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Issues involved: The only issue raised in the present appeal is against the order of Commissioner of Income Tax for not granting registration under section 12A of the Income Tax Act.
Summary: Issue 1: Registration under section 12A of the Income Tax Act The assessee society applied for registration under section 12A(1)(aa) of Income Tax Act, 1961. The Commissioner of Income Tax observed that the society, running an educational institute, was claiming charitable status despite operating as a commercial venture. Citing legal precedent, the Commissioner held that for an activity to be considered charitable, the predominant object must be to serve charitable purposes and not profit-making. The Commissioner concluded that the society's activities did not qualify as charitable, thus denying registration under section 12AA of the Act. Issue 2: Appeal against denial of registration The assessee appealed the Commissioner's decision, arguing that the Chandigarh Tribunal had previously ruled in a similar case that as long as the trust's activities aligned with its stated objectives, registration should be granted. The Tribunal agreed with this argument, emphasizing that the Commissioner's role in granting registration is limited, and the presence of surplus is not relevant at that stage. Relying on the precedent set by the Chandigarh Tribunal, the Tribunal directed the Commissioner to grant registration under section 12AA to the assessee society for its educational institution activities. As a result, the appeal was allowed. This judgment highlights the importance of the predominant charitable purpose in determining eligibility for registration under section 12AA of the Income Tax Act, emphasizing alignment between a trust's activities and its stated objectives.
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