2018 (2) TMI 1647 - AT - Income Tax

Registration u/s 12AA denied - proof of charitable activities - genuine activities - Held that - In the present case undoubtedly the objects of the assessee are charitable in nature and the assessee is running a college for achievement of its objects as given in the bye-laws. Therefore the registration cannot be denied by holding that the activities of the assessee were not genuine. In view of the above CIT (Exemptions) is directed to grant registration to the assessee u/s 12AA of the Act. - Decided in favour of assessee.

Summary

Issues:
Appeal against CIT (Exemptions) order u/s 12AA - Registration denial based on genuineness of activities - Objects of society charitable - CIT's refusal due to lack of evidence - Assessee running college - CIT's power to examine objects and activities - Judgment cited for CIT's powers - Appeal for registration grant.

Analysis:
The appeal was filed against the CIT (Exemptions) order denying registration u/s 12AA. The assessee, a non-profit association, sought registration for charitable activities under the Societies Registration Act, 1860. The CIT rejected the application citing insufficient evidence of the genuineness of activities despite the charitable nature of the society's objects. The assessee contended that financial statements and tax returns proved the operation of a college aligned with the society's objects. Citing a judgment, the assessee argued that the CIT had the authority to assess the society's objects and activities for registration purposes.

Upon review, the ITAT found that the society's objects were charitable, and the CIT did not question their nature. The CIT's rejection based on lack of evidence regarding activities was deemed unfounded as financial statements and tax returns demonstrated the operation of a college by the assessee. Referring to a judgment, the ITAT emphasized the CIT's duty to verify the genuineness of activities in line with the society's objects during registration. Given the charitable nature of the society's objects and the operation of a college, the ITAT directed the CIT to grant registration u/s 12AA.

The judgment highlighted that registration under Section 12AA did not automatically exempt income but allowed for exemption claims not possible without registration. The CIT's inquiry should focus on verifying genuine activities aligned with the society's objects. In this case, the college operation by the assessee for charitable purposes warranted registration approval. The ITAT allowed the appeal, directing the CIT to grant registration to the assessee under Section 12AA.

In conclusion, the ITAT ruled in favor of the assessee, emphasizing the CIT's obligation to assess the genuineness of activities concerning the society's charitable objects during registration under Section 12AA. The judgment underscored the importance of activities being in line with the objects for registration approval, ultimately granting the appeal and instructing the CIT to register the assessee under Section 12AA.