INDIAN RESOURCE & DEVELOPMENT ASSOCIATION,KURUKSHETRA V. COMMISSIONER OF INCOME TAX (EXEMPTION), CHANDIGARH

ITA 412/CHANDI/2021

AI Insights

The case involves the Indian Resource & Development Association, which appealed against the decision of the CIT (Exemptions), Chandigarh, rejecting their application for registration under section 12AA of the Income Tax Act. The CIT(E) had rejected the application on grounds that the society's activities did not constitute 'education' and that there were discrepancies in how government grants were accounted for in previous years. The Tribunal, however, found that the society's activities, which included government-financed science and technology communication programs, did fall within the educational scope as intended by the law. The Tribunal also noted that the CIT(E)'s rejection was inconsistent with later provisional and final registrations granted to the society.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 780493 (ITAT-CHANDIGARH)
• Duration Of Justice: 3 year(s) 9 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-10-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2021-2022
• Appeal Filed On: 15-12-2021
• Other Referred Cases: Ananda Social & Educational Trust v. CIT, CIT v. Surya Educational & Charitable Trust, Spring Dale Educational Society, Vigyadayani Shiksha Samiti v. CIT(E)
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MEENAKSHI VOHRA; VIRTUAL
• Assessee Lawyers: SUDHIR SEHGAL
• Keywords: Charitable institution
• Section: 12AA; 12A

