2011 (6) TMI 1016 - AT - Income Tax

Summary

Issues involved: Denial of registration u/s.12AA of the Income Tax Act, 1961 by the Commissioner of Income Tax.

Summary:

Issue 1: Denial of registration u/s.12AA of the Act
The appeal was filed by the assessee challenging the denial of registration u/s.12AA of the Income Tax Act by the Commissioner of Income Tax. The Tribunal had previously remitted the matter back to the Commissioner for reconsideration. The Commissioner denied registration citing non-production of satisfactory documents and lack of evidence of surplus income utilization for charitable purposes as per Sections 11 to 13 of the Act and Sec.2(15). The Commissioner also referred to Circular No.762 for conducting inquiries regarding the trust's genuineness for registration u/s.12AA.

Issue 2: Nature of Trust's Activities
The assessee trust was created for educational activities without profit motive. The trust deed outlined various educational objectives and activities aimed at benefiting the public. The trust had started building construction during the relevant period, utilizing contributions, donations, and loans for the construction. The Commissioner contended that education was not a charitable activity falling within Sec.2(15) of the Act, while the assessee argued that there was no income diversion or violation of Sec.13.

Issue 3: Eligibility for Registration
The Tribunal examined the trust deed's educational objectives and activities, emphasizing the trust's focus on education without profit motive. It was noted that the trust's funds were used for constructing infrastructure necessary for educational pursuits. The Tribunal held that education itself is a charitable purpose, and the generation of surplus income does not disqualify a trust from registration u/s.12AA. Citing a previous court decision, the Tribunal concluded that the assessee trust was eligible for registration, overturning the Commissioner's decision and directing the grant of registration u/s.12AA.

Conclusion:
The Tribunal allowed the appeal of the assessee, quashing the Commissioner's order and directing the grant of registration u/s.12AA as sought by the trust.