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Income Tax Appellate Tribunal, MUMBAI BENCH “E”, MUMBAI
Before: SHRI VIKAS AWASTHY & SHRI GAGAN GOYAL
These appeals by assessee are directed against the order of Commissioner of Income Tax (Exemption), Mumbai (for short ‘CIT(E)’) dated 28.09.2022& 29.09.2022 under section 12AA & 80G of the Income Tax Act, 1961 (for short ‘the Act’) for A.Y. 2022-23. We shall first take up appeal in as lead case. The assessee has raised similar grounds for both the appeals, which are as follows:
“This appeal is against the order passed u/s 12AA by Commissioner of Income Tax (Exemptions), Mumbai under date September 28, 2022. 1) The learned Commissioner of Income Tax erred in rejecting the application forregistration under section 12AA made by the Appellant. 2) The learned Commissioner of Income Tax erred in misinterpreting andmisreading the clauses of the Memorandum of Association 3)The learned Commissioner of Income Tax erred in not granting adequate opportunity to the appellant to meet his case. 4) The Commissioner of Income Tax erred in ignoring the fact that the appellant: (a) Had been granted a Section & license (b) Had been granted a provisional registration by the Commissioner of IncomeTax's predecessor 5) Having regard to the facts and circumstances of the case, and the provisions of law, the appellant submits the Commissioner of Income tax be directed to grant the Certificate u/s 12AB to the appellant.”
Brief facts of the case are that the assessee trust applied for registration u/s. 12AB under sub-clause (vi) of clause (ac) of sub-section (1) of section 12A vide filing of form no. 10AB on 30.03.2022. Assessee is a company incorporated under the Companies Act, 2013 under section 8 of the said Act.
Assessee was incorporated on May 22, 2021 under section of the Companies Act, 2013. The primary object of the assessee is to launch a digital platform for fundraising by various NGOs. The platform will act as a link between various donors and various recipient NGOs. It will help raise donations in a seamless manner. Ld. CIT(E) found clause 3(b)(19) and 3(b)(24) of Memorandum of Association (MOA) objectionable while deciding application for final registration. It is also observed that before this application filed on 30.03.2022, assessee also filed an application on 06.09.2021 in form no. 10A and same was allowed u/s. 12A (1) (ac)(vi) provisionally w.e.f. 01.10.2021 from A.Y. 2022-23 To A.Y. 2024-25.
This provisional registration was granted, subject to fulfilment of certain conditions specified therein vide clause 10 (a) To 10 (r). Thereafter, assessee received a mail from the office of Ld. CIT(E), stating that the last day to file the application 12A (1) (ac)(iii) is 31.03.2022. In response to this assessee filed an application in form no. 10AB on 30.03.2022.
In response to this application the office of Ld. CIT(E), objected on clause 3(b)(19) and 3(b)(24) of Memorandum of Association (MOA), whereas there was no such objection while granting provisional registration certificate mentioned (supra). Rather, that provisional certificate was issued subject to fulfilment of conditions as mentioned in clause 10 (a) To 10 (r). Apparently, there is no case of revenue that assessee has violated any of the conditions mentioned in clause 10 (a) To 10 (r) of the provisional registration certificates and it will tantamount to review its own cautious decision taken earlier.
As per law even the provisional registration has to be granted subject to fulfilment of requirement of Law and then authorities may impose certain conditions within the boundaries of law to be followed by the assessee in its future conduct and endeavour. Here in this case after going through the MOA and AOA of the assessee initial provisional registration was granted further subject to fulfilment of conditions as prescribed vide clause 10 (a) To 10 (r). Issuance of final registration certificate is just a process in continuation to the earlier proceedings done at the time of issuance of provisional registration certificate.
We have further observed the objections of the revenue and reply of the assessee thereon as under:
3(b)(19) To Participate in all commercial -transactions which are direct or indirect relationship with the above-mentioned objects and to invest and deposit the surplus moneys of the company in such manner as may from time to time determined by the company, through the board 3(b)(24) To negotiate and enter into agreements and contracts with Indian and foreign individuals,companies,corporations, or any such other organisation for technical, business or any other assistance for carrying on the main objects of the trust "In this regard, we submit that the word 'foreign' used in our Memorandum, including in clause 3(b)(24), was only for furtherance of our charitable objects. However, out of abundant caution, we submit that we have initiated the process of removing the word 'foreign' from our Memorandum of Association, specifically from clause number 3(b)(24). In this regard we also assure your Honour that we shall not accept any foreign donations until we obtain a registration certificate under FCRA, 2010, which would lawfully allow us to except such donations. A sworn affidavit in support of our contention is enclosed.
On clause on 3(b)(24) we found assessee reply as satisfactory one and meet out the end of objection raised by the Ld. CIT(E). As far clause 3(b)(19) is concerned we don’t find anything which is contrary to the spirit of law and violative of stipulations imposed vide clause 10 (a) To 10 (r) of the provisional registration certificate granted. Still, revenue is fully empowered to verify the conduct of assessee through scrutiny, if they have any doubt of over the purposes of trust.
As per the scheme of law exemption certificate can never be denied to the assessee. The only power authorities have is with reference to pin point the relevant clauses which are in contradiction to the scheme of law and provide an opportunity to the assessee to remove the same. Even during assessment proceedings of a charitable institution exemption can be withdrawn for that very year in which assessee defaulted with the conditions and not forever. In view of the above, we found there is no case of revenue which stops assessee from enjoying exemption. In the result we set aside the order of Ld. CIT(E) and direct him to issue registration certificate in favour of assessee.
As far as is concerned, that is absolutely based on the outcome of ITA No. 2840/Mum/2022. As ITA No. 2840/Mum/2022 has already been decided in favour of assessee, ITA No. 2839/Mum/2022 relating to section 80G is also allowed.
In the result,both the appeals of the assessee areallowed.
Order pronounced in the open court on 20th day of March, 2023.