2013 (12) TMI 1262 - HC - Income Tax

Rejection of registration u/s 12AA - Held that - nothing has been brought on record, by the learned Commissioner of Income Tax before denying registration under section 12AA of the Act and approval under section 80G of the Act - Tribunal is a final fact finding authority and has found that - As per the aims and objectives of the trust, registration should be granted - Decided against Revenue.

Summary

Issues:
1. Appeal against rejection of registration under Section 12-AA and approval under Section 80G(5) of the Income Tax Act.
2. Discretion of the Commissioner in granting approval under section 80G(5).
3. Tribunal's authority as a final fact-finding body.
4. Justification of the order passed by the Commissioner.

Analysis:
The case involved appeals by the Department under Section 260A of the Income Tax Act against the rejection of registration and approval for an Educational Institution registered under the Societies Act. Initially rejected by the Commissioner, the matter was taken to the Tribunal, which set aside the order and directed reconsideration. Subsequently, in a second round, the registration and approval were again denied based on the institution's alleged lack of engagement in charitable activities. The Tribunal, after thorough examination, directed the Commissioner to grant registration and approval to the institution.

The Department argued that the institution was not genuinely engaged in charitable activities, citing Rule 11AA(3) of the Income Tax Rules, which gives discretion to the Commissioner to verify the genuineness of activities for approval under section 80G(5). However, the Tribunal found no evidence presented by the Commissioner to deny registration and approval, emphasizing that unless the institution's objects are not charitable or it is engaged in non-charitable activities, registration should not be denied. The Tribunal's decision was based on a detailed examination of the institution's aims, objects, and activities, leading to the direction for registration and approval.

The High Court upheld the Tribunal's decision, noting that the Tribunal is a final fact-finding authority. Citing a legal precedent, the Court emphasized that since the Tribunal had thoroughly examined the material and directed the grant of registration and approval, there was no valid reason to interfere with the Tribunal's order. Consequently, the appeals filed by the Department were dismissed at the admission stage, with the Court finding no substantial question of law arising from the Tribunal's decision.

In conclusion, the judgment reaffirmed the Tribunal's authority as a final fact-finding body and upheld its decision to grant registration and approval to the Educational Institution, emphasizing the lack of substantial legal issues warranting interference with the Tribunal's order.