2023 (5) TMI 1365 - AT - Income Tax

Rejecting grant of registration u/s 10(23C)(vi) - PCIT noticed that the rights/proprietorship of institutes properties are restricted to the family itself and not for enduring benefit to the general public and as the properties and rights to run the institutes would be restricted to the members of the family and denied the registration to the applicant u/s 12AA - HELD THAT - PCIT had denied the registration to the applicants u/s 12AA, although the appellants sought for registration u/s10(23C)(vi) - Meaning there by, there was a fundamental error in the impugned order of the Ld. PCIT, as the material issue of grant of registration u/s10(23C)(vi) of the Income Tax Act, 1961 is remained unaddressed in the case of both the appellant assessees. We consider it deem fit to restore back the matter to the file of the Ld. CIT(A) to adjudicate the captioned appeals afresh on the issue of grant of registration u/s10(23C)(vi) of the Income Tax Act, 1961, after considering the written submission and evidences filed on record and may be filed before him during the fresh proceedings after granting sufficient opportunity of being heard to the assessee. PCIT is further directed to consider the fact that both the appellant assessee do not have independent PAN numbers and are using the PAN of the S.M.D.R.S.D. College Society, Pathankot which was registered under the Societies Registration Act, 1860 in 1979 vide Registration No.34 of 1979-80. Since, these M/s S.M.D.R.S.D. College Education and M/s SMDRSD Collegiate Senior Secondary School running under the management of the S.M.D.R.S.D. College Society, Pathankot and using its PAN, and hence whether the appellant assesses can be treated as an independent entity for the purpose of registration u/s10(23C)(vi) of the Income Tax Act, 1961, in the absence of PAN number. No doubt, the appellant assessees shall cooperate in the fresh proceeding before the Ld. PCIT registration u/s10(23C)(vi) of the Income Tax Act, 1961.Appeals filed by the assessees are allowed for statistical purposes.

Summary

Issues:
Grant of registration under section 10(23C)(vi) of the Income Tax Act, 1961.

Detailed Analysis:

1. Background and Grounds of Appeal:
The appeals were filed against the order of the Ld. Commissioner of Income Tax (Exemptions) rejecting the application for registration under section 10(23C)(vi) of the Income Tax Act, 1961. The appellant society, registered under the Societies Registration Act, 1860, contended that the rejection was unjustified and requested a remand for further consideration with additional evidence.

2. Contentions of the Appellant:
The appellant society, comprising educational institutions, argued for registration under section 10(23C)(vi). They highlighted the history and charitable activities of the society, including financial aid to students, and requested an opportunity to respond to objections raised by the Commissioner.

3. Opposing Arguments:
The Departmental Representative supported the order, stating that the appellant's activities did not align with public benefit and raised concerns about the use of a common PAN number for different entities under the society. However, they did not object to a reconsideration by the Commissioner.

4. Analysis by the Tribunal:
The Tribunal reviewed the submissions, the impugned order, and relevant provisions. It noted the restrictions on property transfer and management within the family, indicating a lack of enduring benefit to the public. Citing a precedent, the Tribunal held that registration cannot be granted to a trust controlled by a single family, as in this case. The denial of registration under section 12AA instead of section 10(23C)(vi) was deemed a fundamental error.

5. Decision and Directions:
The Tribunal concluded that the issue of registration under section 10(23C)(vi) had not been properly addressed by the Commissioner. Therefore, it directed a fresh adjudication by the Commissioner, considering all submissions and evidence. The Commissioner was instructed to evaluate the independence of the appellant entities, lacking individual PAN numbers. The appellants were required to cooperate in the proceedings.

6. Outcome:
Both appeals were allowed for statistical purposes, and the matter was remanded to the Commissioner for a fresh decision on the grant of registration under section 10(23C)(vi) of the Income Tax Act, 1961.

This detailed analysis reflects the Tribunal's thorough review of the grounds, arguments, and legal provisions involved in the case, leading to the decision to remand the matter for reconsideration based on the correct section of the Income Tax Act.