SCHOOL TO LEAD FOUNDATION,PUNE vs. COMMISSIONER OF INCOME-TAX (EXEMPTION), PUNE

PDF · subscribers
ITA 615/PUN/2020Status: DisposedITAT Pune28 January 20213 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal found that the CIT(Exemption)'s order was not a speaking order and lacked proper reasoning. Therefore, the matter was set aside and remanded back to the CIT(Exemption) for fresh adjudication.

What were the facts?

The assessee, School to Lead Foundation, applied for registration under Section 12AA. The CIT(Exemption) rejected the application, stating the company's main objective was business, not charitable purposes. The assessee appealed this rejection.

What were the issues?

Whether the CIT(Exemption) properly considered the charitable nature of the assessee's objects and provided a speaking order for rejection.

Which sections of the Income-tax Act were involved?

Section 12AA

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “B” BENCH, PUNE

Before: SHRI WASEEM AHMED, AM & SHRI PARTHA SARATHI CHAUDHURY, JM

For Appellant: Shri Parin Shah
Hearing: 29.01.2021Pronounced: 29.01.2021

आदेश / ORDER PER WASEEM AHMED, AM:

1.

The appeal filed by the assessee is directed against the order of the ld. Commissioner of Income Tax (Exemption), Pune (hereinafter referred as ‘CIT(E)’ for short) dated 30.09.2020 passed u/s 12AA(1)(b)(ii) of the Income Tax Act, 1961.

2.

The assessee has raised the following grounds of appeal :

“1. The Order passed by CIT (Exemption) is invalid and bad in law and required to be quashed. 2. Ld. CIT (Exemption) erred in law and on facts in rejecting application ignoring fact that, the appellant is a company with Charitable objects having license under section 8 of Companies Act, 2013 which inter- alia stipulate that, if the profits (if any) or other income whensoever is derived, the same shall be applied solely for the promotion of the objects set-forth in its Memorandum of Association and that no portion thereof shall be paid or transferred, directly or indirectly by way of dividend, bonus or otherwise by way of profit to persons who at any time are or have been members of the said company or to any person claiming through anyone or more of them ; That, no remuneration or benefit or other benefit in money or money's worth shall be given by the company to any of its member; That, if company contravenes any of the requirements of the section 8 of the act or rule or any of the conditions subject to which license is issued or if the affairs of the company are conducted fraudulently or in a manner violating of the objects of the company or prejudicial to public interest, the license shall be liable to be revoked. Copy of License and certificate of incorporation are attached. Ld. CIT (Exemption) ought to have considered these facts and grant the registration, it be so held now. 3.Ld. CIT (Exemption) erred in law and on facts in rejecting registration by ignoring the detailed submission made by your appellant on 10/08/2020 and as specially para 15 of the said submission wherein reference is made to clause-VIII of the Memorandum of Association which prohibit the company to carry on activity on commercial basis and/or with the motive of earning profits there from; any incidental profit / surplus that may arise from its activities shall be utilized for the furtherance of company's charitable objects. Ld. CIT (Exemption) ought to have considered the submission of your appellant and grant registration. It be so held now.

4. Ld. CIT (Exemption) erred in observing the fact that, the appellant company has charitable nature of objects and is desirous of imparting secular education. Ld. CIT (Exemption) ought to have granted the registration. It be so held now.”

3.

At the outset, it was observed that ld.CIT(E) has dismissed the petition filed by the assessee u/s 12AA(1)(b)(ii) of the Act by observing as under :

“Thus, it is seen that the main objective of the company is to do business / profession and not for any charitable purpose. 4. Considering the above facts, I am not satisfied about the charitable nature of objects of the trust / institution and hence, the request for grant of registration u/s 12AA of the Income-Tax Act, 1961 cannot be accepted.”

4.

On perusal of the above findings of the ld.CIT(E), we find that the order passed by him is not a speaking order. The provisions of Sec.250(6) of the Act requires to pass the order based on reasons and not a speaking order.

Accordingly, we are of the view that the matter needs to be adjudicated afresh by the ld.CIT(E) after pointing out that the objects of the assessee company are not charitable in nature. With these directions, we set aside the issue to the file of ld.CIT(E). Hence, the grounds of the appeal of the assessee are allowed for statistical purposes.

5.

In the result, the appeal of the assessee is allowed for statistical purposes.

Order pronounced on this the 29th day of January, 2021

More judgments on Section 12AA

All 4,243 judgments and leading authorities on Section 12AA →

Recent GST High Court judgments

Search GST case law →