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2009 (7) TMI 180 - AT - Income TaxRegistration u/s. 12A refused - genuineness of the loans and the capacity of the donors for providing the loans not proved - CIT held that the assessee society was a closed organization held by family members and close relatives and was not charitable - Whether the CIT has rightly declined grant of registration to the assessee society? - HELD THAT - The assessee did not make any payments attracting the provisions of s. 13(3). It did not incur any expenditure on establishment and on administration. Apropos the unsecured loans the assessee provided confirmations from all the donees along with details including their PANs. True the management is by the members of the same family but this does not act in any manner detrimental to the assessee who have registered the society. It also does not matter that some of the members are practising chartered accountants. In response to the questionnaire issued to the assessee the assessee vide reply furnished all the requisite information. In Sanjeevamma Hanumanthe Gowda Charitable Trust 2006 (3) TMI 91 - KARNATAKA HIGH COURT it has been held that the authorities have to satisfy genuineness of the activities of the trust or the institution and how the income derived from trust property is applied to charitable or religious purpose and the nature of the activities by which the income derived by the trust. In Medical Accident Prevention Society 2004 (9) TMI 79 - KERALA HIGH COURT it has been held that the relevant consideration while considering the application under s. 12A of the Act is that the trust of the institution to be a charitable one having charitable purposes. In Fifth Generation Education Society 1990 (5) TMI 38 - ALLAHABAD HIGH COURT it has been held that while considering the application under s. 12A of the Act the CIT is not required to examine application of income of trust; he has to see only whether objects of trust are charitable or not objects of general trust do not cease to be charitable no activity need be carried on by society for obtaining registration. In the present case the objects of the assessee society are clearly charitable being for the purpose of education which is covered under the definition of charitable purpose within the meaning of s. 2(15). The observations made by the learned CIT while rejecting the assessee s application for registration as discussed hereinabove do not make the assessee any the less entitled for registration. In keeping with the Dream Land Educational Trust 2007 (4) TMI 661 - ITAT AMRITSAR and other plethora of case law the CIT was only required to satisfy himself about the objects of the trust and the genuineness of its activities and no further. Assessee appeal allowed.
Issues Involved:
1. Refusal to grant registration under Section 12A of the Income Tax Act, 1961. 2. Jurisdiction of the CIT in refusing registration. 3. Examination of the objects and activities of the society for charitable purposes. Issue-wise Detailed Analysis: 1. Refusal to Grant Registration Under Section 12A of the Income Tax Act, 1961: The assessee submitted an application for registration under Section 12A of the IT Act, 1961, accompanied by necessary documents. The CIT refused registration, stating that the objects of the society were general and not specific in nature, particularly pointing out that objects like establishing libraries, publishing books, and arranging seminars could not be considered charitable without defined beneficiaries. The CIT also noted that the society's activities included non-educational purposes and that the organizational structure vested full power in the hands of promoter members, who were close relatives, making it a closed family organization. 2. Jurisdiction of the CIT in Refusing Registration: The learned counsel for the assessee contended that the CIT exceeded his jurisdiction by refusing registration based on the control of the society being in the hands of family members and close relatives. The counsel argued that the CIT's observations were based on suspicion and conjecture, and that the assessee had complied with all requirements under Section 12A of the Act. The CIT's role was to examine the objects and genuineness of the activities of the trust, not to delve into the control or membership structure. 3. Examination of the Objects and Activities of the Society for Charitable Purposes: The Tribunal examined the objects of the society, which included establishing educational institutions, providing scholarships, establishing libraries, and assisting schools for the blind and deaf. These objects were found to be specific and aligned with the definition of "charitable purpose" under Section 2(15) of the IT Act. The Tribunal noted that education is a recognized charitable purpose and that the society's activities, such as acquiring land for educational institutions and obtaining necessary approvals, supported its charitable intent. The Tribunal referenced various case laws, including "Acharya Sewa Niyas Uttaranchal vs. CIT" and "Sanjeevamma Hanumanthe Gowda Charitable Trust vs. Director of IT (Exemptions)," which emphasized that the CIT's jurisdiction is limited to examining the objects and genuineness of the trust's activities. The Tribunal found that the CIT's refusal based on the family control of the society was not justified, as the objects were clearly charitable and the activities genuine. Conclusion: The Tribunal concluded that the assessee's objects were charitable, being primarily for educational purposes, and that the CIT had overstepped his jurisdiction by refusing registration based on the control structure of the society. The Tribunal directed the CIT to grant registration to the assessee under Section 12A of the IT Act. Result: The appeal filed by the assessee was allowed, and the CIT was directed to grant registration under Section 12A.
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