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2017 (5) TMI 1169 - HC - Income TaxRegistration under Section 12A/12AA - applications for registration rejected pointing out certain irregularities and that the societies are being run by the family members as a camouflage of charity - Held that:- The tribunal on the basis of the objects of the societies and the fact that those objects were not disputed recorded satisfaction that the societies were for charitable purposes. However, regarding the second aspect it only records that as no financial irregularity has been found, the genuineness of the activities of the societies also stand established. The mere fact that there were no financial irregularities in running of the societies is not sufficient to infer that the societies are actually carrying activities of charitable purposes in consonance with their objects. The activities of the societies have to be examined independently before coming to the conclusion that they are actually and genuinely for charitable purposes. In the absence of any such finding, we are of the opinion that this aspect of the matter was required to be considered by the tribunal before directing for the registration of the society. The profit earning or misuse of income derived by charitable institution from its activities may be a ground for refusing exemption under the Act which is a matter to be considered and decided at the time of assessment but at the time of grant of registration it is incumbent upon the registering authority to see if the activities of such institution or trust are in consonance with the objects of the trust or the institution and are not a camouflage but are real, pure and sincere. We answer the question partly in favour of the society and partly in favour of the Revenue and while confirming the order of the tribunal in so far as it set aside the order of the Commissioner of Income Tax and that the objects of the society are of charitable nature, we direct the tribunal to reconsider the matter with regard to the genuineness of the activities of the societies as to whether they are in consonance with the charitable objects for which they have been established and to pass a fresh order on this limited aspect within a period of three months.
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