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Issues involved: Challenge to non-granting of registration under s. 12AA of the Act by learned CIT.
Summary: The appeal challenges the refusal of registration under s. 12AA of the Act to Modern Defence Shikshan Sansthan by the learned CIT. The reason cited was the institution's use of a building owned by close relatives of one of the trustees. The applicant society clarified that the building owners had no direct association with the trust's key members and that the rent paid was below the standard rate in the area. The tribunal noted that the CIT's consideration of provisions u/s 13(1)(c)(i), 13(1)(c)(ii), and 13(3)(b) at the registration stage was incorrect. It emphasized that until registration is granted, the issue of fund application is irrelevant. Since the aims and objects of the society were not in question, the refusal based on fund application was deemed unjustified. The tribunal directed the CIT to grant registration to the society under s. 12AA. As a result, the appeal of the assessee was allowed.
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