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2023 (5) TMI 1224 - HC - Income TaxExemption u/s 11 - registration u/s 12AA was refused by holding that the assessee institution did not satisfy the registering authority with the genuineness of its activities and it was held that the assessee Trust had generated surplus (profit) out of their total receipts - ITAT grant registration to the assessee as applied by the assessee - HELD THAT - As decided in M/s Queen s Educational Society 2015 (3) TMI 619 - SUPREME COURT as per 13th proviso to Section 10(23C) is of great importance in that assessing authorities must continuously monitor from assessment year to assessment year whether such institutions continue to apply their income and invest or deposit their funds in accordance with the law laid down. Further, it is of great importance that the activities of such institutions be looked at carefully. If they are not genuine, or are not being carried out in accordance with all or any of the conditions subject to which approval has been given, such approval and exemption must forthwith be withdrawn. All these cases are disposed of making it clear that revenue is at liberty to pass fresh orders if such necessity is felt after taking into consideration the various provisions of law contained in Section 10(23C) read with section 11 of the Income Tax Act. In view of the judgment passed by the Supreme Court referred hereinabove, the issue in hand is squarely covered. No substantial question of law arises for consideration as the Income Tax Appellate Tribunal, Amritsar while allowing the appeal has considered all the aspects.
Issues involved:
The refusal of registration to an assessee Trust under Section 12AA(1)(b) of the Income Tax Act, 1961 based on the genuineness of activities and generation of surplus profit, leading to an appeal before the Income Tax Appellate Tribunal, Amritsar, and subsequent appeal by the Commissioner of Income Tax, J&K, Jammu under Section 260A of the Income Tax Act, 1961. Issue 1: Refusal of Registration by Commissioner of Income Tax, J&K, Jammu: The Commissioner refused registration to the Trust citing lack of genuineness in activities and generation of surplus profit, applying Section 12(AA)(1)(b)(ii) of the Income Tax Act, 1961. The refusal was based on the belief that the surplus profits were not in line with the provisions of Section 12AA, leading to the denial of registration to the Trust. Issue 2: Appeal before Income Tax Appellate Tribunal, Amritsar: The assessee Trust appealed the Commissioner's decision before the Income Tax Appellate Tribunal, Amritsar, which allowed the appeal. The Tribunal found no evidence to support the Commissioner's claims of the fees structure being non-genuine or against norms, or the activities being non-charitable. The Tribunal directed the Commissioner to grant registration to the Trust, highlighting the proper utilization of funds for educational activities. Issue 3: Commissioner's Appeal under Section 260A of the Income Tax Act, 1961: The Commissioner of Income Tax, J&K, Jammu filed an appeal under Section 260A of the Income Tax Act, 1961 against the Tribunal's decision. The Commissioner's appeal was based on the grounds that the Trust had not satisfied with the genuineness of its activities, and the surplus profits were not in accordance with the intent of Section 12AA. However, the Supreme Court judgment in a related case supported the Tribunal's decision, leading to the dismissal of the Commissioner's appeal. In conclusion, the High Court dismissed the appeal, stating that the issue was covered by the Supreme Court judgment, and no substantial question of law arose for consideration as the Tribunal had already examined all aspects. The Court found no merit in the appeal and upheld the Tribunal's decision to grant registration to the Trust, emphasizing the importance of monitoring educational institutions for compliance with the law to ensure they exist solely for educational purposes and not for profit.
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