2022 (10) TMI 1248 - AT - Income Tax

Denial of registration u/s 12AA - appellant trust is engaged in imparting education by running two institutions namely Guru Govind Singh Collection Education and Swami Dayanand Sarswati Educational Institute and offering B.Ed., BEID, DEIED, B.Pharma courses - HELD THAT - Bench is of considered opinion that grant of recognition and its extension is sufficient compliance of the laws material for achieving its objects and beyond that no inquiry is required. It is for the concerned statutory authorities to see that the conditions of accreditation of the courses are complied. There is no requirement of any supporting documents/ bills/ vouchers in regard to educational activity being run when the authorities responsible for regulating the education of that stream or course examine eligibility to run the courses and that the same are run in accordance with law. Appeal of assessee is allowed with direction that subject to the Ld. CIT(E) being satisfied about extension of the accreditation of the B.Ed. course beyond 30.06.2018, vide letter dated 10.05.2018 issued by Mahatma Jyoti Phule Rohilkhand University, Bareilly, the CIT(E) shall allow the application of the assessee. An opportunity of hearing for filing relevant evidence in that context be given to the assessee. Appeal of assessee is allowed for statistical purposes.

Summary

Issues:
Challenge to order dismissing registration application under section 12AA of the Income Tax Act, 1961.

Analysis:
The appellant, a trust engaged in education, filed for registration under section 12A(1) of the Act, which was dismissed by the CIT (Exemption), Lucknow. The dismissal was based on unsatisfactory replies to a detailed questionnaire, particularly regarding student enrollment under the Right to Education Act and approvals/permissions for charitable activities. The appellant appealed, citing errors in the CIT's findings and lack of adverse findings on its charitable activities. The appellant argued that the institution was running approved courses, and the lack of renewal for one course should not affect the registration. The appellant also highlighted past acceptances under section 143(3) and emphasized the charitable nature of its educational activities.

The key issue was the sustainability of the CIT's findings, which questioned the renewal of affiliation certificates for the B.Ed. course and the lack of supportive documents to verify the activities' genuineness. The appellant contended that the CIT's observations were factually incorrect and vague. Reference was made to a judgment by the Agra Tribunal to support the argument that inquiries should focus on compliance with laws essential for fulfilling the trust's objects rather than on approvals or permissions.

During the hearing, the appellant presented evidence of an extension for the B.Ed. course accreditation beyond the expiration date mentioned by the CIT. The Bench acknowledged the accreditation and extension as compliance with essential laws for achieving the trust's objects. It emphasized that no further inquiry or additional supporting documents were necessary when statutory authorities overseeing education ensured compliance with regulations. Consequently, the appeal was allowed, with a direction for the CIT to consider the accreditation extension and grant registration if satisfied, providing the appellant an opportunity to submit relevant evidence.

In conclusion, the appellant's appeal challenging the dismissal of its registration application under section 12AA was allowed, subject to the CIT's satisfaction regarding the B.Ed. course accreditation extension. The judgment highlighted the importance of compliance with essential laws for charitable activities and the limited scope of inquiry required for registration under the Act.