CIT exemption cannot sit in appeal against affiliation granted to asseesee by Education Board. Permission examined by board can not be a subject matter of fresh examination by the CIT exemption.
ABCAUS Case Law Citation
ABCAUS 3512 (2021) (06) ITAT
In the instant case, the assessee had challenged the order passed by the CIT Exemption rejecting the application for registration under section 12AA of the income tax act 1961 (the Act).
Important case law relied referred:
Ananda Social & Educational Trust vs Commissioner of Income tax, [2020] 272 Taxman 7 (SC)
Commissioner of Income-tax (Exemption) vs. Association of Third Party Administrators [2020] 114 taxmann.com 534 (Delhi)
Fateh Chand Trust & College Committee vs. Commissioner of Income Tax (Exemption), Lucknow [2019]
Reham Foundation LKO.*[2019] 111 taxmann.com 379 (Allahabad)
The assessee was an Educational Charitable Trust was formed with the primary and main objective of rendering “education” being a charitable object as defined under section 2(15) of the Act.
The assessee trust was running a school under the name of ‘The Aryans’ School’ which is a CBSE affiliated school for Senior Secondary School Certificate Examination.
For initial ten years, when the annual aggregate receipts of the trust did not exceed the prescribed amount of Rs. 1 crore it had claimed exemption U/S 10(23C)(iiiad) of the Act.
The Trust in anticipation of greater annual receipts sought registration under section 12AA(1)(b) of the Act.
The Tribunal stated that with respect of satisfaction of the lower authority pertaining to genuineness of the activities of the trust is concerned, the law is fairly settled by the Hon’ble Supreme Court which requires the lower authorities to examine the memorandum of Association/or objects of the trust for the purpose of coming to the conclusion whether the activities of the assessee are genuine or not.
The Tribunal noted that Commissioner exemption was not satisfied with the answer given by the assessee and wrongly mentioned that the assessee had not obtained any permission /approvals/affiliation for implementing its objects.
The Tribunal opined that the Commissioner exemption can only ask for the compliance of other laws which are material for fulfilment of the objects of the assessee. The Commissioner cannot look into whether the approval or permission was rightly given or not.
The Tribunal pointed out that the affiliating Central Board of Secondary Education is a specialized and designated authority for the purpose of ensuring the quality, standard of education and is further bestowed with the responsibility to ensure safety, hygiene, potable water, health, building norm etc.
The Tribunal stated that once it or any other equivalent body had granted the affiliation to the assessee then the Commissioner exemption cannot sit in appeal against the affiliation granted to the assessee by the Education board.
Once affiliation is granted then the authorities and approval/permission, which had already been examined by the board should not be a subject matter of fresh examination by the Commissioner exemption.
In the light of the above and the other facts, the Tribunal held that the assessee was entitled to registration under section12AA of the Income Tax Act 1961.
Accordingly, the Tribunal directed the Department to grant registration to the assessee from the date of its application.
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