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TMI Blog2023 (2) TMI 59X X X X Extracts X X X X X X X X Extracts X X X X ..... o see that activities are not camouflage, bogus, artificial and should verify whether the activities are in accordance with the object of the institution. Commissioner (exemption) cannot extend the scope of the enquiry beyond that point. CIT(E) has committed an error in not granting registration in the u/s 12AA read with Section 80G of the Act. Therefore, we allow the Grounds of Appeal and further direct the CIT(E) to grant registration to the assessee u/s 12AA of the Act and also grant approval of registration u/s 80G of the Act afresh and grant approval subject to fulfillment of conditions mentioned in the said provision. Appeal of assessee allowed. - I.T.A. No. 978/DEL/2022 I.T.A. No. 979/DEL/2022 - - - Dated:- 31-1-2023 - DR. B. R. R. KUMAR, ACCOUNTANT MEMBER AND SHRI YOGESH KUMAR U.S., JUDICIAL MEMBER For the Assessee : Shri P. C. Yadav, Advocate ; For the Department : Ms. Sarita Kumari, [CIT] - D. R. ; ORDER PER YOGESH KUMAR U.S., JM These two appeals are filed by the same assessee against two separate orders of the ld. Commissioner of Income Tax (Exemption) [hereinafter referred to CIT (E) New Delhi, both dated 30.03.2022. 2. The asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... income received by the trust to verify the genuineness of the activities of the trust after giving opportunity of being heard to the assessee and thereafter decide the issue afresh on merits. 4. After the remand, the Ld. CIT(Exemption) passed order dated 30/03/2022 by denying the Registration u/s 12AA of the Act and also rejected the exemption u/s 80G of the Act. 5. Aggrieved by the orders dated 30/03/2022, the assessee has preferred the two separate appeals on the grounds mentioned above. 6. The Ld. Counsel for the assessee vehemently submitted that the Ld.CIT (Exemption) has erred in denying the certificate of registration u/s 12AA of the Act and also committed error in denying the exemption u/s 80G of the Act to the assessee ignoring the fact that the assessee is a company comes under Section 25 of the Companies Act and engaged in dissemination of education in the field of mountaineering and while passing the orders impugned failed to appreciate that at the time of registration only the nature of objects and genuineness of activities to be seen. The Ld. Counsel has also submitted that on 31/05/2022 the Income Tax Department has granted provisional registration for Asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Hon ble Supreme Court relied up on by the id CIT (E) was considered and held that such a restricted meaning of education cannot be given. In the present case the assessee s activities are prima facie educational activities further if is for the authority granting registration to give prima facie opinion with reasoning that the activities carried on by the assessee is eligible for registration u/s 12A of the Income Tax Act or not. Furthermore, while granting registration u/s 12A of the Act the registration authority is further required to look into the fact that whether the activities of the' trust are genuine or not. Merely because assesses received some donation and grants from other entities its activities does not become ingenuine. As these aspects are required to be dealt with about the objects whether it is education or not and activities whether they are genuine or not,, the Id CIT(E) has merely relied upon the decision of the Hon ble Supreme Court without considering the several decisions wherein, the above decision of the Hon'ble Supreme Court has been considered. Therefore, we direct the Id CIT(E) to consider the application of the assessee by considering the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pplicant is considered but again it does not prove that Education activity is being carried out by it. 8.4 The applicant has submitted that it is section 25 company incorporated u/s companies Act, 1956 which proves that its objects are for promoting commerce, art, science, religion, charity or any other useful object. The status which is granted by the government is the recognition of the fact that the petitioner is essentially established for the purpose of education and/or for advancement of any other project of general public utility. The contention of the assessee is not found acceptable as the requirements of the Companies Act and the Income Tax Act are different. To obtain registration u/s 12AA, the applicant is required to satisfy the condition of the Income Tax Act and Income Tax Rules. Mere registration u/s 25 of the Companies Act does not automatically confers right to get registered u/s 12AA of the I. T. Act. The CIT(E) is bound to verify the charitable nature of the objects and genuineness of the, activities of the applicant then only pass an order granting or refusing registration. 9. In view of the discussions above, it is held that the activities of the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he scope of the enquiry beyond that point. In the case of Fateh Chand Trust and College Committee Vs. Commissioner of Income Tax (Exemption), Lucknow (2019) 101 Taxman.com 364 (Agra-Trib.) fortified our view as under:- 19. We find that learned CIT, while passing impugned order seems to be under gross misconception that it is his satisfaction and definition of 'charitable activities' dehors requirement of law would only enable an institution to be granted registration under section 12AA of the Act as once registration is granted, the entire income of the institution would become exempt. The said view, in the light of precedents referred above is wholly opposed to law. Under section 12AA of the Act, the Commissioner is/entitled to see that whether the objects are, charitable in nature, which term has been well defined the Act and also to see whether the activities are genuine or not. The genuineness of activities would mean to see that activities are not camouflage, bogus, artificial and whether these are in accordance with the objects of the institution. The scope of_ enquiry does not extend beyond that point.... 14. In the case of Commissioner of Income-tax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7. having heard counsel for the parties, we find that registration of the trust does not involve enquiry into the actual activities or application of funds, etc. The Tribunal has committed no error in following the earlier order. At that stage, the only enquiry required to be conducted was with respect to the object of the trust alone. The objection raised by the Commissioner pertain to matters that may be examined at the stage of assessment. At that stage, if the assessee were to be found to have actually engaged in any non-charitable activity, the benefit of exemption may be denied at that state in the manner provided by the Act. 17. In the case of CIT v. Spring Dale Educational Society [2011] 16 taxmann.com 282/[2012] 204 Taxman 11 (Mag.) the Hon'ble Punjab Haryana High Court held as under: The Revenue has raised the following substantial questions of law: (i)Whether on the facts and in law, the Hon'ble Income Tax Appellate Tribunal was justified in holding that the manner of application of funds of trust do not fall within the purview of the Commissioner of Income Tax while examining application seeking registration u/s 12 AA of the Act, whereas s ..... X X X X Extracts X X X X X X X X Extracts X X X X
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