ITAT allows appeal of U.P. Wrestling Association for charitable status under Income Tax Act

The Income Tax Appellate Tribunal (ITAT) allowed the appeal of the U.P. Wrestling Association, directing the Commissioner to register the association under Section 12AA of the Income Tax Act. The Tribunal held that the association's activities for the advancement of sport (Wrestling) were charitable. The ITAT's decision was based on the principle that registration should focus on the genuineness of the trust or society's objects, not on activities that have not yet commenced. The Tribunal's decision was upheld, dismissing the appeal and affirming the registration of the association under Section 12AA.

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Issues:
1. Appeal against rejection of registration under Section 12A(a) of the Income Tax Act, 1961.
2. Justification of directing the Commissioner of Income-tax (Exemptions) to grant registration u/s 12AA(I)(b) of the Act to the assessee society.

Analysis:
The case involved an income tax appeal against the rejection of registration under Section 12A(a) of the Income Tax Act, 1961. The U.P. Wrestling Association had applied for registration, which was initially rejected by the Commissioner of Income Tax (Exemptions) on the grounds that the association was not carrying out activities wholly for religious and charitable purposes as required by the Act. However, the Income Tax Appellate Tribunal (ITAT) allowed the appeal, stating that the association's activities for the advancement of sport (Wrestling) were within the term 'charitable.' The Tribunal directed the Commissioner to register the association under Section 12AA of the Act.

The appeal raised the question of whether the ITAT was justified in directing the Commissioner to grant registration under Section 12AA(I)(b) of the Act to the assessee society. The Tribunal's decision was based on the precedent set by a Division Bench judgment of the High Court, which emphasized that at the time of registration under Section 12AA, the Commissioner is not required to look into activities that have not yet commenced. The focus should be on the genuineness of the objects of the trust or society seeking registration. The judgment highlighted that the registration cannot be refused solely because the charitable activities have not started. The Tribunal's decision was in line with this legal principle, and the order of the Commissioner was found to be contrary to the law as laid down by the Division Bench.

The judgment also referred to other High Court cases to distinguish the facts of those cases from the present situation, emphasizing that the rejection of registration should be based on the genuineness of the objects and not the activities that have not yet commenced. The Tribunal's view, supported by the Division Bench judgment, was considered valid and in accordance with the law. Therefore, the Tribunal's decision to set aside the order of the Commissioner and direct the registration of the association under Section 12AA was upheld. The appeal was dismissed, affirming the Tribunal's decision and answering the question framed against the Revenue.

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