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Facts
The assessee, a society running educational institutions, applied for registration under section 12A(1)(ac) of the Income Tax Act. The CIT(E) rejected the application, stating that the assessee had claimed deduction under section 11 in earlier years without valid registration.
Held
The Tribunal held that the CIT(E)'s rejection was erroneous as the assessee had not claimed any deduction under section 11, but rather exemption under section 10(23C)(iiiad). The Tribunal found that the assessee was a charitable trust carrying out charitable activities as defined in Section 2(15) and was eligible for registration.
Key Issues
Whether the rejection of registration under section 12A(1)(ac) by the CIT(E) was justified on the grounds of alleged claim of deduction under section 11, when the assessee had claimed exemption under section 10(23C)(iiiad) and was engaged in charitable activities.
Sections Cited
12A(1)(ac), 11, 2(15), 10(23C)(iiiad)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, PUNE BENCHES “A” :: PUNE
Before: MS.ASTHA CHANDRA & DR.DIPAK P. RIPOTE
ORDER
PER DR. DIPAK P. RIPOTE, AM:
1. The appeal filed by the assessee is directed against the order of the Ld.Commissioner of Income Tax (Exemption), Pune [“CIT(E)”] dated 13.09.2024 whereby he rejected the application of the assessee filed before him on 30.03.2024 in Form No.10AB under clause (iii) of section 12A(1)(ac) of the Income Tax Act, 1961 (the “Act”). [A] “1. On the facts and circumstances of the case and in law the Ld.CIT erred in not granting registration u/s 12AC on the ground of not having been satisfied abou8t the charitable nature of activities of the trust or genuineness of its activities in spite of the fact that : a. The appellant trust is exclusively engaged in charitable activities and b. The appellant having submitted all documents as called for by the Ld.CIT in this respect.” Submission of ld.AR : 2. Ld.AR for the Assessee filed paper book containing 263 pages. Ld.AR submitted that all these details were filed before the ld.CIT(E), however, without verifying these documents, ld.CIT(E) has rejected the application for registration u/sec.12A of the Act, on non-existing grounds. Ld.CIT(E) rejected the assessee’s application stating that Assessee had claimed deduction u/sec.11 of the Act in earlier years without having registration u/sec.12A of the Act. Ld.AR submitted that Assessee is running following educational institutions : a. D J Samant English Medium School Pali b. D J Samant English Medium School Lanja. c. D J Samant English Medium School Jakadevi d. D J Samant Senior College of Arts, Commerce & Science Pali. e. D J Samant Private Industrial Training Institute, Pali. 3. Assessee had never claimed deduction u/sec.11 of the Act. Therefore, findings of ld.CIT(E) are incorrect. Ld.AR invited our attention to the Return of Income filed by assessee.
ITA No.2240/PUN/2024 [A]
Ld.AR submitted that in addition to running educational institutions, assessee is also carrying out other charitable activities. Ld.AR invited our attention to the note on activities which is at pages 144 – 171 of the paper book.
Submission of ld.DR : 5. Ld.DR for the Revenue relied on the order of ld.CIT(E).
Findings & Analysis : 6. We have heard both the parties and perused the records. In this case, assessee has made application in Form No.10AB under section 12A(1)(ac)(vi)-ITEM(B) of the Income Tax Act, 1961 on 30/03/2024. Ld.CIT(E) rejected the application. The relevant paragraph is reproduced as under : “5. The assessee was requested to show cause as to why the application should not be rejected and why the approval granted under section 12AB of the Income Tax Act, 1961 should not be cancelled. The assessee was also given opportunity of being heard vide the said notice. The assessee was specifically informed that in the event of failure to comply by the due date, the application shall be liable to be rejected and the approval shall also be liable to be cancelled. The compliance to the said notice was due on 02/09/2024. The notice was duly served on the assessee through e-portal and email.
ITA No.2240/PUN/2024 [A]
The assessee submitted the documents on 02/09/2024. However, the assessee's contention is not acceptable.
Further, without prejudice to the above and as per financial statements and ITRs furnished by the assessee, it is seen that the trust has claimed deduction u/s 11. Therefore, said provisions of sec.12A(1)(ac)(vi)(B) of the Act are not applicable in the assessee’s case. As such, the undersigned is left with no alternative but to reject the application.”
