The High Court of Punjab and Haryana observed that an educational institute duly registered as an educational trust, whose earnings are utilised for the purpose of advancement of education, cannot be denied the benefit of Section 12AA.
Brief Facts:
The respondent had applied for the registration of its association under section 12AA of the Income Tax Act, 1961, but the appellant cancelled the registration of the assessee under the said Act. The assessee challenged the refusal of the registration of the association before the Income Tax Appellate Tribunal. The Tribunal set aside the order of the Commissioner of Income Tax and allowed the registration. The Commissioner of Income Tax has challenged the order passed by the Tribunal before the Punjab and Haryana High Court.
Contentions of the Applicant:
It was submitted by the department that the society was not engaged in charitable activities and was not providing education as a charitable purpose within the meaning of Section 2(15) of the Act. Although the society had been approved under Section 10(23)(vi), but mere approval alone did not guarantee registration under Section 12AA. It was the assessee’s responsibility to prove to the authorities that the society was involved in charitable activities.
Observations of the Court:
The court referred to the decision in the case of Ananda Social and Educational Trust v. Commissioner of Income Tax and Anr., wherein the court held that for the purpose of allowing registration under Section 12AA of the Income Tax Act, 1961, the authority shall examine whether the object of the society is of charitable nature or not, and whether the activities being performed by the society are genuine.
The court observed that the institute is already registered under Section 10(23)(vi) as an educational institute, and Section 12AA relates to registration of trust, and since the institute is a duly registered educational trust and whatever earnings it receives are also utilised for the purpose of advancement of education, the institution could not have been denied the benefit of Section 12AA.
The decision of the Court:
The court dismissed the appeal and upheld the impugned order.
Case Title: The Commissioner of Income Tax, Patiala vs Yadvindra Public School Association, Patiala
Coram: Hon’ble Mr Justice Sanjeev Prakash Sharma and Hon’ble Mr Justice Sanjay Vashisth
Case No.: ITA-253-2011 (O&M)
Advocate for the Petitioner: Mr. Amanpreet (A.P.) Singh
Advocate for the Respondent: Mr. Abhinav Narang