Judgement Text

"आयकर अपीलीय अिधकरण,चǷीगढ़ Ɋायपीठ “ए” , चǷीगढ़ IN THE INCOME TAX APPELLATE TRIBUNAL, CHANDIGARH BENCH “A”, CHANDIGARH HEARING THROUGH: HYBRID MODE ŵी लिलत क ुमार, Ɋाियक सद˟ एवं ŵी मनोज क ुमार अŤवाल, लेखा सद˟ BEFORE: SHRI. LALIET KUMAR, JM & SHRI. MANOJ KUMAR AGGARWAL, AM आयकर अपील सं./ ITA No. 412/Chd/ 2021 िनधाŊरण वषŊ / Assessment Year : 2021-22 Indian Resource & Development Association C/o K R Chhabra, Advocate Shop No. 1, 2, 3 and 4 Sikh Mission Market, Kurukshetra-136118 बनाम The CIT (Exemptions) Sector-17E, Chandigarh ˕ायी लेखा सं./PAN NO: AAAAI2701D अपीलाथŎ/Appellant ŮȑथŎ/Respondent िनधाŊįरती की ओर से/Assessee by : Shri Sudhir Sehgal, Advocate राजˢ की ओर से/ Revenue by : Smt. Meenakshi Vohra, CIT, DR (Virtual) सुनवाई की तारीख/Date of Hearing : 25/09/2025 उदघोषणा की तारीख/Date of Pronouncement : 07/10/2025 आदेश/Order PER LALIET KUMAR, J.M: This is an appeal filed by the Assessee against the order of the Ld. CIT Exemptions, Chandigarh dt. 08/03/2021. 2. At the outset the Registry has pointed out that the present appeal is barred by limitation by 215 days. 3. After considering the condonation application filed by the assessee, we condone the delay for which sufficient cause is shown, and admit the appeals for adjudication. 4. In the present appeal Assessee has raised the following grounds: 1. Order passed by Ld. CIT(Exemption) is illegal, arbitrary and bad in law. 2. On facts and in circumstances of the case Ld. CIT(Exemption) was not justified in holding that the society is not Printed from counselvise.com 2 eligible for getting registration and thus rejecting the application of appellant for registration u/s 12AA of the IT Act. 3. On facts and in circumstances of the case Ld. Commissioner of Income Tax was not justified in holding that the activities of the society are not genuine and therefore rejecting the claim of exemption u/s 10(23C)(iiiab) and 10(23C)(iiiad) when the projects of the society are being substantially financed by the government for the purpose of education. 5. The assessee society, Indian Resource & Development Association, Kurukshetra, was formed on 29.12.2005 and is duly registered with the Registrar of Societies. The primary object of the society, as per its Memorandum, is to render education by increasing the popularity of science and technology among the masses and connecting common people with scientific ideology. The society has been carrying out programs for the promotion of science and technology communication, which are approved and financed by the Ministry of Science & Technology, Government of India. 6. The assessee filed its application in Form No.10A on 20.04.2020 seeking registration u/s 12A of the Act. The Ld. CIT(E) called for details through questionnaires dated 30.06.2020 and 04.12.2020. The assessee furnished replies and supporting documents through the ITBA portal, including utilization details of grants sanctioned by NCSTC (National Council for Science & Technology Communication) and other Government agencies 7. However, the Ld. CIT(E) rejected the application on the following grounds:  The assessee diverted grants received in F.Ys. 2017–18 and 2019–20 to the Balance Sheet instead of routing them through Income & Expenditure account, resulting in non-payment of legitimate tax.  The assessee claimed exemption u/s 10(23C)(iiiad) in earlier years though it was not running a formal educational institution. Printed from counselvise.com 3  The activities of the society were held not to constitute “education” within the meaning of Section 2(15), relying on the decision of Sole Trustee, Lok ShikshanSansthan (101 ITR 234, SC) 8. Feeling aggrieved by the order of the CIT(E) the assessee is in appeal before us on the grounds mentioned in the appeal. 9. The Ld. AR, submitted that the assessee had duly complied with the statutory requirements for seeking registration. He argued that:  The assessee is a Government-financed society carrying out scientific training, awareness workshops, and demonstrations for students, teachers, and researchers, which clearly fall within the ambit of “education.”  The grants are sanctioned for specific projects with stipulations that unutilised amounts be carried forward and utilized in subsequent years. The utilization pattern has been explained and verified through audited accounts  At the stage of granting registration u/s 12AA, the scope of inquiry is limited to examining the genuineness of objects and activities, not the mode of accounting or taxation of past years. Reliance was placed on Ananda Social & Educational Trust v. CIT (272 Taxman 7, SC) and CIT v. Surya Educational & Charitable Trust (355 ITR 280, P&H). 10. It was further argued that even if there were accounting differences in earlier years, those issues could be examined by the AO during assessment proceedings. The rejection of registration on such technical grounds was unjustified. The assessee also pointed out that for subsequent years, provisional registration u/s 12A had been granted vide Form 10AC dated 31.05.2021, and later approval u/s 12AB was also issued on 06.12.2024. 11. The Ld. DR, on the other hand, supported the order of the CIT(E) and submitted that the assessee failed to demonstrate that it was engaged in systematic schooling or formal instruction. The activities carried out were more in the nature of workshops and awareness programmes, which do not fall within the strict meaning of “education” as envisaged by the statute. He Printed from counselvise.com 4 also emphasized that the assessee had wrongly claimed exemption u/s 10(23C)(iiiad) in prior years, which itself shows lack of bona fides. 12. We have carefully considered rival submissions and perused the record. It is noted that the assessee society is engaged in promoting science and technology through training, workshops, and awareness programmes, financed entirely by Government grants. The accounts are subject to audit and scrutiny by Government agencies including the CAG. These facts are not in dispute. 12.1. In our view, the rejection of registration by the Ld. CIT(E) is not sustainable for the following reasons:  At the stage of registration u/s 12AA, the Commissioner has to examine whether the objects are charitable and whether the activities are genuine. He cannot go into the manner of application of income or past taxability of grants. This principle has been affirmed by the Hon’ble Supreme Court in Ananda Social & Educational Trust (supra).  The assessee’s objects, as recorded in its Memorandum, are purely educational in nature. Promotion of science and technology awareness is a part of educational advancement in modern society. Several judicial pronouncements have held that education is not restricted to classroom teaching but includes systematic dissemination of knowledge (Spring Dale Educational Society, 204 Taxman 11 (P&H); Vigyadayani Shiksha Samiti v. CIT(E) ITA No.309/Del/2016).  The allegation of wrongly claiming exemption u/s 10(23C)(iiiad) in earlier years cannot be a ground to reject present registration, since registration is to be considered on the basis of objects and proposed activities, not past assessments. 12.2 We also take note that the Department itself has granted provisional registration u/s 12A vide Form 10AC dated 31.05.2021 and later approved registration u/s 12AB on 06.12.2024, which covers AY 2022–23 to AY 2026–27. This shows that the Department has accepted the assessee’s activities as Printed from counselvise.com 5 charitable and educational in nature in subsequent years. We are unable to understand the inconsistent and incoherent stand of the Department on the same fact and activities of the assessee. We disapprove the same. 12.3 In view of the above discussion, we hold that the order of the CIT(E) rejecting registration u/s 12AA is unsustainable in law. Accordingly, the same is quashed and the CIT(E) is directed to grant registration to the assessee u/s 12AA of the Act with effect from the date of application. 13. In the result, appeal of the assessee is allowed. (Order pronounced in the open Court on 07/10/205) Sd/- Sd/- मनोज क ुमार अŤवाल लिलत क ुमार (MANOJ KUMAR AGGARWAL) (LALIET KUMAR) लेखा सद˟/ ACCOUNTANT MEMBER Ɋाियक सद˟ /JUDICIAL MEMBER AG आदेश की Ůितिलिप अŤेिषत/ Copy of the order forwarded to : 1. अपीलाथŎ/ The Appellant 2. ŮȑथŎ/ The Respondent 3. आयकर आयुƅ/ CIT 4. आयकर आयुƅ (अपील)/ The CIT(A) 5. िवभागीय Ůितिनिध, आयकर अपीलीय आिधकरण, चǷीगढ़/ DR, ITAT, CHANDIGARH 6. गाडŊ फाईल/ Guard File आदेशानुसार/ By order, सहायक पंजीकार/ Assistant Registrar Printed from counselvise.com "