2020 (2) TMI 319 - AT - Income Tax

Exemption u/s 11 - Entitled for registration u/s 12A/12AA - HELD THAT - The first aspect of grant of registration under section 12A/12AA of the Act is that the object of the assessee society should be charitable in nature. The assessee was engaged in imparting education and the objects were of charitable in nature which has been accepted by the Hon ble High Court. As far as the genuineness of the activities of the assessee society were concerned, the assessee had filed on record the audited accounts for different assessment years alongwith the assessment orders for the respective years and no adverse comments have been made against any of the assessee society, which are listed before us. We hold that where the activities undertaken by the assessee in the field of education were genuine, the assessee were entitled to the claim of registration under section 12A/12AA. Accordingly, we hold so and direct the Commissioner, Moradabad to grant registration to the assessee from the date of the application moved by the assessee. Hence the claim of the assessee stands allowed.

Summary

Issues:
Appeals against consolidated order of Commissioner under section 12A/12AA of the Income Tax Act - Reconsideration of genuineness of activities of assessee societies - Grant of registration under section 12A/12AA - Charitable nature of society's objects - Assessment of activities of the societies.

Analysis:
The appeals before the Appellate Tribunal ITAT Delhi involved a challenge against the consolidated order of the Commissioner under sections 12A/12AA of the Income Tax Act. The Hon'ble Delhi High Court had directed the Tribunal to reconsider the matter concerning the genuineness of the activities of the assessee societies and pass a fresh order on this limited aspect. The Tribunal had previously held that the societies existed solely for imparting education without a profit motive, making them eligible for registration under section 12A/12AA of the Act. The Tribunal emphasized that even if funds were exchanged between the societies, registration should not be refused unless personal benefit was derived. The Tribunal also noted that any violation of section 13 of the Act would be addressed post registration.

The Revenue appealed against the Tribunal's order, prompting the Hon'ble High Court to observe the charitable nature of the society's objects but directed a reassessment of the activities' genuineness. During the Tribunal hearing, the assessee highlighted the existence of the societies since 2002, with registration applications submitted in 2008. The assessee presented audited accounts and assessment orders demonstrating acceptance of their educational activities. The Revenue, however, relied on the Commissioner's order rejecting registration.

Upon reviewing the contentions and records, the Tribunal focused on the limited remand from the High Court regarding the genuineness of the assessee's activities. It acknowledged the charitable nature of the society's educational objectives, as accepted by the High Court. Considering the genuine educational activities supported by audited accounts and assessment orders without adverse comments, the Tribunal concluded that the societies were entitled to registration under section 12A/12AA. Consequently, the Tribunal directed the Commissioner to grant registration to the assessee societies from the application date, allowing the appeals of the assessee.

In conclusion, the Tribunal's decision on the genuineness of the educational activities led to the allowance of the appeals, emphasizing the importance of charitable objectives and legitimate operations in determining eligibility for registration under the Income Tax Act.