Whether registration u/s 12A can be denied to an educational institute merely because it has not filled EWS quota seats with adequate numbers

THE issues before the Bench are - Whether registration u/s 12A can be denied to an educational institute merely because it has not filled the EWS quota seats with adequate numbers; Whether any fault in the activities of the assessee can be alleged where, despite the advertisement of school, appropriate number of EWS students were not admitted for reasons beyond the control of assessee and Whether Director of Exemption can deny exemption when the Directorate of education, the monitoring authority, could not find any fault with the activities of the assessee which are admittedly imparting of education. And the verdict goes in favour of the assessee.

Facts of the case

Assessee is a society running school under the name and style of "The Sanskirit", it has been granted registration of 12A long back and assessee was enjoying the same. However in the impugned year the assessee has been denied the registration of 12A, on the ground that the assessee has not fulfilled the Ews seats reserved for economic weaker section- Assessee challenged the order of the DIT before Tribunal and argued that there is no evidence on record which could prove that the assessee has denied admission to any EWS student and the fact of the matter is that because of the situation of the school the number of students from EWS are not coming for admission in school - The AR of the assessee also pointed out that monitoring authority that is Directorate of Education has also given clean chit to the assessee in this regard.

After hearing the parties the ITAT held that,

++ there is sufficient evidence available on record which is uncontested that the objects of the society are charitable in nature and a finding to the said effect has been given in the impugned order itself. Regarding the shortfall in the requisite no. of students belonging to the EWS category students in the facts as they stand no evidence of non-compliance has been brought to our notice either in the arguments or in the impugned order. The reasons consistently advanced for the situation in regard to locational aspect in the face of the evidence to the contrary have to be accepted as where there is no alleged violation of any of the requirements either of the Urban Ministry or of the Directorate of Education the authorities under the Incometax Act cannot be said to presume to sit over in judgment for the implementation of the public policy on the judgement of the authorities empowered to implement them. The DIT(E) in the facts of the peculiar case cannot cancel Registration in the facts of the present case for the reasons set out in the impugned order as the same amounts to usurping the Role of an authority constituted to implement the government policy. Only when there is any instance of violation of terms and conditions pointed out by the Directorate of Education and/or the Urban Ministry on the information of de-recognition of the school by the Directorate of Education. The tax authorities can take notice. The gravity of the consequences of holding a certain school as de-recognised is not to be trifled with or taken lightly and it is a powerful tool in the hands of the Directorate of Education and if it is taken away, serious consequences are visited on the school which is not a fact in the present case.