High Court Of Allahabad
CIT vs. Lucknow Educational and Social Welfare Society
Section : 12AA
Ferdino Inacio Rebello, CJ.And Dr. Satish Chandra, J.
IT Appeal No. 190 Of 2005
February 14, 2011
JUDGMENT
1. This appeal was admitted on the following questions :
“1. Whether, on the facts and in the circumstances of the case, the learned Income-tax Appellate Tribunal was legally correct in giving directions to the Commissioner of Income-tax-II, Lucknow, to grant registration to the society under section 12AA of the Income-tax Act, 1961 ?
2. Whether, on the facts and in law, the learned Income-tax Appellate Tribunal was legally correct in holding that where the aims and objects appear charitable in nature as per the memorandum, the registration should be granted to the society ?
3. Whether the learned Income-tax Appellate Tribunal was erred in law and on facts in directing the Commissioner of Income-tax-II, Lucknow, to grant registration to the society against the facts narrated by the Commissioner of Income-tax-II, Lucknow, in his order that no activities of charitable nature were carried on by the society.”
2. The present society, which is the respondent here, had applied for registration under section 12AA of the Income-tax Act, 1961 (hereinafter referred to as “the Act”). The authority, namely, the Commissioner (appellant herein) by a speaking order dated October 28, 2004, for the assessment year 2003-04, held that the activities of the applicant are only for commercial purposes and to gain personal profit. Accordingly, he refused to register the society under section 12AA(1)(b)(ii) of the Act. The learned Commissioner has also noted that there was an erstwhile society, known as “Lucknow Shikshan Sansthan” which was registered on September 9, 1987, and the said society, in the course of its functioning, had four branches in the name of “New Public Inter College”. A resolution was passed in the general meeting of that society on June 5, 2002, to dissolve the society and devolve the movable and immovable assets of the society to the three societies with similar objectives. The society “Lucknow Educational and Social Welfare Society” by devolution inherited the movable and immovable assets located at the branches “New Srinagar” and “Krishnanagar”. As the erstwhile society never compiled its accounts, hence no final accounts reflecting the value of fixed assets existed at the time of dissolution. The learned Commissioner (appellant) also noted that the assessee-society was asked to furnish registration proof of “Lucknow Shikshan Sansthan” as well as its “Smriti Patra” and “Niyamawali”. In response thereto, the copy of registration certificate of the “Lucknow Shikshan Sansthan” was furnished but its “Smriti Patra” and “Niyamwali” were not produced. The appellant herein proceeded in the absence of the same and opined that it was not known whether the society existed for charitable purpose only or for the purpose other than charitable purpose or for both and whether the erstwhile society was having similar objectives as the applicant-society. Thereafter, the appellant proceeded to examine the books of account, case law relied upon by the respondent herein and came to the conclusion which he has arrived at.
3. Thereafter, this matter was taken up in appeal before the Income-tax Appellate Tribunal (ITAT). The learned Income-tax Appellate Tribunal considered the requirement for registration under section 12AA of the Act. It observed that while granting registration, the Commissioner of Income-tax has to examine the two aspects for registration of a society-Firstly, whether the activities of the society were genuine and, secondly, whether the object of the society was charitable. The Income-tax Appellate Tribunal thereafter recorded a finding that there was no dispute that the assessee was running an institution, which is a genuine activity and that the object for which the society was formed has been given in the “Smriti Patra”. All the objects were of the general public utility. A finding was recorded that there was no evidence on record before the Commissioner of Income-tax to record a finding that the objects of the society were not charitable and, therefore, from the documents filed therein, the assessee has satisfied the conditions for registration under section 12AA of the Act and accordingly issued the directions. This order was passed on July 7, 2005, which has been challenged before this court by the appellant-Commissioner of Income-tax-II, Lucknow.
4. On behalf of the appellant, learned counsel has contended that firstly in the absence of “Smriti Patra” and “Niyamawali”, the learned Tribunal could not have proceeded to direct the Commissioner of Income-tax to register the society. Secondly, it was submitted that at the highest if the Tribunal had come to the conclusion that there were sufficient material for arriving at the conclusion which it has arrived at, it ought to have remanded the matter to the Commissioner of Income-tax for reconsideration. Reliance was placed upon a judgment of the Supreme Court in the case of Municipal Corpn. of Delhi v. Children Book Trust AIR 1992 SC 1456.
5. On the other hand, on behalf of respondent-assessee, learned counsel submits that the questions raised in this appeal have been answered by a Division Bench of this court in the case of CIT v. Red Rose School [2007] 163 Taxman 19 (All.). It was submitted that in the instant case, the necessary documents were available before the Tribunal and on the basis of the same, the Tribunal has recorded the finding that the objectives were genuine and the respondent-assessee was carrying on the activities for charitable purposes. The learned Tribunal was, therefore, right in directing for registration of the society.
6. We have heard learned counsel for the parties and gone through the materials available on record.
7. As rightly held by the learned Bench of this court in Red Rose School’s case (supra) that in the absence of registration, the assessee would be deprived of claiming such benefit, even though it is otherwise entitled for the same either in respect of the entire income or a part thereof. The tests for registration which have to be applied are-(1) whether the activities of the society are genuine, and (2) whether the purpose of the society is charitable.
8. In the instant case, on the basis of the documents filed in support the registration and the objection raised by the appellant-Revenue, we have examined as to whether such a contention was raised in the appeal memo. We find that no such contention has been taken. The contents now raised is that the applicant-respondent had not produced the “Smriti Patra” and “Niyamawali” of the appellant. The finding recorded by the Commissioner of Income-tax was documents not of this assessee but of its predecessor in title. Apart from the above, and considering the finding of the Commissioner, it is evident that merely by observing that the objects of the society were not charitable, cannot be a ground for refusing to grant registration. The Commissioner had to apply the test whether the activities are genuine and its object charitable.
9. Considering the above, the Tribunal having come to the conclusion that the assessee had satisfied the conditions for registration under section 12AA of the Act as to both the objects and in the absence of any other material, the question of law as framed cannot arise and, consequently, the appeal is dismissed.
[Citation : 340 ITR 86]
