2012 (10) TMI 1182 - HC - Income Tax

Summary

Issues Involved:
The issues involved in the judgment are:
1. Whether the cancellation of registration u/s 12-AA can be justified based on an order passed u/s 10(23C)(vi) of the Income-tax Act?
2. Whether the cancellation of registration u/s 12A was justified due to the assessee not engaging in charitable activities?
3. Whether the Tribunal erred in not considering relevant decisions while cancelling the registration of the assessee society?

Issue 1:
The appeal was filed u/s 260-A of the Income-tax Act against the order of the Income Tax Appellate Tribunal. The Tribunal had concluded that registration u/s 12-AA cannot be cancelled based on an order u/s 10(23C)(vi) by the Chief Commissioner, as these are independent proceedings. The respondent was granted registration u/s 12A as a charitable institution, but the claim for exemption u/s 10(23C)(vi) was disallowed by the Chief Commissioner. The Commissioner of Income Tax then cancelled the registration u/s 12A. The Tribunal restored the registration, stating that the proceedings u/s 10(23C)(vi) are separate and cannot be the sole ground for cancellation of registration u/s 12A.

Issue 2:
The Tribunal found that the assessee had other objects besides educational purposes, such as promoting Indian culture and cottage industries. The Tribunal held that the assessee was entitled to claim exemption u/s 10(23C)(vi) without needing registration u/s 12A. The Tribunal also noted that the assessee had been allowed deductions under Section 11 for certain assessment years, indicating compliance with charitable activities.

Issue 3:
The Tribunal did not consider the decisions relied upon by the CIT while cancelling the registration. However, the High Court upheld the Tribunal's decision, stating that the CIT did not mention any non-compliance with Section 11 conditions for charitable institutions. The High Court agreed that the Tribunal rightly restored the registration based on the allowed exemptions and deductions under Section 11 for the relevant assessment years.

In conclusion, the High Court found no error in the Tribunal's decision and dismissed the appeal.