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A charitable institution is expected to comply with all the laws of the land. The Commissioner (Exemption) is vested with the power under section 12AA(3) to cancel the registration if the activities of the charitable institution are not genuine no matter it’s objects being charitable. The Madras High Court in (2023] 450 ITR 368 (Mad) held that the word “genuine” must be read as in compliance with all the laws of the land. If the institution or trust is used as a cloak to violate law, irrespective of whether any benefit is achieved or not, the benefit of registration cannot be permitted to accrue to the assessee.


In this case the trust violated with the provisions of Tamil Nadu Educational Institutions (Prohibition of Collection of Capitation Fee) Act, 1991 viz a viz receipt of capitation fee as a condition precedent for admitting a student. Likewise if it violate any other law there could lie difficulty in maintaining the exemption. 

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