YOGA VISMAYA TRUST ,SHIMOGA vs. CIT, EXEMPTIONS, , BANGALORE

The learned CIT[E] erred in refusing to grant of registration u/s 12AB of the Income-tax Act, 1961, on the erroneous ground that the trust deed of the appellant lacked essential clauses as listed in SI.No.5 and that the Page 2 of 4 appellant had not undertaken the necessary amendment to date, without appreciating that the appellant was in the process of amending the trust deed under the facts and in the circumstances of the appellant's case.

The learned CIT[E] erred in refusing to grant registration u/s 12AB of the Income-tax Act, 1961, holding that the appellant's financials show personal expenditure incurred in the nature of depreciation and expenses of KIA Carnival Car (as identified from depreciation schedule) of about 15%, which is not a relevant consideration at the stage of grant of registration.

The learned CIT[E] erred in refusing to grant of registration u/s 12AB of the Income-tax Act, 1961, holding that there are lot of adverse remarks appearing on Google Reviews regarding the Yoga services offered by the appellant, which is not a relevant consideration at the stage of grant of registration.

The learned CIT[E] erred in refusing to grant of registration u/s 12AB of the Income-tax Act, 1961, observing that there was suspicion that the activity of assessee is assuming character of a commercial activity, simply because the appellant charges certain consideration for courses offered, which suspicion cannot be a ground to conclude that the activity of the appellant is commercial in the nature or that the appellant has to be regarded as a wellness institution and not a yoga centre.

The learned CIT[E] failed to appreciate that the order refusing registration u/s. 12AB on the grounds listed above was passed in excess of juri iction by erroneously making certain observations that are alien to the consideration for grant of registration and therefore, the impugned order passed deserves to be vacated and the appellant be granted registration u/s. 12AB of the Act.

For the above and other grounds that may be urged at the time of hearing of the appeal, your appellant humbly prays that the appeal may be allowed and Justice rendered and the appellant may be awarded costs in prosecuting the appeal and also order for the refund of the institution fees as part of the costs.”

The brief facts of the case are that the assessee is a charitable trust and got provisional registration u/s. 12AB of the Act and subsequently applied for the permanent registration on 10/09/2024. The Ld.CIT(E) based

As against the said order, the present appeal has been filed by the assessee.

At the time of hearing, the Ld.AR submitted that the Ld.CIT(E) had relied on the report of the JAO for rejecting the application which is not in accordance with the provisions of the Act. Further, the Ld.AR submitted that at the time of registration it is needless to verify the reasons given in the impugned order and also submitted that the Ld.CIT(E) had rejected the application without granting a personal hearing as contemplated under the provisions of the Act.

The Ld.DR relied on the order of the Ld.CIT(E) and prayed to dismiss the appeal.

We have heard the arguments of both sides and perused the materials available on record.

From the perusal of the impugned rejection order, we found that the Ld.CIT(E) had mainly relied on the report of the JAO for rejecting the said application. The case of the assessee is that the said report was not communicated to them before rejecting the application. When the Ld.CIT(E) had relied on the adverse report of the JAO, she should have communicated the same to the assessee and sought for the explanations from the assessee. Instead of doing so, the Ld.CIT(E) had utilised the reasons stated in the report and rejected the application filed by the assessee which in our opinion is not correct. Moreover, we have also gone through the reasons given by the JAO in his report and we do not find that the said reasons are valid reasons for rejecting the applications. The reviews available on google about the assessee trust would not be a reason for denying the said registration. Similarly, the charging of fees for the yoga course is also not a Page 4 of 4 reason to reject the said application unless and until it is proved that the assessee is doing the commercial activity. Mere suspicion would not be a reason for rejecting the said application. Furthermore, the Ld.CIT(E) had not granted an opportunity of being heard as contemplated u/s. 12AB(1)(b)(ii) of the Act.

In view of the findings given by us, we are of the view that the Ld.CIT(E) had erred in rejecting the application filed u/s. 12AB of the Act. We, therefore set aside the said order and remit this issue to the file of the Ld.CIT(E) for denovo consideration after getting explanations and also after receiving documents from the assessee. It is needless to mention that the Ld.CIT(E) may also grant a personal hearing to the assessee before passing the order.

In the result, the appeal filed by the assessee is allowed for statistical purposes.

Respondent 3. CIT

DR, ITAT, Bangalore

Guard file

CIT(A)