2011 (9) TMI 1205 - AT - Income Tax

Summary

Issues involved: Application for registration u/s 12AA of the Income-tax Act, 1961 rejected by the Commissioner of Income-tax-II at Madurai.

The judgment pertains to an appeal filed by the assessee against the rejection of their application for registration under section 12AA of the Income-tax Act, 1961 by the Commissioner of Income-tax-II at Madurai. The assessee, a trust engaged in educational activities through a Teachers Training Institute, had its initial application rejected and subsequently filed a fresh application addressing the identified defects. The main grounds for rejection included the failure to appeal against the initial rejection and the consistent generation of profits, raising doubts about the charitable nature of the activities.

Upon hearing both parties and examining the case, it was noted that the assessee solely operated a Teachers Training College recognized by the State Government and University, charging fees as per regulations. The Commissioner of Income-tax did not allege any additional activities beyond education, a recognized charitable pursuit. The judgment emphasized that the mere generation of surplus does not negate charitable status unless the surplus is misapplied or profit motives are proven. As no such violations were evident, the rejection of the registration application was deemed unjustified. Consequently, the Commissioner of Income-tax was directed to grant registration under section 12AA of the Income-tax Act, 1961.

In conclusion, the appeal by the assessee was allowed, and the order for registration under section 12AA was pronounced in an open court session on September 19, 2011, in Chennai.