2016 (11) TMI 1361 - AT - Income Tax

Grant of registration u/s. 12A and approval u/s. 80G denial - denial of claim holding that the aims and objects of the Society are not charitable and activities conducted by the appellant are not genuine - Held that - From the analysis of the financial statements we find that the nominal surplus amounts shown above remained with the society and not distributed amongst its. The appellant society has charged fees from students but the same has been utilized for running of school for education purpose. Therefore the view of the ld. CIT that society has charged hefty fees from students and hence operating commercial activities is wrong and not supported by any material on record. The finger raised by ld. CIT on the activities of appellant society and its aims and objects being not charitable is therefore based on no good reasons relevant for refusal to grant registration. Therefore in view of several decisions relied on by the ld. Counsel for the assessee and in the attending facts of the case we direct the ld. CIT to grant registration u/s. 12A and approval u/s. 80G of the Act as prayed for.

Summary

Issues:
Appeal against rejection of registration u/s. 12A and approval u/s. 80G of the IT Act based on the aims and objects of the Society being deemed non-charitable and activities not genuine.

Analysis:
1. The appellant filed applications seeking registration u/s. 12A and approval u/s. 80G, which were rejected by the CIT on the grounds that the aims and objects of the Society were not charitable and the activities were not genuine.
2. The CIT based the rejection on the definition of 'Charitable Purpose' under the Income Tax Act, stating that charging fees from the public implies a profit-oriented business entity, not a charitable institute.
3. The appellant argued that the fees charged were for educational purposes and relied on precedents to support the charitable nature of the society's aims and activities.
4. The Tribunal found no justification in the CIT's decision, emphasizing that charging fees alone does not disqualify an entity from charitable status, citing precedents limiting CIT's jurisdiction to examining genuineness of activities and objects.
5. Financial statements showed nominal surplus amounts used for educational purposes, contradicting the CIT's claim of commercial activities, leading the Tribunal to direct the CIT to grant registration and approval as requested.
6. The appeals of the assessee were allowed, emphasizing the charitable nature of the society's activities and aims.

This detailed analysis covers the issues involved in the legal judgment comprehensively, highlighting the arguments presented by both parties and the Tribunal's reasoning for allowing the appeals.