2015 (11) TMI 479 - AT - Income Tax

Registration u/s 12A denied - fee collected from the students used for carrying out the objects of the society - Held that - There cannot be any doubt that one of the objects of the society is to impart the education and for achieving that object assessee has established an educational institution and imparting the education. Therefore, there cannot be any doubt with regard to charitable object of the society. So far as the genuineness of its activities are concerned, the CIT(A) has not brought any specific instance which could prove that the activities of the society are not genuine. So far as application for registration u/s 12A of of the Act by the assessee dated 14.6.2013 is concerned, it is open to the assessee to make an application as per law. There is no time frame fixed by the Act that the assessee society has to make an application immediately when the society is constituted. The Commissioner has to examine the objects of the society and genuineness and accordingly registration u/s 12AA of the Act has to be granted. Therefore, once the conditions of section 12A of the Act are satisfied, the CIT(A) cannot deny the registration on extraneous conditions. - Decided in favour of assessee.

Issues Involved:
1. Condonation of delay in filing the appeal.
2. Denial of registration under Section 12A of the Income-Tax Act.
3. Examination of the society's objects and genuineness of activities.
4. Collection of fees and its impact on the charitable status.
5. Compliance with other statutory requirements like registration under Section 10(23C) of the Income-Tax Act.
6. Examination of unsecured loans and their impact on registration.
7. Amendments in the Memorandum of Association and their relevance to registration.
8. Precedent case laws and their applicability.

Detailed Analysis:

1. Condonation of Delay in Filing the Appeal:
The appeal by the assessee was delayed by 26 days. The assessee's counsel argued that the delay was unintentional and beyond control. The Tribunal found the reason for the delay justified and genuine, thus condoned the delay.

2. Denial of Registration under Section 12A of the Income-Tax Act:
The assessee society, "Srinivasa Educational Society," applied for registration under Section 12A. The Commissioner of Income-Tax (CIT) denied the application, citing several reasons, including the society's commercial activities, failure to register under Section 10(23C), and issues with unsecured loans and amendments in the Memorandum of Association.

3. Examination of the Society's Objects and Genuineness of Activities:
The Tribunal noted that the society's primary objective was to impart education and run various educational institutions. The CIT's rejection was based on the collection of full fees from students, which was deemed a commercial activity. However, the Tribunal found no evidence to support this claim and stated that collecting fees does not amount to a commercial activity if it is used for educational purposes.

4. Collection of Fees and Its Impact on the Charitable Status:
The CIT argued that the society's collection of full fees from students indicated a commercial activity. The Tribunal disagreed, stating that the society's fee collection was not higher than prescribed by authorities and was used to further educational objectives. Thus, it did not amount to a commercial activity.

5. Compliance with Other Statutory Requirements:
The CIT also noted that the society had not registered under Section 10(23C) despite exceeding the Rs. 1 crore receipt threshold. The Tribunal clarified that registration under Section 10(23C) is not a prerequisite for Section 12A registration.

6. Examination of Unsecured Loans:
The CIT raised concerns about unsecured loans and their confirmation. The Tribunal found that the funds advanced by the promoters for building construction were already assessed under Section 143(3) of the Act for the assessment year 2011-12. Hence, it was not a valid ground for denying registration under Section 12A.

7. Amendments in the Memorandum of Association:
The CIT pointed out repeated amendments in the Memorandum of Association. The Tribunal reviewed the amendments and found them irrelevant to the registration under Section 12A, as they did not affect the society's charitable objectives.

8. Precedent Case Laws and Their Applicability:
The assessee cited several case laws supporting their claim for registration under Section 12A, emphasizing that the CIT should only consider the objects and genuineness of activities. The Tribunal agreed with the assessee's reliance on these precedents, noting that the CIT overstepped by considering extraneous factors.

Conclusion:
The Tribunal concluded that the CIT's rejection of the registration under Section 12A was based on flimsy grounds. It directed the CIT to grant the registration, emphasizing that the society's activities were genuinely charitable and aligned with its objectives. The appeal was allowed, quashing the CIT's order.

← Previous Next →