2017 (11) TMI 1722

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....er Section 12AA(b)(ii) of the Income Tax Act, 1961. The appeal was admitted on the following substantial questions of law:- "1. Whether the ITAT erred in law in misinterpreting the provision and language of Section 12-AA which use the phrase "call for such documents and information" and the phrase may also make such inquiries as deem necessary? 2. Whether the ITAT was justified in law in curbing the legislative powers provided to the C.I.T. U/s 12-AA to be exercised before granting registration? 3. Whether in the facts and circumstances of the case and in law, the Hon'ble ITAT was correct in law in holding that in considering an application u/s 12AA, the Commissioner is not required to look into the nature ....

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....ut returning any independent finding as to how according to the Tribunal, the assessee had earned it's entitlement to exemption. Sri Shubham Agarwal, learned counsel for the revenue submits, exemption under Section 12AA of the Act could have been granted if, the Commissioner had been satisfied that the objects of the assessee an education society were charitable. Insofar as neither the CIT nor the Tribunal have recorded any finding to that effect, the Tribunal could not have granted relief of registration to the assessee under Section 12AA of the Act. Alternatively, he relied on a judgment of the Division Bench of this Court in the case of The Commissioner of Income Tax Vs. Wilsonia College Society reported in (2017) U.P.T.C. 679 ....

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....unsel for the assessee that the finding of the CIT was based on extraneous or irrelevant consideration and the order of the Tribunal, the order of CIT, to that extent, is wholly justified. This Court in the case of CIT Vs. Wilsonia College Society (supra) while dealing with a similar issue had followed an earlier judgment of this Court in the case of Commissioner of Income Tax Vs. Red Rose School reported in (2007) 212 CTR 394 (All) and had held as below:- "We have perused the aforesaid decision and find that the profit earning or misuse of income derived by charitable institution from its activities may be a ground for refusing exemption under the Act which is a matter to be considered and decided at the time of assessment but ....