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2021 (9) TMI 840 - AT - Income TaxExemption u/s 11 - denial of registration 12AA - proof of charitable activity u/s 2(15) - Activity of running a school - showing the admission fees under the head reserve and surplus - HELD THAT:- CIT(E), admittedly in the order has not objected to the charitable object of the society. In fact the applicant society is running school in the name and style of Sarashwati Public Senior Secondary School, and is registered with Punjab School Education Board. Thus the assessee's society is purely into imparting the education which is discernible from the activities undertaken by the society namely to run the educational school. The running of the school is undoubtedly a charitable purpose and falls within the four corner of section 2(15) of the IT Act. The objection raised by the ld. CIT(E) was with respect to showing the admission fees under the head reserve and surplus. The ld. CIT(E) was of the opinion that by showing the admission fees under the head reserve and surplus, the assessee has diverted the receipt to the balance sheet which should have been taken in the income and expenditure account. The above said wrong treatment of the admission fees under the head reserve and surplus, would not disentitle the assessee from getting the registration 12AA of the IT Act. As it is not the case of the CIT(E) that the activities of the assessee ceased to be charitable on account of the above said wrong diversion of admission fees in the balance sheet. For the purposes of registration, u/s. 12AA of the IT Act it is essential for the registration authorities to examine that the object of the assessee should be charitable and the activities of the assessee are genuine. In our view, in the present case the objects of the assessee are charitable and further the activities of the assessee are genuine. The wrong treatment of the assessee of the admission fees under the head reserve and surplus, undoubtedly an issue which the AO was required to be examined. It has a direct bearing on the eligibility of the assessee u/s. 10(23C) (iiiad). The financial year 2016-17 to 2018-19, are on record which shows that even if the admission fees is taken into the profit and loss account instead of balance sheet, then also the total aggregate receipt for the financial year 2016-17 and 2017-18 would below ₹ 1 crore. For the financial year 2018-19 the admission fees during the year was ₹ 506910/- and the total income for the year was 9240017/- thus the total aggregate annual receipt was ₹ 97,46927/-. (Page-22 and 23 of the paper book) thus even for the financial year 2018-19 relevant to the assessment year under consideration the assessee was eligible for u/s. 10(23C)(iiiad). As relying on DOCTOR MADAN LAL ATRI CHARITABLE TRUST VERSUS CIT EXMP. LUCKNOW (U.P.) [2021 (6) TMI 358 - ITAT AGRA] we are of the opinion that the assessee is entitled registration accordingly we direct the CIT(E) to grant registration to the society from the date of application. - Decided in favour of assessee.
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