M.C.TRUST,CHENNAI vs. CIT(EXEMPTIONS), CHENNAI

This appeal by assessee is arising out of the order of the learned Commissioner of Income Tax (Exemptions), Chennai in order No.ITBA/EXM/S/EXM1/2019-20/1021386606(1) dated 30.11.2019 rejecting the assessee’s application for registration of Trust u/s. 12AA of the Income Tax Act, 1961 (hereinafter ‘the Act’).

The brief facts are that the assessee filed an online application in Form No.10A for registration of assessee’s trust u/s. 12AA of the Act dated 23.05.2019. The CIT(Exemptions) noted that the assessee is running a kalyana mandapam i.e., Marriage Hall and as per the provisions of sub-section (4) of section 11, property held under trust includes a business undertaking. According to him, therefore the kalyana mandapam does not fall under charitable purposes as defined u/s.2(15) of the Act and thereby he rejected assessee’s application by observing in para 7 as under:- “7. The case of the assessee does not fall under charitable purpose u/s.2(15) of the Act. The activities carried out on by the Trust cannot be treated as charitable in nature. In view of the above, the assessee has failed to comply with the requirements of registration as contained in section 12AA(1) of the Income Tax Act, 1961. Hence, the assessee’s application is rejected and registration u/s. 12AA is denied.”

Now before us the ld.CIT-DR, Shri Vasanthan was asked to go through the statement of facts filed before the Tribunal by the 3 assessee, wherein the assessee has given aims and objects of the trust in its petition, which are not considered by the CIT(Exemptions). The Bench further appraised that even CIT(Exemptions) has not recorded the finding as regards to the genuineness of the trust, which is the primary condition for registration of trust. The ld.CIT-DR could not controvert the same.

We have heard the ld.CIT-DR and gone through the facts and circumstances of the case. We noted that the assessee in its written submissions before the Tribunal i.e., petition filed, has submitted the activities it is doing like annadhanams, medical reliefs and supporting the activities of education at lesser cost, and other charitable activities. Further, the assessee in its petition has narrated the charitable activities. We noted that the CIT(Exemptions) have not gone into the details rather carried away by the proviso to section 2(15) of the Act. In case, assessee’s activities falls under the proviso to section 2(15) of the Act and it is not a charitable activity falling under the proviso, a consequential disallowance can be made but registration cannot be denied unless and until there is a finding of CIT(Exemptions) that the activities of the trust are not genuine. Hence, we set aside the order of CIT(Exemptions) and remand the matter back to his file for fresh

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