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2020 (4) TMI 559 - AT - Income TaxExemption u/s 11 - denying registration to the assessee u/s 12A read with Section 12AA - assessee had paid salary partly through Bank and partly in cash, but had not deducted tax at source in case of any of the employees - HELD THAT - Not in dispute that the assessee is engaged in the activity of education which qualifies as charitable purpose within the meaning of Section 2(15) - there is no reference in the impugned order dated 27.09.2016 of Ld. CIT(E), whatsoever, to any facts and circumstances which can be said to be violative of provision of Section 12A read with Section 12AA - No materials have been brought to our attention from the Revenue s side either to show how any of the provision under Section 12A read with 12AA are not fulfilled by the assessee - we agree with the contention of the assessee that it is of no relevance, for the purposes of registration under Section 12A read with Section 12AA of I.T. Act, whether or not tax was deducted at source from salary of the staff. We also agree with the contentions of assessee that, it is of no relevance, for registration under Section 12A read with Section 12AA of I.T. Act, if salary has been paid partly in cash and partly by cheque. We also agree with the contention of the Ld. Counsel for assessee that there is nothing in law to prevent the assessee from applying for registration under Section 12A read with Section 12AA at a later stage, if such registration was not sought for by the assessee in earlier years. Assessee s application for registration under Section 12A read with Section 12AA of I.T. Act cannot be rejected by Ld. CIT(E) relying on irrelevant considerations, merely on the basis of an unsustainable conclusion. - Decided in favour of assessee.
Issues:
1. Denial of registration under Section 12A read with Section 12AA of the Income Tax Act. Analysis: Issue 1: Denial of registration under Section 12A read with Section 12AA of the Income Tax Act The appeal was filed by the Assessee against the order of the Learned Commissioner of Income Tax (Exemption) Chandigarh denying registration under Section 12A read with Section 12AA of the Income Tax Act. The Assessee had initially filed as a business entity but later sought registration as a charitable entity engaged in educational activities. The denial was based on the grounds that the Assessee had not deducted tax at source from staff salaries, paid salaries partly in cash, and had a change of mind regarding registration. The Assessee argued that these factors were irrelevant for registration under Section 12A and 12AA and that the focus should be on fulfilling the conditions prescribed by the Act. The Income Tax Appellate Tribunal (ITAT) found that the Assessee's activities qualified as charitable purposes under the Act and that the denial of registration was based on irrelevant considerations. The ITAT held that the denial lacked a proper justification and a speaking order, which is necessary for rejecting registration under Section 12A and 12AA. Therefore, the ITAT directed the Commissioner to grant registration to the Assessee under the mentioned sections. The appeal filed by the Assessee was allowed, and the order was pronounced on 10/02/2020.
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