Recently, the Chandigarh Bench of the Income Tax Appellate
Tribunal ("Tribunal") upheld1 the denial of registration under section
12AA2 of the Income Tax Act, 1961
("ITA") to M/s Jiwan Dass Kartar Singh
Charitable Trust ("Trust") which was
acting as a franchisee of Zee Learn Limited ("Zee Learn")
for their Kid Zee pre-school.
Under the ITA3, the income of
institution generated from and applied towards a charitable purpose
(as defined under section 2(15)4 of
the ITA) is exempt from income tax. However, a registration under
section 12AA is a pre-requisite for an institution to be regarded
as a charitable institution.
The denial of registration in the instant case was on the ground
that the trust, through established with charitable objects, was
used to run a franchise for earning profits. As there was no intent
of imparting education to public at large and no charitable
activity being carried out in actuality, the registration denial
was upheld.
