Charitable registration for educational institutions cannot be denied for surplus or fee collection when objects and genuineness are established.

At the stage of registration under section 12AA, the Commissioner must confine the enquiry to whether the objects are charitable and the activities are genuine. An educational institution's objects remained charitable under section 2(15), and refusal could not rest on alleged commerciality, fee collection, surplus, or issues arising under the Right of Children to Free and Compulsory Education Act, 2009, which fall within that Act's own framework. The proviso to section 2(15) was held inapplicable to education. Once registration was directed to be granted, the consequential rejection of approval under section 80G, which depended entirely on that refusal, could not survive and was cancelled, subject to verification of the original instrument of establishment.

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Issues: (i) Whether registration under section 12AA could be refused on the grounds that the assessee's objects were not charitable, its activities were not genuine, and it was allegedly running on commercial lines by charging fees and by reference to the Right of Children to Free and Compulsory Education Act, 2009; (ii) Whether rejection of approval under section 80G could survive when it was based only on refusal of registration under section 12AA.

Issue (i): Whether registration under section 12AA could be refused on the grounds that the assessee's objects were not charitable, its activities were not genuine, and it was allegedly running on commercial lines by charging fees and by reference to the Right of Children to Free and Compulsory Education Act, 2009.

Analysis: The only statutory enquiry at the stage of registration is whether the objects are charitable and the activities are genuine. The assessee's main object was education, which falls within charitable purpose under section 2(15). The Commissioner did not record any adverse finding on the objects themselves and could not reject registration by importing issues under the Right of Children to Free and Compulsory Education Act, 2009, as that enquiry lies with the authorities under that Act. The proviso to section 2(15) does not apply to education, and the presence of surplus or fee collection by itself does not justify refusal of registration where the charitable educational character of the institution is otherwise shown.

Conclusion: Registration under section 12AA could not be refused on those grounds, and the direction to grant registration was warranted, subject to verification of the original instrument of establishment.

Issue (ii): Whether rejection of approval under section 80G could survive when it was based only on refusal of registration under section 12AA.

Analysis: The rejection of approval under section 80G rested entirely on the earlier refusal of registration under section 12AA. Once that refusal was set aside and registration was directed to be granted, the basis for rejecting section 80G approval no longer survived.

Conclusion: The rejection of approval under section 80G could not be sustained and was rightly cancelled.

Final Conclusion: The assessee succeeded on both matters, with the registration issue decided on merits and the approval issue allowed as a consequential result.

Ratio Decidendi: At the stage of registration under section 12AA, the Commissioner must confine the enquiry to the charitable nature of the objects and the genuineness of the activities, and cannot refuse registration on extraneous considerations or merely because the institution earns surplus from educational activity.

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