEBI’s validly filed Form 10AB application. The appeal was thus allowed.

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