Registration can’t be denied to Charitable Institution merely because It is solely for benefit of Christian Community: Patna HC [Read Judgment]

The Patna High Court has held that, Registration can’t be denied to Charitable Institution merely because It is solely for benefit of Christian Community.

The appellant is an educational institution which was granted registration under section 12AA on April 26, 1985. In the year 2011, the income tax department cancelled its registration on the ground that its activities were exclusive to benefit of Christians rather than for the public.

The assessee, before the High Court, held that the registration of an Educational Society cannot be cancelled if the CIT omits to record to its satisfaction that the activities of the institution are not in accordance with its objective.

After hearing both the sides, the bench comprising Justices Jyoti Saran and Partha Sarthy observed that in sub-section 3 of Section 12AA of the Income Tax Act, it is only in two circumstances that such power can be exercised by the Principal Commissioner or the Commissioner. Those are (a) if the activities of such trust or institution are not found genuine; or (b) the activities of such trust or institution are not being carried out in accordance with the objects of the trust or institution.

“The legislative intent of the provision of sub-section 3 of Section 12AA is loud and clear and it is if and only if, the institution in question is found violating either of the two conditions that the Principal Commissioner or the Commissioner can exercise such power to cancel the registration and in no other circumstance,” the bench said.

“A plain reading of the order would confirm that the Commissioner has got mixed up in between the stipulations warranting exercise u/s 12AA(3) and Section 13(1) (b) in so far as it dis-entitles a trust or a charitable institution to the exclusion from the total income of the previous year, any income, if the same is used for benefit of any particular religious community or caste. Any such issue can be a subject matter of assessment proceeding but certainly cannot lay a foundation for cancellation of registration of the institution altogether unless the two prerequisites as present in sub-Section 3 of Section 12AA are satisfied. Since, there is no satisfaction recorded by the CIT either that the activities of the assessee was not genuine or that it was not being carried in accordance with the objects for which it was set up, the conclusion is drawn by the authorities in the order in reference to the provision of Section 13(1)(b), is a confirmation of perversity,” the bench said.