2016 (10) TMI 209 - HC - Income Tax

Granting registration to the assessee under Section 12-AA - Held that - The applicant-assessee could not produce the books of accounts in respect of the expenses claimed by the applicant for verification of the activities of the Trust and, therefore, on the strength of the material available on record, the Commissioner of Income-tax concluded that the society is not carrying out any charitable activities. Other findings were also recorded in relation to the existence of the premises and the lease deed executed and further in view of various orders and judgments referred to came to the conclusion that on the tests applying on the strength of such judgments, the registration sought as a charitable institution could not be granted to the respondent-assessee. The Tribunal considered the appeal preferred by the assessee against the same and then recorded it s satisfaction to the effect that a perusal of the Trust Deed, the reply submitted by the assessee and the evidence relating to the activities in the shape of a detailed report that was available on record including certain news-items published was sufficient to construe that the activities of the trust were being carried out for charitable purposes. The order also records that the assessee has given the list of donors and also the terms of lease that was obtained for the premises to establish the educational institution for Vedic Studies. The Tribunal, therefore, itself assessed the material that was already there on record and came to the conclusion that the Commissioner of Income-tax had omitted to consider the same and based its findings on surmises and conjectures.

Summary

Issues:
- Correctness of ITAT judgment reversing Commissioner's order on registration under Section 12-AA of the Income-tax Act, 1961.

Analysis:
The High Court dealt with the appeal questioning the correctness of the ITAT judgment reversing the Commissioner's order denying registration under Section 12-AA of the Income-tax Act, 1961 to the assessee. The appellant argued that the Tribunal erred in deciding the issue itself without remitting it back to the Commissioner for further inquiry. The Commissioner had rejected the application citing the failure of the assessee to produce necessary documents like bills and vouchers to establish the genuineness of the Trust's activities. The High Court noted that the Commissioner concluded that the society was not engaged in charitable activities due to lack of proper documentation and other discrepancies related to premises and lease deed.

The Tribunal, however, upon reviewing the Trust Deed, the reply submitted by the assessee, and other evidence available on record, found that the activities of the trust were indeed charitable in nature. The Tribunal considered details such as the list of donors and the lease terms for the premises where educational activities were conducted for Vedic Studies. The Tribunal criticized the Commissioner for not adequately considering this existing material and basing conclusions on conjectures. The High Court agreed with the Tribunal's assessment, finding no substantial question of law in the matter and dismissing the appeal with observations supporting the Tribunal's decision.

In conclusion, the High Court upheld the ITAT judgment, emphasizing the importance of considering all available evidence in determining the charitable nature of activities conducted by a trust seeking registration under Section 12-AA of the Income-tax Act, 1961. The Court's analysis highlighted the significance of proper documentation and thorough examination of facts to establish eligibility for such registration, ultimately affirming the Tribunal's decision in favor of the assessee.