1. This appeal of the assessee challenges non-granting of registration to it under Section 12AA of the Act by learned CIT vide his order dt.
30th Jan., 2006.
2. The facts are that the Modern Defence Shikshan Sansthan, Shivganj, applied for registration under Section 12AA of the Act. The learned CIT refused to grant the registration to it on the reasoning that this institution had taken a building to run the school owned by Shri Jagjeet Singh and Smt. Nisha Kanwar, who are close relatives of one of the trustees of the applicant society. The learned CIT sought explanation from the applicant society in this regard and reply was filed to the effect that owners of the building are not related either to the President or the Treasurer of the trust and also do not have any post in the trust. It was also explained that the standard rent in the area in which this building is situated is much more than what is being paid by the trust.
3. We have heard the rival submissions and perused the evidence available on record.
4. It has been contended before us by the learned Authorised Representative that the learned CIT invoked the provision of Section 13(1)(c)(i), 13(1)(c)(ii) and 13(3)(b) of the Act on a wrong premise, for considering the grant or non-grant of registration under Section 12AA of the Act. We are totally in agreement with learned Authorised Representative, because at the stage of consideration of the issue of registration under Section 12AA, it is not a sine qua non to examine the aspect of the application of income. Until registration is granted the question of application of fund does not arise at all. The learned CIT has not given any other reasons, say, the objects etc., which according to him violates the provisions of granting the registration.
In these circumstances, when the learned CIT has not doubted the aims and objects of the society, he cannot throw away the application of registration on this pretext. Therefore, in our view, the registration sought for under Section 12AA by the applicant society should have been granted by him. The question of application of the funds, which has been discussed by the learned CIT which attracts the provisions of Sections 13(1)(c)(i), 13(1)(c)(ii) and 13(3)(b) as mentioned above have to be considered only thereafter. Accordingly, we direct the learned CIT to grant registration to the society under Section 12AA of the Act.