IIGJ RESERCH AND LOBORATORES CENTRE,MUMBAI vs. COMMISSIONER OF INCOME TAX , (EXEMPTION), MUMBAI

ORDER Per: Smt. Beena Pillai, J.M.: The present appeal filed by the assessee arises out of order dated 27/11/2024, passed by Ld. CIT(E), Mumbai. At the outset Ld.AR submitted that, assesse applied in form 10AB u/s.12A(1)(ac)(iii),seeking registration u/s 12AB of the Act. 2. It is submitted that, the assessee received provisional registration on 30/03/2022, for assessment years covering from Assessment Year: NA IIGJ Research and Laboratories Centre 2022-23 to 2024-25. It is submitted that subsequently the assesse was issued notice dated 17/09/2024, calling upon the assessee to furnish various details. Vide letter dated 03/10/2024 the assesse furnished relevant details on the e-portal as called for. 2.1. Subsequently, another notice was issued on 29/10/2024 calling upon assessee for further details in respect of certain specific clauses in the trust deed wherein, the assessee had intention to apply funds outside India. In response to said notice, the assesse requested for time to comply with, due to ongoing Diwali Festival. 2.2. Accordingly, another notice was issued on 16/11/2024 fixing the date of hearing on 19/11/2024. The assesse somehow could not comply with the said notice and the impugned order for was passed rejecting the registration, or non-furnishing of details and failure to comply with necessary compliance. Aggrieved by the order passed by the Ld. CIT(E) assesse is in appeal before this Tribunal.

3. The Ld.AR at the outset submitted that, the appeal may be remanded to Ld. CIT(E) by granting an opportunity to furnish all relevant details in respect of the quires raised vide notice dated 29/10/2024. 3.1. He submitted that, due to inadvertence the assesse failed to respond to the notice dated 16/11/2024. He submitted that in the interest of natural justice the assesse may be granted an opportunity of being heard. 3.2. On the contrary, the Ld. DR placed reliance on the following decision wherein the cancellation of was up held due to certain specified violations:

4. Based on review of the ancillary objects mentioned in para 3(b) of the Memorandum of Association, the Ld. CIT(Exemptions), vide notice dated 29th October 2024 (Page 44 of the Paper book) raised a query with respect to certain clauses of ancillary objects wherein reference was made to words such as “abroad", "world", "international organisation", etc. This includes activities such as publications, advertisements, receipt of grants or assistance from international organizations, attending global conferences, promote the Indian gemology market at global level, etc. It is submitted that the activities stated therein are for promoting Indian Gem & Jewellery Industry, more specifically in the field of grading and Assessment Year: NA IIGJ Research and Laboratories Centre gemology, at a global/international level. Therefore, the situs and benefit accruing from charitable activity proposed to be carried out by the Appellant is in India.

a. The Ld. CIT(Exemptions) has not invoked the provisions of section 12AB of the Act and therefore the above provisions are not applicable to the facts in the present case. b. Sub-sections (4) and (5) of section 12AB would apply to a case where registration or provisional registration has been granted and subsequently the specified authority has inter alia notice occurrence of one or more specified violations. In such a case, the said authority may pass an order cancelling the registration of such trust. It is submitted that this power would be relevant in a case where registration is sought to be cancelled and not at the stage of grant of registration. c. Clause (f) of Explanation which defines "specified violation" refers to non-compliance with the requirement of any other law as referred to in item (B) of sub-clause (i) of clause (b) of sub-section (1) and the holding that occurrence of such non-compliance has either not been disputed or has attained finality. In this regard, the following will be relevant, which are in the alternative and without prejudice to any others: i. There should be a requirement in any other law for the time being in force which will be material for the purpose of achieving the objects of the trust and that there should be compliance of such requirement. It is submitted that section 11(1)(c) would not be regarded as such requirement as it is not any other law but a part of the Act. Further, this cannot be regarded as a 'requirement which will be material for the purpose of achieving the objects of the trust.. Such a requirement would mean a positive condition to be fulfilled and it should be material for achieving the objects, none of which are relevant in so far as section 11(1)(c) is concerned. ii. This requirement can trigger only upon an act of actual non-compliance. The clauses as relied upon by the CIT (Exemptions), Mumbai are enabling powers to obtain the objects of the trust which may or may not be exercised. It is not his case that there has been any non-compliance with section 11(1)(c) in the present case. d. If grant of registration is rejected on this ground, then section 11(1)(a) and 11(1)(b) which deals with the quantum of income for which exemption is to be granted and refers to the extent it has been applied to such purpose in India to be redundant and otiose as this requirement will never arise in any case in the absence of registration under section 12AB of the Act.

Assessment Year: NA IIGJ Research and Laboratories Centre e. With respect to the decision of Hon'ble Delhi High Court in the case of DIT v. National Association of Software and Services Companies (supra) and Hon'ble Tribunal in the case of India Brand Equity Foundation (supra), the issue involved was whether expenditure incurred outside India in connection with exhibition/fair outside India would constitute application of income under section 11 of the Act. It is submitted that the issue in the present case is with respect to registration under section 12AB of the Act and not with respect to allowability of application of income which is an issue dealing with computation of income. As stated above, the Assessing Officer has the jurisdiction to examine and assess the applicability of particular income or expense vis a viz. the provisions of section 11 to 13 of the Act. The examination of such issues at the time of registration would result in merger of registration and assessment proceedings which is not the intent of the law and render the assessment proceedings otiose.

5. Accordingly, grounds raised by the assesse stands partly allowed for statistical purposes.