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2012 (12) TMI 818 - HC - Income TaxRegistration cancelled u/s 12-AA(3) - approval u/s 10(23C)(vi) had been denied to the assessee - ITAT restored registration - Held that - Exemption under Section 10(23C)(vi) can be claimed by an assessee without applying for registration under Section 12A as it is not required to fulfill the conditions mentioned under Section 11 while claiming exemption under Section 10(23C) (vi). Further in the order passed by the CIT, there is no whisper that the assessee has not fulfilled any of the conditions of the Section 11 for claiming it to be a charitable institution. He had solely relied on the order of the Chief Commissioner of Income Tax passed under Section 10(23C) (vi) while denying the exemption under the aforesaid sub-section. Therefore, the Tribunal had rightly restored the registration on the ground that in the Assessment Years 2004-05 and 2006-07 benefit of exemption/deduction under Section 11 was allowed to the respondent-assessee.
Issues:
1. Interpretation of Section 12AA(3) of the Income-tax Act regarding cancellation of registration. 2. Eligibility criteria for continued registration under Section 12A of the Act for a charitable institution. 3. Consideration of decisions relied upon by the Chief Commissioner of Income Tax in canceling registration of the assessee society. Analysis: Issue 1: Interpretation of Section 12AA(3) of the Income-tax Act regarding cancellation of registration The case involved a dispute where the Chief Commissioner of Income Tax canceled the registration granted to the respondent-assessee under Section 12A of the Act after finding that the institution was not solely established for educational purposes. The Income Tax Appellate Tribunal, Allahabad, allowed the appeal and restored the registration, emphasizing that the proceeding under Section 10(23C)(vi) of the Act cannot be the sole ground for cancellation under Section 12AA(3) of the Act. The Tribunal also considered the deduction under Section 11 of the Act, which was allowed to the respondent-assessee for certain assessment years, indicating compliance with the charitable institution requirements. Issue 2: Eligibility criteria for continued registration under Section 12A of the Act for a charitable institution The respondent-assessee claimed exemption under Section 10(23C)(vi) of the Act based on being a charitable institution solely for educational purposes. The Chief Commissioner of Income Tax denied this exemption, leading to the cancellation of registration under Section 12A of the Act. However, the High Court found that the respondent fulfilled the conditions for exemption under Section 10(23C)(vi) without needing to meet the requirements under Section 11 of the Act. The Court highlighted that the respondent had been granted benefits of exemption/deduction under Section 11 for specific assessment years, supporting the restoration of registration by the Tribunal. Issue 3: Consideration of decisions relied upon by the Chief Commissioner of Income Tax in canceling registration of the assessee society The High Court rejected the Revenue's argument that the institution ceased to be a charitable institution due to having additional objectives besides educational purposes. The Court emphasized that the institution's diverse objectives, including scientific education, character building, and promoting Indian culture, did not disqualify it from being considered charitable. The Court upheld the Tribunal's decision to restore the registration, concluding that the Tribunal had correctly considered the relevant provisions and previous orders while making its decision. In conclusion, the High Court upheld the decision of the Income Tax Appellate Tribunal, Allahabad, dismissing the appeal and affirming the restoration of registration for the respondent-assessee.
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