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2025 (5) TMI 1303 - AT - Income TaxCancellation of registration granted u/s 12A and u/s 12AB(4) - registration granted u/s 12A cancelled with retrospective effect or not? - HELD THAT - As observed that the PCIT has invoked the explanation to section 12AB(4) to hold the assessee committed specified violations particularly in terms of application of income and genuineness of the activities. As the Finance Act 2022 introduced the concept of specified violations u/s 12AB(4) became effective only from April 1 2022. Accordingly order of CIT(E) in cancelling the registration granted u/s 12A to the assessee society from AY 2018-19 is set aside and registration u/s 12A to the assessee is restored. The ground of appeal No. 1 of the assessee is allowed. Withdrawal/cancellation of the registration w.e.f. Asst. Year 2022-23 granted u/s 12A(1)(ac)(i) vide Unique Registration Number - allegations of the Ld. CIT(E) that the income of the assessee was mainly applied for a particular religious community which is in contraventions to provisions of clause (a) (d) and (e) of Explanation to Section 12AB(4) - HELD THAT - Appellant society is engaged in the providing charitable activities as defined in section 2(15) of the Act. It is also seen that that the assessee society is providing education where the schools are being run by adopting the existing facility and further developing by getting lease and constructing building. The assessee society having CBSE affiliated school where students from all the sections of society irrespective of their caste and creed are admitted and getting education. It is also seen that assessee society has been able to demonstrate that the registration process for getting admission in these schools is not restricted to the students of a particular community. Likewise assessee has been able to demonstrate that it is providing scholarship to the student coming from all the communities and only criteria is weak financial background with promising results. Merely because the schools are situated in the area where dominant population is of a particular religious community majority of the students getting admission are from that particular community however it is an admitted fact that the assessee society is not running Madrassa. Since main object of assessee society is to provide quality of life to the weaker sections of the society it always tried hard to provide benefit to the poor and in order to achieve these objects schools were opened in the area where economically weaker sections of society are main residents. As the assessee society is working for a public at large it cannot be said that it had applied its income for the benefit of a particular community. It is further seen that not only education but also the free medical facilities drinking water child support distribution of free food low cost housing etc. were also provided where all the weaker sections of the society got benefited. Once it is established that the main object is of charitable in nature and objects are for the benefit for the whole mankind and for all the citizens of county benefit of exemption u/s 12A cannot be withdrawn. The assessee society never restricted its benefit to any caste or community in other words it never intended to serve a particular caste or community rather the assessee society is working for the benefit of mainly for weaker sections of the society. Looking to the facts that assessee society is providing education medical facility relief to poor as defined in section 2(15) of the Act which has not been doubted by the Ld. CIT(E) who merely for the reason that major beneficiaries are from a particular religious community has cancelled the registration which is contrary to the facts of the present case as discussed above. The assessee society never intended to restrict the benefits to a particular religious community and the beneficiaries includes all the sections of the society irrespective of their casts and creed and therefore the action of the Ld. CIT(E) in withdrawing registration granted u/s 12A w.e.f. AY 2018-19 and further registration granted in 12A(1)(ac)(i) of the Act w.e.f. AY 2022-23 is not in accordance with law. Appeal of assessee allowed.
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