2010 (3) TMI 810 - AT - Income Tax

Trust running a school in a village without seeking necessary prior permission to run this school - CIT rejected the application for registration under 12AA. - Held that -the objects of the trust are nothing but only charitable because running of a school is only a charitable activity. It was argued that if the main object of the trust is charitable and even if the other objects are not implemented, it is not material for grant of registration. - It was submitted at the end that the trust is genuine and carries on educational activities which are charitable in nature, hence registration under section 12A(a) should be granted to it.

Summary

Issues:
Application for registration under section 12AA rejected due to running a school without necessary permission and missing information.

Analysis:
The appeal was filed against the rejection of the application for registration under section 12AA of the Income-tax Act, 1961, by the Commissioner of Income-tax. The Commissioner rejected the application citing the operation of a school without prior permission and missing information as reasons for refusal. The key contention was that the trust's main object is charitable in nature, primarily focusing on educational activities, which should qualify for registration despite certain operational issues. The appellant argued that even if the school was running without permission, it should not hinder the grant of registration as the primary objective of the trust is charitable. The Departmental representative supported the Commissioner's decision.

Upon review, the Appellate Tribunal found that the trust's main objective is charitable, emphasizing educational activities. The Tribunal noted that the existence of an educational institution was proven, and the belated filing of the return was in compliance with the law. The trust was deemed genuine, carrying out charitable educational activities as its primary function. Therefore, the Tribunal directed the Commissioner to grant registration under section 12AA to the assessee-trust. Consequently, the appeal of the assessee-trust was allowed, overturning the Commissioner's decision to reject the registration application.