2016 (2) TMI 1090 - AT - Income Tax

Refusing the registration to the appellant society u/s 12AA - Held that - One of the main object of the assessee society was carrying educational activities which is clearly a charitable activity as defined u/s 2(15). Further in pursuance of its main object the assessee was conducting the activity of imparting education in the two institutes established by it being Royal College of Education & Research Centre & Pearl Valley School. We find that these documents were there before the Ld. CIT who found no infirmity in the same. Therefore it can be safely concluded that the activities of the assessee society were charitable and were being genuinely carried out by it. ‌13. In view of the same, we hold that Ld. CIT could not have refused registration under section 12AA to the assessee society. The recommendation of the ACIT who had conducted the enquiry in this regard also confirm the fact that the assessee was eligible for grant of registration under section 12AA. The ACIT had very clearly stated that the assessee society fulfilled all the conditions required for registration under section 12AA. Further the inspector deputed to conduct enquiry about the activity being carried out by the assessee society also clearly stated that the activity were in the nature of imparting education. Thus we hold that the assessee society is entitled to Registration u/s 12AA - Decided in favour of assessee.

Summary

Issues Involved:
1. Refusal of registration under section 12AA of the Income Tax Act, 1961.
2. Genuineness of the books of account, bills, vouchers, and supporting documentary evidence.
3. Genuineness of the corpus donation received by the assessee society.

Issue-wise Detailed Analysis:

1. Refusal of registration under section 12AA of the Income Tax Act, 1961:

The assessee society filed an application in Form No. 10A seeking registration under section 12AA on 09/08/2012. The CIT refused registration on the grounds that the genuineness of the charitable activity had not been established due to the non-production of books of account, bills, vouchers, and supporting documentary evidence. Additionally, the CIT doubted the genuineness of the corpus donation received. The assessee appealed against this decision, arguing that the books of account were indeed produced during the proceedings, and detailed submissions regarding the corpus donation were made. The Tribunal found that the books of account were produced twice before the ACIT and once before the CIT, thus refuting the CIT's claim.

2. Genuineness of the books of account, bills, vouchers, and supporting documentary evidence:

The Tribunal noted that the books of account were produced before the ACIT on 03/09/2012 and 20/12/2012, and before the CIT on 18/02/2013. The documents submitted included letters indicating the production of books of accounts, detailed submissions regarding the corpus donation, and copies of donation receipts. The Tribunal concluded that the CIT's grievance regarding the non-production of books of account was unfounded and could not be the basis for doubting the genuineness of the society's activities.

3. Genuineness of the corpus donation received by the assessee society:

The CIT also refused registration on the grounds that the genuineness of the corpus donation amounting to Rs. 7.21 lacs was not established. The Tribunal held that the scope of the Commissioner's enquiry under section 12AA is limited to the genuineness of the objects and activities of the trust. It cited the Hon'ble Allahabad High Court's decision in CIT Vs. Red Rose School, which clarified that the Commissioner must satisfy himself about the genuineness of the activities and objects of the trust, and not delve into the genuineness of donations at the registration stage. The Tribunal found that the assessee had submitted complete details of the corpus donation and that neither the ACIT nor the CIT had conducted further enquiries to establish the genuineness or otherwise of the donations. The Tribunal concluded that the genuineness of donations should be examined during assessment proceedings, not at the stage of granting registration under section 12AA.

Conclusion:

The Tribunal found that the assessee society had genuinely conducted charitable activities, as evidenced by the audited financial statements and the recommendation of the ACIT. The society was engaged in imparting education through its institutions, Royal College of Education & Research Centre and Pearl Valley School. The Tribunal held that the CIT could not refuse registration under section 12AA based on the reasons provided and set aside the CIT's order, allowing the appeal and granting registration to the assessee society.

Order:

The appeal of the assessee was allowed, and the order of the CIT refusing registration under section 12AA was set aside. The assessee society was granted registration under section 12AA. The order was pronounced in the open court.