2013 (5) TMI 240 - HC - Income Tax

Registration u/s 12A - denial of claim as not satisfied about the objects of the assessee and genuineness of its activities by CIT(A) - Tribunal allowed the claim - Held that - The Tribunal held that when an application under Section 12AA is filed for being registered under Section 12A, CIT is required to see, whether the application is in accordance with Section 12AA read with Rule 17A and, whether Form 10B has been properly filled up. In addition to that CIT is also required to see the objects of the Trust / Society and to ascertain, whether they are exclusively charitable or not. At the stage of considering such an application, the Tribunal held that CIT was not required to examine the application of income, which can be examined only by the AO - thus no contrary view can be taken. In favour of assessee.

Summary

Issues:
- Rejection of application for registration under Section 12A of the Income Tax Act, 1961 based on the objects of the assessee and genuineness of its activities.
- Interpretation of the requirements under Section 12AA, Rule 17A, and Form 10B for registration under Section 12A.
- Commissioner's role in assessing charitable objects of the Trust/Society during the registration process.

Analysis:
The judgment by the High Court of Uttarakhand dealt with the rejection of an application for registration under Section 12A of the Income Tax Act, 1961. The Commissioner of Income Tax had rejected the application citing dissatisfaction with the objects of the assessee and the genuineness of its activities. The primary reason for rejection was the absence of expenses for charitable activities in the accounts of the respondent assessee for the relevant year. However, the assessee approached the Tribunal and succeeded in their appeal. The Tribunal emphasized that the Commissioner's role is to ensure compliance with Section 12AA, Rule 17A, and the proper filling of Form 10B during the registration process. Furthermore, the Commissioner is obligated to assess the objects of the Trust/Society to determine if they are exclusively charitable. The Tribunal clarified that the assessment of income falls under the jurisdiction of the Assessing Officer and is not within the Commissioner's purview during the registration process.

The High Court, in its judgment, upheld the Tribunal's decision and dismissed the appeal. It concurred with the Tribunal's interpretation that the Commissioner's evaluation during the registration process should focus on the compliance with statutory requirements and the charitable nature of the Trust/Society's objects. The Court emphasized that the Commissioner's scrutiny should not extend to the examination of income, which falls under the Assessing Officer's domain. By affirming the Tribunal's stance, the High Court reinforced the distinct roles of the Commissioner and the Assessing Officer in the registration and subsequent assessment processes under the Income Tax Act, 1961. The judgment underscored the importance of adherence to statutory provisions and the exclusive charitable nature of the Trust/Society's objectives for successful registration under Section 12A.