SOCIETY FOR BETTERMENT OF EDUCATION MIDNAPORE,PASCHIM MIDNAPORE vs. CIT (EXEMPTION), KOLKATA, KOLKATA

Brief facts of the case are that the assessee society came into existence vide Memorandum of Association dated 03.05.1975. The society filed application in Form 10AA for registration u/s. 12AA of the Act on 01.09.2017. The Ld. CIT(E) during the hearing took note of the fact that the assessee society was having surplus fund in the past five years from 2012-13 to 2016-17 and taking note that since assessee’s gross receipt was more than Rs. 1 cr. it was not eligible to claim u/s. 10(23C)(iiiad) of the Act. According to the Ld. CIT(E), even though the assessee society having surplus amount they have not paid the taxes voluntarily. Even though the Ld. CIT(E) acknowledged the fact that assessee society’s object falls under the ambit of sec. 2(15) of the Act and it runs an educational

We have heard rival submissions and gone through the facts and circumstances of the case. Since facts stated above are not disputed, the same are not repeated for the sake of brevity. Though the Ld. CIT(E) acknowledges the fact that the assessee society’s objectives fall under the ambit of sec. 2(15) of the Act and it runs an educational institution, he was not convinced to grant registration u/s. 12AA of the Act on the aforesaid reasons stated herein above. However we cannot countenance the action of the Ld. CIT(E) since we are of the opinion that so far as grant of registration u/s. 12AA of the Act is concerned, the Ld. CIT(E)’s jurisdiction is only to verify the objects of the Institution/Trust/society and look into the genuineness of the activities, meaning thereby that he has to satisfy himself that the objects are charitable in nature and the activities being carried on or to be carried on are genuine, meaning thereby that they are in consonance for achieving the charitable object and nothing else. The Ld. CIT(E) while discharging his duty for grant of registration u/s. 12AA of the Act has to restrict himself in the field which we have stated above.

We note that the Ld. CIT(E) should have examined the genuineness of the society and its activities. There was no material to show that the assessee society was not genuine or that its activities were not as professed in the Memorandum of Association. There was no finding that the assessee society was a sham society. Since the primary object of the assessee/society was to give education and the objective is charitable in nature as specified in sec. 2(15) of the Act, the Ld. CIT(E) should have exercised his jurisdiction well within the area specified above. In the light of the aforesaid discussion, we are inclined to set aside the order of Ld. CIT(E) and remand the matter back to his file to consider the application for registration of the assessee society in the light of the aforesaid observation. The question as to whether the past income of the assessee society is leviable to tax is the lookout of the AO of the assessee and is not the issue before ld CIT(E). At the cost of repetition, we state the 3 Society For Betterment of Education Midnapore ld CIT(E) while considering the application of a society for registration u/s. 12AA of the Act has to verify the objects of the Institution/Trust/society and look into the genuineness of the activities, meaning thereby that he has to satisfy himself that the objects are charitable in nature and the activities being carried on or to be carried on are genuine, meaning thereby that they are in consonance for achieving the charitable object and nothing else. The Ld. CIT(E) while discharging his duty for grant of registration u/s. 12AA of the Act has to restrict himself in the field which we have stated above.It has to be remembered that if the assessee society has surplus or any income has escaped assessment there are sufficient power vested with the department to tax the assessee society as per law and in accordance to law. With the aforesaid observation, we are inclined to set aside the order of the Ld. CIT(E) and remand the matter back to his file for fresh adjudication of the application for registration u/s. 12AA of the Act.

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