2015 (11) TMI 1124 - AT - Income Tax

Registration under Section 12AA denied - depreciation claimed on the land - Held that - registration under Section 12AA of the Act was denied to the appellant society solely on the ground that the appellant society had been claiming depreciation on the land which is not permissible under the Income Tax Act. In our considered opinion, this is not relevant consideration at the time of grant of registration. It is the issue to be examined during the course of assessment proceedings after grant of registration under Section 12AA of the Act. In this connection, it is relevant to mention that one of us (Hon ble Accountant Member) is author of the order in the case of Paramount Public School Education Society Vs. CIT, 2015 (11) TMI 811 - ITAT DELHI wherein it was held that the registration cannot be denied by examining the issues which are relevant for the assessments. Also we direct the ld. Commissioner of Income Tax (Exemptions), Chandigarh, to grant approval under Section 80G of the Act - Decided in favour of assessee.

Summary

Issues Involved:
1. Denial of registration under Section 12AA of the Income-tax Act, 1961.
2. Denial of approval under Section 80G of the Income-tax Act, 1961.

Issue-wise Detailed Analysis:

1. Denial of Registration under Section 12AA of the Income-tax Act, 1961:

The appellant society, registered under the Societies and Registration Act on 8th September 1999, applied for registration under Section 12AA of the Income-tax Act on 07.10.2014. The Commissioner of Income Tax (Exemptions), Chandigarh, rejected the application, citing that the society had been claiming depreciation on land, which is not permissible under the Income Tax Act. The appellant society contended that its objects are purely charitable and that it complied with all conditions required for registration under Section 12AA. The Tribunal found that the reason for rejection-claiming depreciation on land-is not a relevant consideration at the time of granting registration. The Tribunal referenced the case of Paramount Public School Education Society Vs. CIT, where it was held that issues relevant for assessments should not be examined during the grant of registration. The Tribunal emphasized that the Commissioner should only examine whether the objects of the institution are charitable. Since the Commissioner did not find any non-charitable objects, the Tribunal directed the Commissioner to grant registration to the appellant society within 30 days.

2. Denial of Approval under Section 80G of the Income-tax Act, 1961:

The appellant society also appealed against the denial of approval under Section 80G, which was based on the same grounds as the denial of registration under Section 12AA. Since the Tribunal had already directed the Commissioner to grant registration under Section 12AA, it similarly directed the Commissioner to grant approval under Section 80G.

Conclusion:

The Tribunal allowed both appeals filed by the assessee. The Commissioner of Income Tax (Exemptions), Chandigarh, was directed to grant registration under Section 12AA and approval under Section 80G of the Income-tax Act, 1961. The decision was pronounced in the open court on 4th November 2015.