7. Thus, ld.CIT(E) has rejected the assessee’s application on the ground that assessee had claimed deduction u/sec.11 of the Act. Ld.CIT(E) has not specified for which assessment year assessee had claimed deduction u/sec.11 of the Act.
7.1 Page Number 1 and 2 of the paper book is the reply filed by the assessee in response to the show cause notice. In the said reply, assessee has specifically submitted that assessee have not claimed exemption u/sec.11 of the Act, in the past. Assessee enclosed copies of the Return of Income for A.Y.2023-24, A.Y.2022-23 and A.Y.2021-22. 8. Similarly, assessee had filed following documents before the ld.CIT(E) which are part of the paper book :
ITA No.2240/PUN/2024 [A]
Reply_S 12A_SHRI SAI ANIRUDDHA EDUCATION SOCIETY_31.08.24.
ITR FORM AY 23-24 3. REGISTRATION CERTIFICATE 4. ITR FORM AY 22-23 5. ITR FORM AY 21-22 6. DECLARATION 7. NOTES ON ACTIVITIES 8. ACKNOWLEDGEMENT OF AUDIT REPORT ALONG WITH FINANCIAL STATEMENTS AND REPORT 9. DONATION RECEIVED 10. DONATIONS FY 2022-23 11. IDENTITY PROOF OF TRUSTEES 12. DONATIONS FY 2020-21 13. DONATIONS-RECEIPTS-1_Optimized 14. DONATIONS-RECEIPTS-2_Optimized 15. VOUCHER_2021-22_Optimized 16. VOUCHER_2022-23_Optimized 17. BANK STATEMENTS 18. NOTES ON ACTIVITIES 19. 10AC SELF CERTIFIED
We have perused copy of return of income for A.Y.2023-24 and noted that assessee had not claimed any exemption u/sec.11 of the Act for A.Y.2023-24. In the Return of Income, Assessee has specifically claimed exemption u/sec.10(23C)(iiiad) of the Act. The relevant pages scanned and reproduced as under :
ITA No.2240/PUN/2024 [A]
Thus, on perusal of the Return of Income for A.Y.2023-24, it is observed that the findings recorded by ld.CIT(E) is incorrect. Similarly, we have perused the Return of Income for A.Y.2022-23 [A] and it is observed that Assessee has not claimed any deduction u/sec.11 of the Act, rather Assessee has claimed exemption u/sec.10(23C)(iiiad) of the Act.
Thus, even for A.Y.2022-23, assessee has not claimed any deduction u/sec.11 of the Act as alleged by ld.CIT(E). Thus, the finding recorded by ld.CIT(E) is incorrect.
ITA No.2240/PUN/2024 [A]
Ld.CIT(E) has rejected assessee’s application only for one reason i.e.Assessee allegedly claimed deduction u/sec.11 of the Act. We have already reproduced above that we have verified returns and observed that no deduction u/s.11 of the Act has been claimed. Therefore, the basis for rejection is erroneous.
On perusal of the paper book, it is observed that assessee is running various educational institutions which are as under : a. D J Samant English Medium School Pali b. D J Samant English Medium School Lanja. c. D J Samant English Medium School Jakadevi d. D J Samant Senior College of Arts, Commerce & Science Pali. e. D J Samant Private Industrial Training Institute, Pali.
13.1 Assessee has filed all the necessary details before ld.CIT(E). Assessee is a duly registered trust with Assistant Charity Commissioner, Ratnagiri under Maharashtra Public Trust Act. Copy of the certificate issued by Assistant Charity Commissioner is at page no.60 of the paper book. We have also observed that in addition to running various educational institutions, Assessee had organised other activities like Lecture by Director of MITCON on the subject of Self-Employment which was reported in the local newspaper(page 158 of the paper book). Similarly, other charitable [A] activities reported in the local newspapers can be observed from the paper book. Assessee has also submitted copy of the Audit Report filed before Charity Commissioner as per Maharashtra Public Trust Act, which gives list of educational institutes.
Nowhere in the order ld.CIT(E) has doubted the genuineness of activities.
In these facts and circumstances of the case, we are convinced that assessee is a charitable trust carrying out charitable activities as defined in Section 2(15) of the Act. Therefore, Assessee is eligible for registration u/sec.12A(1)(ac) of the Act. Accordingly, we direct ld.CIT(E) to grant registration u/sec.12A(1)(ac) of the Act.
In the result, appeal of the assessee is allowed.