2016 (4) TMI 1233 - AT - Income Tax

Cancelling the registration granted to the assessee under section 12AA - assessee is indulging in religious activities and also engaged in commercial activities - Collecting fees from students for imparting education - Held that - Collecting fees from students for imparting education through Government recognized ITI or collecting nominal rent for hostel accommodation from women cannot be considered to be commercial activities. Further if the society violates its objects by indulgencing in any non charitable activities or religious activities however conducts itself predominantly in charitable activities then the exemption granted under section 12A(a) of the Act cannot be withdrawn but only the amount spent outside the scope of the objects of the society can be taxed. On perusing the paper book filed by the assessee and examining the receipts & payment account enclosed therein we find that the assessee trust is conducting multi various activities which appears to be charitable. However in the interest of justice we remit the matter back to the file of the learned Commissioner of Income Tax to examining the paper book filed before us by the assessee and to verify the activities conducted by the assessee and also any other relevant material which was not before the learned Commissioner of Income Tax on the earlier occasion to justify the stand of the assessee and thereafter decide the matter in accordance with merit and law. Appeal of the assessee is allowed for statistical purposes.

Summary

Issues:
1. Cancellation of registration under section 12AA of the Act
2. Rejection of application for renewal under section 80G of the Act

Analysis:
Issue 1: Cancellation of registration under section 12AA of the Act
The appeal was filed against the cancellation of registration granted under section 12AA of the Act by the Commissioner of Income Tax. The Commissioner observed that the society had mentioned its Christian affiliation, ran commercial activities without separate accounts, and spent on religious functions. The cancellation was based on non-compliance with statutory conditions, lack of charitable activities, and significant surplus from commercial activities. The Tribunal noted the society's charitable objectives and remitted the matter back to the Commissioner for detailed examination of activities to ensure compliance with charitable purposes and public benefit without discrimination.

Issue 2: Rejection of application for renewal under section 80G of the Act
The Commissioner also rejected the society's application for renewal under section 80G of the Act due to lack of charitable activities and significant surplus from commercial operations. The Tribunal considered the society's charitable objectives and directed the Commissioner to reevaluate the activities to ensure adherence to charitable purposes and public benefit without discrimination.

In conclusion, the Tribunal allowed the appeal for statistical purposes, emphasizing the need for a thorough examination of the society's activities to determine compliance with charitable objectives and public benefit requirements.