Anwar Sultana Educational Trust Vs. CIT (E), Chandigarh - (Income Tax Appellate Tribunal) (16 Aug 2021)

Exemption under Section 11 of IT Act can be availed by institutions which are genuinely engaged in 'charitable activities’

MANU/IS/0009/2021

Direct Taxation

Present appeal of the assessee society is directed against the order passed by the CIT(E), Chandigarh whereby he rejected the application filed for registration under Section 12AA(1)(b)(ii) of the Income Tax Act, 1961 (IT Act). The appellant society has been in operation since 28th May, 2016 and filed an application in the office of CIT(E) on 1st February, 2017 for seeking registration under Section 12AA of the IT Act.

It is admitted fact that the main Object of the applicant trust are to impart education among the society without any caste, creed and Colour. The trust deed submitted before the Learned CIT was quite explanatory of the fact that, the trust was created for imparting education.

Learned CIT(E), while passing impugned order seems to be under hurry in passing ex parte order in 2nd round and further to understand the definition of 'charitable activities' de hors requirement of law would only enable an institution to be granted registration under section 12AA of the IT Act as once registration is granted, the entire income of the institution would become exempt. The said view, in the light of precedents referred above is wholly opposed to law. Under section 12AA of the Act, the Commissioner is entitled to see that whether the objects are charitable in nature, which term has been well defined in the Act and also to see whether the activities are genuine or not. The genuineness of activities would mean to see that activities are not camouflage, bogus, artificial and whether these are in accordance with the objects of the institution. The scope of enquiry does not extend beyond that point.

Exemption under Section 11 of IT Act can be availed by institutions which are genuinely engaged in 'charitable activities’. However, benefit of section 11 of IT Act is subject to application of income for charitable activities and the Assessing Officer is well entitled to see whether such application has been made and other conditions of Section 11 of IT Act have been complied. In view of the peculiar facts and circumstances of the case, the order under appeal is unsustainable and thus reversed. The Learned CIT(E) is directed to grant registration to the Appellant.

Tags : REGISTRATION REJECTION LEGALITY