2014 (6) TMI 500 - AT - Income Tax

Refusal to grant registration u/s 12A of the Act Original MOA and other documents to be produced - Held that - The DIT (E) has refused registration to the assessee society on the ground of its bye-laws not being in conformity with the requirements of the A.P. Societies Registration Act, and the variance between the objects, redundantly stated in the Bye Laws, and the objects stated in the MOA - both being too general, and not verifiable - the assessee has expressed its preparedness to amend the byelaws, so as to make the bye laws specific and verifiable, to the satisfaction of the DIT(E) thus, the matter is remitted back to the DIT(E) for fresh examination of the assessee s application for registration u/s 12AA and approval u/s 80G, after giving reasonable opportunity to the assessee to make necessary amendments to its byelaws, so as to make them specific and in conformity with the provisions of A.P. Societies Registration Act Decided in favour of Assessee.

Summary

Issues:
- Registration under S.12AA of the Income-tax Act, 1961
- Compliance with A.P. Societies Registration Act
- Verifiability of society's objects
- Rejection of registration application
- Grounds for refusal by Director of Income-tax(Exemption)
- Appeal against rejection

Analysis:
The judgment involved an appeal against the order of the Director of Income-tax(Exemption) Hyderabad, refusing registration under S.12AA of the Income-tax Act, 1961 to the assessee society. The assessee, registered under the A.P. Societies Registration Act, filed an application seeking registration under S.12AA. The Director noted discrepancies between the objects mentioned in the Memorandum of Association and the deed of bye-laws executed later, leading to doubts about the verifiability of the society's actual objects. Additionally, the Director found inconsistencies in the bye-laws, specifically regarding the corpus fund clause, which was deemed inconsistent with the provisions of S.11 of the Act. Consequently, the Director refused registration under S.12AA and rejected the application.

The grounds of appeal raised by the assessee challenged the rejection, emphasizing their compliance with providing necessary information and the charitable nature of their society's objects. The assessee expressed willingness to amend the bye-laws to meet the Director's requirements. The Appellate Tribunal considered these submissions and observed that the bye-laws needed to be specific and verifiable, in line with the A.P. Societies Registration Act. Therefore, the Tribunal set aside the Director's order and directed a fresh examination of the registration application, allowing the assessee to make necessary amendments to the bye-laws. The Director was instructed to pass appropriate orders after giving the assessee a reasonable opportunity to amend the bye-laws.

Ultimately, the Tribunal allowed the assessee's appeal for statistical purposes, indicating a procedural victory for the assessee in terms of a fresh examination and opportunity to rectify the issues identified by the Director of Income-tax(Exemption).