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of <h1>Tribunal Grants Registration to Society Denied by Tax Commissioner</h1> <h3>Labana Sikh Educational Society Barara Versus The CIT (Exemptions), Chandigarh</h3> Labana Sikh Educational Society Barara Versus The CIT (Exemptions), Chandigarh - TMI Issues Involved:1. Denial of registration under section 12AA of the Income Tax Act, 1961.2. Genuineness of the appellant society's activities and objects.3. Applicability of section 10(23C)(iiiab) versus section 10(23C)(iiiad) of the Act.4. Allegation of running institutions on commercial lines.Detailed Analysis:1. Denial of Registration under Section 12AA:The appellant society's application for registration under section 12AA was rejected by the Commissioner of Income Tax (Exemptions) on the grounds that the society's activities did not corroborate with its stated educational objectives. The appellant contested this, arguing that the Commissioner had erred in denying registration as the genuineness of the society's objects and activities had not been doubted.2. Genuineness of the Appellant Society's Activities and Objects:The society, established in 1981, aimed to provide balanced and wholesome education through institutions like Sant Mohan Singh Khalsa Labana Girls College and S.M.S. Public School. The Commissioner noted that the society's income was derived from donations and rent, while the schools earned from fees and rent. Despite this, the Commissioner did not find any adverse evidence against the society's objects and activities. The Tribunal emphasized that the scope of the Commissioner's power under section 12AA is limited to verifying the genuineness of the objects and activities, not the financial specifics. The Tribunal cited the Allahabad High Court's decision in Commissioner of Income Tax vs. Red Rose School, which clarified that the Commissioner should focus on the genuineness of the activities and objects when considering registration under section 12AA.3. Applicability of Section 10(23C)(iiiab) versus Section 10(23C)(iiiad):The Commissioner argued that the society should have claimed exemption under section 10(23C)(iiiab) instead of section 10(23C)(iiiad), as the aggregate receipts from the society's institutions exceeded Rs. 1 crore. The Tribunal found that this issue did not affect the genuineness of the society's activities. The Tribunal noted that the society had been availing exemptions in previous years without issue and that the exemption claim under section 10(23C)(iiiad) was a separate matter from the registration under section 12AA.4. Allegation of Running Institutions on Commercial Lines:The Commissioner claimed that the appellant society's institutions were being run on commercial lines, which would disqualify them from registration under section 12AA. The Tribunal found this assertion to be unsupported by any concrete evidence or figures. The Tribunal concluded that the Commissioner’s general comment lacked basis and did not warrant consideration.Conclusion:The Tribunal held that the Commissioner of Income Tax had erred in denying the registration under section 12AA, as the genuineness of the society's objects and activities had not been doubted. The Tribunal set aside the Commissioner’s order and directed that the registration be granted to the appellant society. The appeal was allowed, and the order was pronounced in the open court.
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