Case Law Details

Case Name : CIT Vs Sri Guru Gorakh Nath Charitable Educational Society. (Punjab & Haryana High Court)
Appeal Number : Income tax (Appeal) no. 336 of 2013
Date of Judgement/Order : 05/05/2015
Related Assessment Year :
Brief of the Case

Punjab & Haryana High Court held In the case of CIT vs. Sri Guru Gorakh Nath Charitable Educational Society that  power of the Commissioner to look into the objects of the Society and the genuineness of the same cannot be doubted when the basis is of non-supply of information. Tribunal was not justified in allowing the appeal and issuing necessary direction and matter required to be sent back to the Commissioner for fresh enquiry.

Facts of the Case

In this case society was registered with the Registrar of the Societies on 19.04.2005. It applied for registration under Section 12AA of the Act, in form No.10A. The Commissioner rejected the application on the ground that the Society had not proved its case whether the activities were being run in a charitable manner and that the Society was not created wholly and exclusively for charitable purposes.

Contention of the Assessee

 The ld counsel for the assessee submitted that Commissioner order was based on the judgment of the Supreme Court in MCD Vs. Children Book Trust 1992 (3) SCC 390. In a later judgment of the Supreme Court in M/s Queen’s Educational Society Vs. Commissioner of Income Tax 2015 (3) TMI 619, it had been specifically held that the earlier judgment of the Apex Court was dealing with the property tax provisions and therefore, could not have been relied upon. Accordingly, ITAT rightly allowed the registration.

 Contention of the Revenue

 The ld counsel of the revenue submitted that once relevant materials have not been furnished, the Commissioner was well justified in denying the registration and the Tribunal was not justified in directing registration and even otherwise, the matter should have been remanded for a fresh enquiry on the basis of some directions laid down and it was not appropriate for the Tribunal, in such circumstances, to allow the appeal, in view the right of the Commissioner to go into the issue to satisfy itself of the objects and the genuineness of its activities.

Held by CIT (A)

 CIT (A) held that u/s 12AA (1)(b)(ii) assessee had failed to comply with provision u/s 12AA(1)(a) in as much as document and information called for was not submitted. Accordingly registration not granted.

Held by ITAT

 ITAT allowed the appeal of assessee and directed the Commissioner to grant registration to the Society under Section 12AA of the Act.

 Held by High Court

 In this case, it is clear that additional informations asked by Commissioner were not provided by the assessee.

As per section 12AA which prescribed the procedure for registration it is clear that Commissioner has to satisfy himself of the objects of the trust and the genuineness of the activities and after giving an opportunity of being heard to the trust or the institution, a refusal can be made to register the trust. Thus, the section gives power to the Commissioner to look into the genuineness of the activities of the trust and to satisfy himself about its activities.

The provisions of Section 12AA, also give the power under sub-section (3) to cancel the registration of the activities of the trust if it is not carried out in accordance with the objects but the Commissioner has to keep in mind that it is not to act as an Assessing Authority while deciding the application and the enquiry regarding the genuineness of the activities of imparting education with a charitable purpose is to be kept in mind. The objects of the trust, thus, have to be taken into consideration.

A Division bench of this court in Commissioner of Income Tax Vs. Surya Educational & Charitable Trust [2013] 355 ITR 280 held that the principles laid down for excluding income under Section 10(23C) are not applicable while considering the application for registration under Section 12AA. It was also further held that the genuineness of the objects of the trust is to be taken into consideration.

In such circumstances, it would be appropriate that the Commissioner undertakes the exercise afresh, on the basis of the application which has already been filed, keeping in view the material which can be produced by the assessee.

Accordingly, appeal of the revenue allowed.

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