2017 (4) TMI 608 - AT - Income Tax

Grant of registration under section 12AA denied - genuine educational society - non-furnishing of agreement between Heralds of Good News and the assessee - Held that - As gone through the objects of the assessee-society and find that assessee-society mainly existed to carry the educational activities particularly in rural under developed area. The Heralds of Good News society is running educational institutions at Yernagudem by resolution dated 05/04/2009 three schools namely St.Joseph E.M. Private School St. Joseph E.M. Elementary School & St. Joseph E.M. High School have been transferred to the assessee-society i.e. M/s. St.Paul Province Society Yernagudem West Godavari District. The assessee has filed assessment order of Heralds of Good News wherein it is declared NIL income by claiming exemption. It is clear from the assessment order that Heralds of Good News school enjoying registration under section 12A of the Act. The Assessing Officer has clearly mentioned in the assessment order that the society is registered under section 12AA in the Assessment Year 2006-07. The assessee also filed income tax returns of the Heralds of Good News educational society income & expenditure and also receipts upto 31/03/2010. The assessee also filed its details of opening balance receipts payments and balance in school during the year 2011-12 and also filed balance sheet before the Commissioner of Income Tax. CIT-A is of the opinion that the assessee-society is not a genuine society. The order passed by the CIT is without looking into the objects of the society and without any basis. The CIT is not able to point out what is the violation committed by the assessee-society and how the society is not eligible for grant of registration under section 12AA of the Act. Therefore the assessee is eligible for registration under section 12AA. - Decided in favour of assessee.

Summary

Issues: Delay in filing appeal, rejection of registration under section 12AA

Delay in filing appeal:
The appeal was delayed by 18 days, and the assessee filed an application for condonation of delay, which was not objected by the Revenue. The assessee provided sufficient cause for the delay, leading to the Tribunal condoning the delay and admitting the appeal.

Rejection of registration under section 12AA:
The assessee, a society registered under the Registration of Societies Act, applied for registration under section 12AA of the Act. The Commissioner of Income Tax rejected the application citing mixed religious and charitable objects in the memorandum. The ITAT directed the Commissioner to reconsider the application. However, the Commissioner rejected the registration again, stating the society failed to provide an agreement with another society and raised doubts about the genuineness of the activities. The Tribunal found that the society primarily existed for educational activities in a rural area and had received schools from another society for administrative convenience. Despite providing necessary details and documents, the Commissioner rejected the registration unjustly. The Tribunal, after reviewing the objects and details submitted, granted registration under section 12AA to the society.

Conclusion:
The Tribunal allowed the appeal, granting registration under section 12AA to the assessee society. The decision was based on the genuine educational activities of the society and the unjust rejection by the Commissioner of Income Tax without valid reasons.