DIRECTOR OF INCOME TAX vs. COMMERCE TEACHERS ASSOCIATION

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ITA - 1099 / 2011HC Delhi20 September 20114 pages
For Petitioner: ABHISHEK MARATHA
AI SummaryDismissed

What did the High Court hold?

The Tribunal held that the condition imposed was unwarranted as Section 12AA does not permit such stipulations. The High Court agreed with the Tribunal's view that while conditions can be imposed, the specific condition in question was inappropriate.

What were the facts?

The Commerce Teachers Association, a society with charitable objects, applied for registration under Section 12AA of the Income Tax Act. The Director of Income Tax granted registration but imposed a condition that the society should not charge any fee from beneficiaries or for talent exams.

What were the issues?

Whether the Director of Income Tax can impose conditions while granting registration under Section 12AA, and if so, whether the specific condition imposed was justified.

Which sections of the Income-tax Act were involved?

Section 12AA

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ITA 1099/2011 Page 1 of 4

* IN THE HIGH COURT OF DELHI AT NEW DELHI

Decision Delivered on: 20th September, 2011

+ ITA NO.1099/2011

DIRECTOR OF INCOME TAX (EXEMPTION) …..Appellant Through: Mr. Abhishek Maratha, Advocate

-versus-

COMMERCE TEACHERS ASSOCIATION .....Respondent Through: None.

CORAM:

HON'BLE MR. JUSTICE A.K. SIKRI

HON'BLE MR. JUSTICE SIDDHARTH MRIDUL

1.

Whether reporters of local papers may be allowed to see the Order? 2. To be referred to the Reporter or not? 3. Whether the Order should be reported in the Digest?

A.K. SIKRI, J. (ORAL)

1.

The Respondent-Assessee is an Association of Commerce Teachers which is registered as a Society under the Societies Registration Act, 1860. The Assessee claimed itself to be a Welfare Society whose objects are of charitable nature. As per 2011:DHC:4841-DB

ITA 1099/2011 Page 2 of 4

the Memorandum of Association it has 54 objects. The Society applied for grant of registration under Section 12AA of the Income Tax Act, 1961.

2.

The Director of Income Tax(Exemption) analysed the activities of the Assessee and was satisfied that the Assessee was deserved to be granted registration under Section 12AA of the Act. Accordingly, Order dated 28th September, 2010 was issued by the Director of Income Tax(Exemption) granting such a registration. However, certain conditions were imposed in the said registration. The Respondent-Assessee did not call in question any conditions except Condition No.11 which reads as under: “The society should not charge any fee/amount from the beneficiaries. Also shall not collect any fees on account of talent exam.”

3.

Challenging the imposition of the aforesaid condition as unwarranted the Respondent-Assessee preferred Appeal before the Income Tax Appellate Tribunal, which has been allowed by the learned Tribunal holding that there was no purpose to impose such a condition. It is inter alia recorded by the Tribunal 2011:DHC:4841-DB

ITA 1099/2011 Page 3 of 4

that there is no dispute that otherwise Respondent-Assessee fulfills all the relevant conditions for claim of registration under Section 12AA of the Act. Section 12AA of the Act nowhere provides that the Director of Income Tax(Exemption) would grant registration subject to imposition of stipulation as enumerated at Serial No.11 of the certificate.

4.

Learned Counsel for the Appellant argues that this Court in the Digember Jain Society for Child Welfare vs. Director General of Income Tax(Exemptions), (2010) 329 ITR 459, has categorically held that while granting the exemption the Director General is free to incorporate stipulations and conditions in terms of the third proviso. On this basis it is argued that the Tribunal is not right in holding that the registration cannot be subject to conditions.

5.

After reading the Order of the Tribunal we are of the opinion that the Tribunal has nowhere said that conditions cannot be imposed at all. The only dispute was about the nature of Condition No.11 and entire observations of the Tribunal are qua that condition holding it to be unwarranted. We are in 2011:DHC:4841-DB

ITA 1099/2011 Page 4 of 4

agreement with the view taken by the Tribunal. No question of law arises. The Appeal is accordingly dismissed.

A.K. SIKRI, J.

SIDDHARTH MRIDUL, J. SEPTEMBER 20, 2011

2011:DHC:4841-DB

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