2012 (10) TMI 390 - HC - Income Tax

Charitable purpose - registration u/s 12A - Genuineness of Activities of Society - Held that - The object of the Trust so long as it fits into any one of the objects as mentioned under Section 2(15) of the Act, the first requirement is fulfilled and the second requirement will be met by the genuineness of the activities of such institutions are also to the satisfaction of the authority. We do not find any recording by the Registering Authority about the lack of genuineness of activities, but the Registering Authority did notice some shortcomings on the part of the Society, in the manner of its functioning. The shortcomings by themselves cannot be put on par with lack of genuineness of the Society - decided in favour of assessee.

Summary

Issues:
1. Appeal by the Revenue under Section 260-A of the Income Tax Act, 1961.
2. Denial of registration under Section 12-A of the Act to the assessee.
3. Examination of the reasons for denial of registration by the Registering Authority.
4. Tribunal's decision to grant registration to the assessee.
5. Appeal against the Tribunal's decision by the Revenue.
6. Admissibility of the appeal to examine various questions raised by the Revenue.

Analysis:

1. The appeal was filed by the Revenue challenging the order passed by the Appellate Tribunal, which directed the Registering Authority to grant registration to the assessee under Section 12-A of the Income Tax Act, 1961. The Tribunal found that the reasons for denial of registration by the Registering Authority were not justifiable and allowed the appeal of the assessee.

2. The assessee, a registered Society running educational institutions, had applied for exemption under Sections 11 and 12 of the Act after the deletion of Section 10(22) of the Act. Registration under Section 12-A is mandatory for claiming such exemptions.

3. The Registering Authority denied registration to the assessee based on concerns about the manner of conduct of the Society, alleging misuse of funds for personal benefit. However, the Authority did not provide specific reasons for the rejection.

4. The Tribunal, upon review, concluded that the reasons cited by the Registering Authority did not warrant denial of registration under Section 12-A. The Tribunal found the alleged irregularities to be minor and not illegal, thus allowing the appeal and directing the grant of registration to the assessee.

5. The Revenue appealed the Tribunal's decision, arguing that the Tribunal had wrongly characterized the reasons for rejection as trivial. The Revenue contended that the Tribunal's order was unsustainable.

6. The High Court, after hearing arguments from both parties, referenced a previous judgment related to the registration process under Section 12-A. The Court emphasized the importance of assessing the genuineness of the Trust's activities and charitable purposes for registration. The Court found that the Registering Authority's concerns did not equate to a lack of genuineness, and the Tribunal's decision to grant registration was upheld.

In conclusion, the High Court dismissed the Revenue's appeal, stating that the Tribunal had not committed any error or illegality in allowing the appeal of the assessee. The Court emphasized that the issues raised were not crucial for the purpose of Section 12-A of the Act, thereby affirming the Tribunal's decision to grant registration to the assessee.