2011 (9) TMI 76 - HC - Income Tax

Registration under Section 12AA - Certain conditions were imposed in the registration by The Director of Income Tax(Exemption) - Condition No.11 which reads as under The society should not charge any fee/amount from the beneficiaries - Also shall not collect any fees on account of talent exam. - Held that -the Tribunal has nowhere said that conditions cannot be imposed at all - The only dispute was about the nature of Condition No.11 and entire observations of the Tribunal are qua that condition holding it to be unwarranted - Agree with the view taken by the Tribunal - No question of law arises. The Appeal is accordingly dismissed.

Summary

Issues:
1. Registration under Section 12AA of the Income Tax Act, 1961.
2. Imposition of conditions on registration.
3. Challenge to the imposition of conditions.
4. Interpretation of the law regarding the imposition of conditions.
5. Applicability of previous court judgments on the issue.

Analysis:
1. The Respondent, an Association of Commerce Teachers registered under the Societies Registration Act, 1860, applied for registration under Section 12AA of the Income Tax Act, 1961, claiming to be a Welfare Society with charitable objectives outlined in its Memorandum of Association.

2. The Director of Income Tax(Exemption) granted registration to the Respondent but imposed certain conditions, including Condition No.11 prohibiting the collection of fees from beneficiaries or talent exam fees. The Respondent challenged this condition before the Income Tax Appellate Tribunal, which allowed the appeal stating that the condition was unwarranted as the Respondent fulfilled all requirements for registration under Section 12AA.

3. The Appellant argued that previous court judgments allowed the imposition of conditions by the Director General of Income Tax(Exemptions) while granting exemptions, citing the case of Digember Jain Society for Child Welfare vs. Director General of Income Tax(Exemptions), (2010) 329 ITR 459. The Appellant contended that the Tribunal erred in holding that registration cannot be subject to conditions.

4. The High Court, after reviewing the Tribunal's order, found that the Tribunal did not dispute the imposition of conditions in general but specifically questioned the nature of Condition No.11. The Court agreed with the Tribunal's view that the condition was unwarranted, emphasizing that Section 12AA does not mandate the imposition of stipulations like the one in question.

5. In conclusion, the Court dismissed the appeal, stating that no legal question arose from the Tribunal's decision. The judgment highlighted that while conditions can be imposed, they must align with the provisions of the law, and the specific condition challenged in this case was deemed inappropriate.