THE COMMISSIONER OF INCOME TAX-I, CHANDIGARH V. VISHVAS

ITA/322/2013

AI Insights

The case revolves around the appeal by the Commissioner of Income Tax against the decision of the Income Tax Appellate Tribunal, which allowed the registration of the respondent society, Vishvas, under Section 12AA of the Income Tax Act. The Tribunal had earlier found that the objects of the society were charitable and recommended registration despite initial reports from the Assistant Commissioner and Joint Commissioner of Income Tax which did not support registration. The High Court's decision focused on the legality of the Tribunal's findings and the interpretation of the requirements for registration under Section 12AA.

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 771459 (HC-CHANDIGARH)
• Appeal Type: Others
• Pronouncement Date: 13-05-2014
• Assessment Year: misc
• Other Referred Cases: MCD v. Children Book Trust [1992) 3 SC 390
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Respondent
• Court: HIGH COURT
• Assessee Lawyers: URVASHI DHUGGA
• Keywords: Charitable Activities; Income tax appellate tribunal; Registration under section 12AA; Genuinity of financial activities
• Section: 12AA; 260A; 80G(5)(vi)

Judgement Text

"ITA No.322 of 2013 (O&M) 1 IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH ITA No.322 of 2013 (O&M) Date of decision: 13.05.2014 The Commissioner of Income Tax I, Chandigarh -----Appellant Vs. Vishvas,H.No.1006, Sector 19B, Chandigarh ----Respondent CORAM:- HON’BLE MR. JUSTICE AJAY KUMAR MITTAL HON'BLE MR. JUSTICE JASPAL SINGH Present:- Ms. Urvashi Dhugga, Advocate for the appellant. ---- Ajay Kumar Mittal,J. 1. Learned counsel for the appellant-revenue during the course of hearing produced the following documents:- (i)Annexures 'A' and 'B' – reports of Assistant Commissioner of Income Tax (ACIT) and Joint Commissioner of Income Tax (JCIT) dated 19.4.2012 and 26.4.2012 respectively whereby initially they had not recommended for registration of the respondent society. (ii)Annexures 'C' and 'D' – report of ACIT and comments of JCIT dated 25.6.2012 and 28.6.2012 respectively whereby subsequently they had recommended for registration under Section 12AA and approval under Singh Gurbax 2014.05.28 16:26 I attest to the accuracy and integrity of this document High Court Chandigarh ITA No.322 of 2013 (O&M) 2 Section 80G(5) (vi) of the Income Tax Act, 1961 (in short, “the Act”). The above documents Annexures 'A' to 'D' are allowed to be taken on record subject to all just exceptions. 2. This appeal has been preferred by the revenue under Section 260A of the Act against the order dated 17.4.2013, Annexure A.2, passed by the Income Tax Appellate Tribunal, Chandigarh Bench 'B' (in short, “the Tribunal”) in ITA No.856/Chd/2012, proposing to raise following substantial questions of law:- i) Whether in the facts and circumstances of the case, the Tribunal was legally correct in allowing the appeal of the assessee by granting the registration under Section 12AA of the Income Tax Act even when the trust was not involved in carrying on any 'charitable activity' within the meaning of section 2(15) of the Act read with the decision of the Hon'ble Supreme Court in the case of MCD v. Children Book Trust [1992) 3 SC 390 in which it was inter alia held that education per se was not a charitable purpose? ii)Whether in the facts and circumstances of the case, the Tribunal was legally correct in holding that genuinity of its financial activities is not to be considered at the time of granting registration under Section 12A? iii)Whether in the facts and circumstances of the case, the Tribunal was legally correct in stating that carrying on of charitable activities at the time of registration and the utilization of funds are not relevant? 3. A few facts relevant for the decision of the controversy involved, as available on the record, may be noticed. The applicant- society - Vishvas filed an application for grant of registration under Singh Gurbax 2014.05.28 16:26 I attest to the accuracy and integrity of this document High Court Chandigarh ITA No.322 of 2013 (O&M) 3 Section 12A of the Act on 14.12.2011 in Form No.10A. The assessee submitted the requisite relevant documents including the objects of the institution. The Commissioner of Income Tax (CIT) made enquiries through the Assessing Officer and finally concluded vide order dated 29.6.2012, Annexure A.1 that the assessee had not been carrying on its charitable activities and therefore rejected the application. Aggrieved by the order, the assessee filed appeal before the Tribunal. Vide order dated 17.4.2013, Annexure A.2, the Tribunal allowed the appeal of the assessee holding that carrying on of charitable activities at the time of registration and utilization of the funds etc. were not relevant and once the objects of the institution were found to be charitable in nature, registration under Section 12AA of the Act had to be granted. Hence the instant appeal by the revenue. 4. We have heard learned counsel for the appellant and perused the record. 5. Learned counsel for the appellant revenue submitted that the assessee was not a genuine charitable institution which could claim benefit under Section 12AA of the Act. 6. After hearing learned counsel for the appellant, we do not find any merit in her contention. 7. The Tribunal while setting aside the order of the CIT had noticed that the objects which were filed by the assessee were charitable in nature and none of the objects were otherwise than charitable. Referring to the report of the Assessing Officer dated Singh Gurbax 2014.05.28 16:26 I attest to the accuracy and integrity of this document High Court Chandigarh ITA No.322 of 2013 (O&M) 4 25.6.2012 (Annexure 'C'), it was noticed that even the Assessing Officer had recommended that the appellant should be granted registration. It was concluded by the Tribunal that the genuinity of the society was not in doubt and carrying on of charitable activities at the time of registration and utilization of funds etc. was not relevant considerations to be scanned at the time of grant of registration. The relevant observations read thus:- “5. We have heard rival submissions and have carefully perused the entire record. From the objects filed and enclosed in the Paper Book, it is noticed that all the objects of the appellant institution are charitable in nature and none of the objects is otherwise than charitable in nature. Even the AO, vide his report dated 25.6.2012 has recommended that the appellant should be granted registration under Section 12A. In our considered opinion, the carrying on of charitable activities at the time of registration and the utilization of the funds etc. are not relevant and once the objects of the institution are found to be charitable in nature, registration under Section 12AA has to be granted. We have found that there is no merit in the reasoning given by learned Commissioner to reject registration. The applicant society is not required to prove its case that the project is to be run under its name in a charitable manner. The genuinity of the society is not, at all, in doubt. The genuinity of its financial activities is not to be considered at this stage. Therefore, the reasons given by learned Commissioner for refusing registration under Section 12A are not legally valid. Therefore, we direct the learned Commissioner to grant registration to the applicant society under Section 12A of the Act, as per Singh Gurbax 2014.05.28 16:26 I attest to the accuracy and integrity of this document High Court Chandigarh ITA No.322 of 2013 (O&M) 5 application filed in Form No.10.” 8. In view of the above findings which have not been shown to be illegal, perverse or erroneous in any manner, no question of law much less substantial question of law arises. Consequently, the appeal stands dismissed. (Ajay Kumar Mittal) Judge May 13, 2014 (Jaspal Singh) 'gs' Judge Singh Gurbax 2014.05.28 16:26 I attest to the accuracy and integrity of this document High Court Chandigarh "