2013 (11) TMI 974 - HC - Income Tax

Registration u/s 12AA Held that - In view of the magnitude of the income in the previous year relevant to assessment year under appeal, the charitable activities carried out cannot be called as low magnitude The assessee trust is in the first year of its operation Decided against Revenue.

Summary

Issues:
1. Appeal against the ITAT order allowing registration under Section 12A of the Income Tax Act.
2. Dispute regarding charitable activities of the assessee-trust.
3. Rejection of registration application by the CIT.
4. Legality of the ITAT's decision in granting registration.

Analysis:
1. The appeal was filed by the revenue challenging the ITAT's decision to allow the assessee's appeal and grant registration under Section 12A of the Income Tax Act. The ITAT set aside the CIT's order rejecting the registration application, leading to the revenue questioning the legality of this decision.

2. The dispute arose from the CIT's dissatisfaction with the charitable activities of the assessee-trust, leading to a show-cause notice questioning the foundation's compliance with statutory requirements. The CIT rejected the registration application citing lack of substantial charitable activities and insufficient evidence of scholarships provided to students from weaker sections of society.

3. The rejection of the registration application by the CIT prompted the assessee-trust to appeal before the ITAT. The ITAT, in its judgment, overturned the CIT's decision, emphasizing the charitable nature of the foundation's activities and directing the grant of registration under Section 12A of the Income Tax Act.

4. Upon review, the High Court found that the revenue did not dispute the foundation's stated objective of promoting education and supporting educational institutions. The Court noted that it was the foundation's first year of establishment and considered the nature of its activities in granting registration. The High Court upheld the ITAT's decision, stating that the tribunal had not erred in directing the grant of registration based on the foundation's activities and purpose as outlined in its Memorandum of Association and Articles of Association.

In conclusion, the High Court dismissed the Tax Appeal, finding no substantial question of law warranting interference with the ITAT's order. The Court affirmed the ITAT's decision to grant registration to the assessee-trust under Section 12A of the Income Tax Act, emphasizing the foundation's charitable objectives and activities in the field of education.