2015 (11) TMI 811 - AT - Income Tax

Eligibility for grant of registration u/s 12AA - CIT(A) rejected the registration under Section 12AA of the Act primarily on the ground that the jurisdiction of the case does not vest with him and the proviso to Section 2(15) of the Act is applicable and the assessee society failed to furnish full details of the corpus fund - Held that - It is undisputed fact that the appellant society filed the returns of income with the Income Tax Officer (Exemption), Rohtak. We also find from the paper book that the Deputy Commissioner of Income Tax, Rohtak, Circle Rohtak, had issued scrutiny notice under Section 143(2) of the Act dated 22nd September, 2014 for the assessment year 2013-14. Therefore, it is the Commissioner of the Income Tax, Rohtak, who had valid jurisdiction for the appellant society. The jurisdiction of Commissioner of Income Tax is always determined with reference to the situs of the Assessing Officer. In the circumstances, the first objection raised by the CIT is rejected and it is worthwhile to mention here that the learned CIT(DR) fairly conceded before us that this objection does not hold water. Commissioner is only entitled to examine whether the objects of the institutions are charitable or not. Once the objects of the institutions are found to be charitable, the Commissioner has no option, but to grant registration. In the present case the Commissioner has not found that any objects of the trust are not charitable in nature. The objections raised by the CIT that the appellant had failed to comply with the direction of the Commissioner of Income, Rohtak to file the details of donors of corpus funds and the institution was collecting the fees from the students are not relevant considerations at the time of grant of registration under Section 12AA of the Act. These are the issues to be examined during the assessment proceedings after grant of the registration under section 12AA of the Act. Therefore, we direct the Commissioner of Income Tax, Rohtak, to grant registration to the appellant society within a period of 30 days from the date of receipt of this order. Accordingly, the grounds of appeal filed by the appellant society are allowed in full. - Decided in favour of assessee.

Summary

Issues involved:
1. Denial of exemption under Section 12AA of the Income-tax Act, 1961 by the Commissioner of Income Tax, Rohtak.
2. Jurisdiction of the Commissioner of Income Tax in rejecting the application for registration under Section 12AA.
3. Compliance with the direction to furnish details of donors of corpus funds for registration under Section 12AA.

Analysis:
Issue 1: The appellant society's appeal was against the denial of exemption under Section 12AA of the Income-tax Act by the Commissioner of Income Tax, Rohtak. The society filed for registration under Section 12AA with all required documents, but the Commissioner rejected it citing jurisdictional issues and non-disclosure of corpus fund details. The appellant contended that the Commissioner overstepped by demanding corpus fund details and argued for registration based solely on the institution's objectives, citing relevant case laws.

Issue 2: Regarding the jurisdiction of the Commissioner, it was established that the Commissioner of Income Tax, Rohtak, had valid jurisdiction over the appellant society as evidenced by the filing of returns with the Income Tax Officer (Exemption), Rohtak. The objection raised by the Commissioner on jurisdiction was dismissed, affirming that the Commissioner had the authority to handle the registration application under Section 12AA.

Issue 3: The Commissioner's insistence on the disclosure of corpus fund donors was challenged by the appellant, supported by legal precedents emphasizing that at the registration stage under Section 12AA, the focus should be on the institution's charitable objectives, not on income application. The judgments highlighted that the genuineness of the institution's activities determines registration eligibility, with income scrutiny reserved for assessment proceedings post-registration. Consequently, the Tribunal directed the Commissioner to grant registration to the appellant society within 30 days, emphasizing that compliance with donor details was not a prerequisite for Section 12AA registration.

In conclusion, the Tribunal allowed the appeal, directing the Commissioner to grant registration to the appellant society, emphasizing that registration under Section 12AA should primarily assess the charitable nature of the institution's objectives, with income-related scrutiny reserved for subsequent assessment proceedings.