12AA Registration cannot be withdrawn on Ground of Receiving Service Charges for conducting Programmes: Delhi HC [Read Order]

Finance Act - Delhi High Court - taxscan

While granting income tax relief to Institute of Road Safety & Fleet Managment Society, a division bench of the Delhi High Court held that receiving service charges by for conducting programmes cannot be reason to deny registration under Section 12AA of the income Tax Act, 1961.

In the instant case, the Director of Income Tax (Exemption) refused to grant 12AA registration to the Assessee finding that it had received service charges from the various organizations for conducting programmes.

However, the ITAT allowed the plea of the assesse on second appeal and directed  DIT(E) to grant registration to the Assessee under Section 12AA and deduction under Section 80G of the Income Tax Act, 1961.

Dismissing the departmental appeal, Justice S Muralidhar and Justice Prathibha M Singh upheld the ITAT order. The bench concurred with the findings of the Appellate Tribunal that the genuineness of the activities of the Assessee stood established and that the ingredients of Section 12AA of the Act stood satisfied.

This finding has not been shown to be perverse by the Revenue. It is in fact found by the DIT (E) that the activities carried on by the Assessee did fall under the last limb of Section 2(15) of the Act, that is, for advancement of any other object of general public utility. The mere fact that the Assessee had received service charges from the various organizations for conducting programmes would not convert its essential function to that of a business and this is what has also weighed with the ITAT to finally accept the case of the Assessee.”

Read the full text of the Order below.

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