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2015 (9) TMI 655

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..... ting cancelling the registration of the assessee society u/s 12AA(3) of the Act. In the facts of the present case, we find no infirmity in the order of CIT in denying registration u/s 12A. - Decided against assessee. - ITA No. 548/LKW/2012 - - - Dated:- 31-3-2015 - Sunil Kumar Yadav, JM And A. K. Garodia, AM,JJ. For the Appellants : Shri A R Shukla Shri R B Shukla, Advs For the Respondent : Shri Vivek Mishra, CIT, DR ORDER Per A K Garodia, AM This is assessee's appeal directed against the order passed by learned CIT-II, Lucknow dated 03/09/2012 passed by him u/s 12AA (3) of the Income Tax Act. 2. In this appeal, the assessee has raised the following grounds: 1. BECAUSE the Ld. Commissioner of Income-ta .....

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..... 15) of the Act with reference to commercial activities does not apply to education and medical relief. 5. BECAUSE the Ld. Commissioner of Income-tax has erred in law and on facts in cancelling u/s 12AA (3) the registration granted u/s 12AA (1) (b) (i) of the Income-tax Act without appreciating the explanation given by the assessee in respect of each and every issue raised in the show cause notice. 3. Learned A.R. of the assessee reiterated the same contentions, which were raised before learned CIT. He also submitted that the amended objects of the society dated 21/09/2002 are available on page No. 141 of the paper book. He also submitted that in assessee's own case, the matter reached up to Tribunal during the proceedings for .....

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..... e sake of ready reference:- 5. Finally, it was pointed out to the assessee that the society is being run as on commercial venture and is earning profit and is not being run as a charitable organization. The assessee has explained that although the activities of the assessee have resulted in a surplus in A.Y.'s 2007-08 to A.Y. 2009-10, if the amounts capitalized in these year is also considered then, there is a deficit instead of surplus in all the years. Various case laws have been cited in which it has been held that capital expenditure is also regarded as application of income for charitable purpose. This explanation of the assessee does not reveal the full facts. The complete facts are that on going through the applica .....

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..... ction (1) or has obtained registration at any time under section 12A [as it stood before its amendment by the Finance (No. 2) Act, 1996 (33 of 1996)] ]and subsequently the Commissioner is satisfied that the activities of such trust or institution are not genuine or are not being carried out in accordance with the objects of the trust or institution, as the case may be, he shall pass an order in writing cancelling the registration of such trust or institution: 6.1 From the above provisions of sub section (3) of section 12AA, we find that in case, the CIT is satisfied that the activities of the trust or institution are not genuine or are not being carried out in accordance with the objects of the trust or institution, as the case may be, .....

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..... whether the assessee society is running and carrying out its activities as per its object clause. When the object clause shows that the education and treatment has to be provided free of cost and the assessee society is charging fees for those facilities, it has to be accepted that the assessee society is not being carrying out its activities as per its object clause and once this is found that activities of the assessee society are not being carried out in accordance with the objects of the trust, the CIT shall pass an order in writing cancelling the registration of the assessee society u/s 12AA(3) of the Act. In the facts of the present case, we find no infirmity in the order of CIT. 7. Now we examine the applicability of the Tribunal .....

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..... the case may be and unless, of course, the objects of the trust apparently make out that they were not in consonance with the public policy or that they were not the objects of any charitable purpose, registration cannot be refused. Hence, it is seen that as per the judgment of Hon'ble Allahabad High Court, what has to be looked into at the stage of granting registration is as to whether the objects are charitable or not and whether they are in consonance with the public policy or not and this is not required to be seen at that stage as to whether the activities are being carried out in accordance with the objects of the trust. For the purpose of sub section (3) of section 12AA, this is primary requirement to look into as to whether th .....

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