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2015 (12) TMI 886 - AT - Income TaxRegistration u/s 12AA and approval u/s 80G denied - Held that - It was not proper on the part of the CIT to reject the application solely on the ground that the assessee has not commenced charitable activities as per its objects. When he has not expressed any doubt with regard to the charitable object of the assessee and when there is no other material before him to conclude that assessee s activities are not genuine, there is no reason to refuse registration u/s 12AA of the Act. The grant of registration u/s 12AA of the Act does not automatically entitle the assessee for exemption u/s 11 of the Act. The Assessing officer is empowered under the Act to look into both the genuineness of the activities and application of fund and in case of any violation of the provisions contained under section 11 to 13 of the Act, the assessee would not be entitled for exemption u/s 11 and would be subjected to tax. That being the case, in our view, refusal of grant of registration u/s 12AA of the Act is not justified solely on the ground that the assessee has not commenced its activities. We are supported in our view by the decisions relied upon by the assessee. In that view of the matter, we set aside the order of the CIT and direct him to grant registration u/s 12AA of the Act to the assessee. - Decided in favour of assessee.
Issues:
1. Rejection of application for registration u/s 12AA of the Income-Tax Act. 2. Rejection of application for approval u/s 80G of the Act. Issue 1: Rejection of application for registration u/s 12AA of the Income-Tax Act: The assessee, a company, applied for registration u/s 12AA of the Act seeking charitable status. The CIT rejected the application citing lack of substantial charitable activities. The CIT noted the company's limited activities, including tuition fee payments, book publishing, and donations, but found them insufficient. The CIT emphasized the need for genuine activities beyond the objects of the company for registration. The CIT observed the company's business activity of book sales as not aligned with its charitable objects. The CIT concluded that the company had not conducted worthwhile activities as per its main or ancillary objects, leading to rejection. The CIT's decision was based on the absence of significant charitable activities despite the company's existence. The CIT's refusal was challenged, arguing that the company had undertaken charitable activities, received donations, and planned infrastructure development. The Tribunal found the CIT's rejection unjustified, noting the company's charitable efforts, financial statements, and compliance with CIT's queries. The Tribunal emphasized that registration under section 12AA does not guarantee exemption under section 11, and the assessing officer can scrutinize activities for compliance. Relying on precedents, the Tribunal set aside the CIT's decision and directed registration u/s 12AA for the company. Issue 2: Rejection of application for approval u/s 80G of the Act: The second appeal concerned the rejection of the assessee's application for approval u/s 80G by the CIT following the rejection of registration u/s 12AA. As the Tribunal directed registration u/s 12AA, it overturned the CIT's decision on approval u/s 80G. The Tribunal instructed the CIT to grant approval u/s 80G to the assessee upon meeting the specified conditions under section 80G(5) of the Act. Consequently, both appeals of the assessee were allowed, with the Tribunal setting aside the rejection of both registration u/s 12AA and approval u/s 80G by the CIT. The Tribunal's decision aimed to ensure the assessee's eligibility for tax benefits under the Income-Tax Act by granting the necessary approvals as per the law.
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