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Income Tax Appellate Tribunal, DELHI BENCH ‘D’, NEW DELHI
Before: Sh. K. N. CharyDr. B. R. R. Kumar
Per Dr. B. R. R. Kumar, Accountant Member:
The present appeals have been filed by the assessee against the orders of ld. CIT (E), Chandigarh, dated 30.06.2017 refusing to grant registration u/s 12AA and Section 80G(5)(vi).
The stated aims and objects of the trust are to establish, run and manage of Kalyankari Satsang Asharam (Kabir Panth) and to arrange satsang for providing spiritual knowledge to establish and run the educational institutions to establish and run the ayurvedic, homeopathic and yog sadhana center for providing better health service; to establish and run gaushala. & 4789/Del/2017 2 Sat Kabir Sidhant Parchar Trust 3. The ld. CIT (E) examine the accounts of the assessee and the bank statements wherein Rs.3,37,700/- has been debited to S.K. Motors Pvt. Ltd. and an amount of Rs.1,50,000/- to Goel Jewellers. The ld. CIT (E) found that the expenses shown in the income and expenditure accounts pertain to Bhandara expenses. The ld. CIT (E) also held that the activities of the trust reveal that the trust has restricted itself to religious activities only and hence not covered under definition of charity as explained u/s 2(15) of the Act.
During the hearing before us, the ld. AR argued that Rs.53,00,000/- shown in the provisional financial statement wherein the ld. CIT (E) held that the donor could not be ascertain was factually incorrect. He produced the receipt along with the complete address of the donor. Further, he argued that Bhandara expense is a wider charitable general public utility. He relied on the judgment of the Hon’ble Jurisdictional High Court in the case of Ophthalmic and Optometry Research Education Centre In and Judgment of Hon’ble Supreme Court in the case of Ananda Social and Education Trust 2020 (2) TMI 1293
Against the arguments of the ld. AR, the revenue argued that the assessee is not in the activities that are of charitable in nature and as per the provisions of the Act, the ld. CIT (E) is empowered to satisfy himself about the genuineness of its activities and in case where the activities are found to be non- genuine, the registration ought to have been not accorded.
The ld. DR further relied on the following case laws is have been duly perused by us: & 4789/Del/2017 3 Sat Kabir Sidhant Parchar Trust CIT Vs. Savior Charitable Trust [2013] 35 taxmann.com 295 (Punjab and Haryana) CIT Vs. Jagannath Gupta Family Trust [2019] 102 taxmann.com 34 (SC) Corbett Educational Society Vs. CIT [2017] 82 taxmann.com 249 (Delhi-Trib.) Suchinta Educational Society Vs. CIT [2013] 35 taxmann.com 178 (Chandigarh-Trib.) Hardayal Charitable and Educational Trust Vs. CIT [2012] 25 taxmann.com 288 (Agra) Ganeshi Lal Educational Society Vs. CIT [2013] 40 taxmann.com 257 (Punjab and Haryana)
On perusal, we find that the decisions in the case Suchinta Educational Society and Hardayal Charitable and Educational Trust have been reversed. In the case of Savior Charitable Trust and Jagannath Gupta Family Trust dealt with non-identification of donors whereas the case of Corbett Educational Society dealt with diversion of income to the family members. Thus, we find the case relied by the ld. DR are not applicable to the facts of the instant case.
With the background of the applicant, it would be pertinent to point out the extant provisions guiding the grant of exemptions u/s 12A. The provisions of Section 12AA are as under:
“The [Principal Commissioner or] Commissioner, on receipt of an application for registration of a trust or institution made under clause
(a) [or clause (aa) of sub-section (1)] of Section 12A shall-
(a) Call for such documents or information from the trust or institution as he thinks necessary in order to satisfy himself about the genuineness of activities of the trust or institution and may also make such & 4789/Del/2017 4 Sat Kabir Sidhant Parchar Trust inquiries as he may deem necessary in this behalf; and (b) After satisfying himself about the objects off the trust or institution and the genuineness of its activities, he-
(i) shall pass an order in writing registering the trust or institution;
(ii) shall, if he is not so satisfied, pass an order in writing refusing to register the trust or institution.......
The definition under section 2(15) of the Act defining charitable purpose as an inclusive definition under which the trust or institution carrying on the following activities are said to have carried on charitable activities: (a) Relief to the poor; (b) Education; (c) Medical relief; (d) Preservation of environment; (e) Preservation of monuments or places or objects of artistic or historic interest; (f) Advancement of any other object of general public utility.
In order to avail the benefit of exemption under section 11 /12 of the Act the activities of the trust or institution is to be charitable purposes. The conditions for applicability of sections 11 and 12 of the Act are provided under section 12A of the Act and one of the conditions is that the person in receipt of the income which he claims to be for charitable purposes is to make an application for registration of & 4789/Del/2017 5 Sat Kabir Sidhant Parchar Trust the trust or the institution in the prescribed form and in the prescribed manner to the Commissioner within the stipulated period of creation of the trust or the establishment of the institution. On receipt of the application in the requisite form No.10A along with Instrument of creation of the trust or the institution, the procedure for registration of the trust or the institution by the Commissioner is provided under section 12AA of the Act.
Admittedly, at the time of grant of registration the Commissioner is not empowered to examine the application of income but he has to examine whether the application is made in accordance with the requirements of section 12A of the Act and whether form No.10A has been proper or not. The Commissioner is further to examine whether the objects of the trust are charitable or not and also to satisfy himself about the genuineness of the activities of the trust or the institution. The Commissioner is not to examine the application of income at this juncture. The Hon'ble Supreme Court in CIT v. U.P. Forest Corpn. [1998] 230 ITR 945/97 Taxman 259 (SC), held that in order to take advantage of the provisions of section 11 of the Act, the trust or the institution has to get itself registered. Whether the income of the institution can be regarded as being held for charitable purposes and whether the institution is entitled to registration under section 12A of the Act, requires investigation of facts. In view thereof, section 12AA of the Act recognizes the principle laid down by the Hon'ble Supreme Court and Commissioner under section 12AA of the Act is empowered to call for such documents or information from the trust or the institution in order to satisfy himself that the & 4789/Del/2017 6 Sat Kabir Sidhant Parchar Trust objects of trust are charitable and also about the genuineness of the activities of the trust or the institution and is also empowered to make such enquiries as he deem necessary in this regard. From the enquiries conducted by the ld. CIT (E), we find that ld. CIT (E) has not brought anything on record to prove that the objects of the trust or institution are not charitable in nature. Hence, we set aside the order of the ld. CIT (E) declining the registration u/s 12AA and u/s 80G(5)(vi).
As a result, both the appeals of the assessee are allowed for statistical purposes. Order Pronounced in the Open Court on 19/03/2021.