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Income Tax Appellate Tribunal, PUNE BENCH “B”, PUNE
PER ANIL CHATURVEDI, AM :
This appeal filed by the assessee is emanating out of the order of Commissioner of Income Tax (Exemptions) – Pune dated 28.05.2018 passed u/s 12AA(1)(b)(ii) of the Income Tax Act.
The relevant facts as culled out from the material on record are as under :-
Assessee is stated to be a Private Company incorporated under the Companies Act, 2013 on 14.02.2017 and stated to being formed to contribute for the welfare of society through engagement in
Corporate Social Responsibilities and such other activities for rural
development, promoting education, protection of national heritage etc.
Assessee made an application for registration u/s 12A of the Act
before ITO, Exemptions, Kolhapur on 02.11.2017 along with
supporting documents. Subsequently, assessee in reply to the letter
from CIT, Exemptions, Pune dated 10.01.2018 submitted the bills of
the expenses incurred / donations made etc. for verifying the
genuineness of activities of the assessee. The application of the
assessee was rejected by the Ld.CIT(E), Pune on the ground that the
genuineness of activities of the trust is not verifiable and the activities
of the trust are not charitable. Aggrieved by the order of Ld.CIT(E),
Pune assessee is now before us and has raised the following grounds :
“1. Ld CIT erred in not granting an appropriate opportunity of hearing and has thus violated the laws of nature justice. 2. The learned CIT erred in rejecting the application for registration of the appellant on the ground that activities of the trust are not genuine and object of the trust are not charitable. 3. The learned CIT while rejecting the application has erred in holding that the application cannot be processed as no verifiable details/ proof have been furnished by the appellant in respect of the activities claimed to be carried out by the appellant. 4. The learned CIT while rejecting the application for registration has erred in not appreciating the following important points that:
a. The foundation is registered as NGO u/s 8 of the companies Act,2013. b. The objects of the trust mentioned in the memorandum of association are purely of charitable nature. c. The audited books of accounts for the year ended 31.03.2017 were' furnished and details about the expenditure incurred were submitted along with the activities carried out were furnished before the ITO(Exemptions), Kolhapur from 30.10.2017. d. The submissions made before the ITO and inspector of CIT Exemptions at Kolhapur as well as Pune have not been considered before rejecting the application.”
Before us, at the outset, Ld.A.R. submitted that though
assessee Trust has raised various grounds but the only grievance of
the assessee is about the refusal of granting registration u/s 12AA of
the Act.
Before us, Ld.A.R. pointed to the objects of the Trust and
submitted that all the objects are charitable and that CIT(E) has
rejected the application without considering the submissions made
before ITO, Kolhapur and CIT(E), Pune. He further submitted that it
is a settled law that at the time of registration, the CIT(E) is only
required to look as to whether the objects of the Trust are charitable
or not and the activities are genuine and he is not required to examine
the application of income. He further submitted that various
requirements raised by Ld.CIT(E) were provided by the assessee. He
further submitted that without issuing any show cause notice and
only on the basis of assumptions, Ld.CIT(E), rejected the application
filed by the assessee. He further submitted that the CIT(E) be directed
to grant registration to the assessee. Ld. D.R. on the other hand,
supported the order of lower authorities.
We have heard the rival submissions and perused the material
on record. The issue in the present case is with respect to denial of
claim of registration u/s 12A of the Act. The registration u/s 12A of
the Act can be sought either by a Trust or by an Institution. In order
to avail of the benefit of exemption u/s 11 or 12 of the Act, the
activities of the Trust or the Institution must be charitable or for
religious purposes. The conditions for applicability of Sec.11 and 12
are provided u/s 12 A and one of the conditions is that the person in
receipt of the income which he claims to be for charitable purposes
has to make an application for registration of the Trust or the
Institution in the prescribed form and in the prescribed manner to the
Commissioner within the period stipulated therein. The procedure for
registration of the Trust or the Institution by the Commissioner is
provided u/s 12AA of the Act. Sec.12AA(1) requires the Commissioner
to whom an application is made for the registration of a Trust or
Institution to satisfy himself about the genuineness of the activities of
the Trust or the Institution as well as the objects of the Trust or
Institution and for that purpose Commissioner is vested with power to
call for documents or information and is also empowered to make
such inquiries as he may deem necessary in that behalf. The
Commissioner is thereupon empowered to pass an order in writing
either registering an Institution or if he is not satisfied about the
objects of the Trust or Institution and of the genuineness of its
activities, to pass an order in writing refusing to register the Trust or
Institution. Thus it can be seen that at the time of grant of
registration, the Commissioner is not empowered to examine the
application of income. The stage for consideration of the relevance of
the object of the Trust and the application of its funds arises at the
time of assessment. We further find that Hon’ble Kerala High Court in
the case of Shri Anjaneya Medical Trust Vs. CIT (2016) 382 ITR 399
(Ker) on the issue of the scope of inquiry by CIT(A) for the registration
u/s 12A and 12AA has observed as under :
“It is clear from a plain reading of sections 12A and 12AA of the Act that what is intended thereby is only a registration simpliciter of the entity of a trust. This has been made a condition precedent for the
claiming of benefits under the other provisions of the Act regarding exemption of income, contribution, etc. No examination of the modus of the application of the funds of the trust or an examination of the ethical background of its settlers is called for while considering an application for registration. The stage for consideration of the relevance of the object of the trust and the application of its funds arises at the time of assessment. Where benefits are claimed by the assessee in terms of sections 11 and 12 of the Act, the question as to the nature of such contribution and income can be looked into. At the time of registration of the trust, going by the binding judgments of the apex court, what is to be looked into is whether the trust is a genuine one and whether it is a sham institution floated only to avail the benefits of exemption under the Act. There is no such finding in the impugned order.”
In the present case, we find that there is no finding of CIT(E) on
the objects of Trust as mandated by the provisions of the Act as noted
above. Further it is also not in dispute that assessee had made an
application for registration in 02.11.2017. Considering the totality of
the aforesaid facts, we restore the issue back to CIT(E), Pune to decide
the issue of registration u/s 12AA of the Act in accordance with law
and after granting reasonable opportunity of hearing to the assessee.
Thus, the grounds of the assessee are allowed for statistical purposes.
In the result, the appeal of the assessee is allowed for
statistical purposes.
Order pronounced on 12th day of September, 2019.
Sd/- Sd/- (SUSHMA CHOWLA) (ANIL CHATURVEDI) �या�यक सद�य / JUDICIAL MEMBER लेखा सद�य / ACCOUNTANT MEMBER
पुणे Pune; �दनांक Dated : 12th September, 2019. Yamini
आदेश क� ��त�ल�प अ�े�षत/Copy of the Order forwarded to : 1. अपीलाथ� / The Appellant 2. ��यथ� / The Respondent 3. CIT(Exemptions), Pune. 4. Addl.CIT(Exemp), Pune. 5 �वभागीय ��त�न�ध, आयकर अपील�य अ�धकरण, “बी” / DR, ITAT, “B” Pune; गाड� फाईल / Guard file. 6.
आदेशानुसार/ BY ORDER
// True Copy // व�र�ठ �नजी स�चव / Sr. Private Secretary आयकर अपील�य अ�धकरण ,पुणे / ITAT, Pune.