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Income Tax Appellate Tribunal, ‘C’ BENCH: CHENNAI
Before: SHRI V. DURGA RAO & SHRI G. MANJUNATHA
PER V. DURGA RAO, JUDICIAL MEMBER:
This appeal filed by the assessee is against the order of the learned Commissioner of Income Tax, (Exemptions) in C.No.CIT(E) 2 (1156)/2017-18 dated 27.03.2018.
The facts that are in brief is that the Assessee is a Trust had filed an application in Form No.10A for registration u/s.12AA of the Income Tax Act, 1961 on 05.09.2017 with the following objects: :- 2 -: a) To train resident students for spreading knowledge of Vedanta. b) To conduct online classes in Vedanta, Sanskrit and Yoga. c) To affiliate with Indian and Foreign Universities to run academic courses on Vedanta. The above objects are considered by the learned Commissioner of Income Tax (Exemptions) and he is of the opinion that one of the object, i.e. online classes that provide education to non-Indians residing outside India and therefore the objects of the Trust are to serve persons residing outside India. The application of income is also outside India and thus he came to a conclusion that the application of income is intended to be applied for the purpose of those residing outside India and therefore the intension of the Trust to carry out such activities are not genuine.
The Assessee being aggrieved had carried the matter before the Tribunal.
The learned Counsel for the Assessee has submitted that all the activities of the Trust are charitable in nature and as to whether the Trust is genuine or not it cannot be examined at the time of granting registration u/s.12AA of the Income Tax Act, 1961. The learned Commissioner of Income Tax (Exemptions) has to see whether the objects of the Assessee Trust are charitable in nature :- 3 -: or not? He should not see the application of income of the Trust, at the time of granting the registration u/s.12A of the Income Tax Act, 1961, for the above proposition he relied upon the decision of the Hon’ble Jurisdictional High Court in the case of New Life in Christ Evangelistic Association Vs. Commissioner of Income Tax & Another reported in [2000] 246 ITR 532 (Mad).
On the other hand, the learned Departmental Representative strongly supported the order passed by the learned Commissioner of Income Tax (Exemptions).
We have heard both the sides, perused the materials available on record and gone through the order of the learned Commissioner of Income Tax (Exemptions).
The main objects of the Trust is to spread knowledge in Vedanta, Sanskrit and Yoga and one of the objects provides affiliation with Indian and Foreign Universities for running academic courses on Vedanta. The learned Commissioner of Income Tax (Exemptions) considered the very same object and he is of the opinion that as per the above object, there may be a possibility of application of income outside India.
I.T.A No.2589/Chny/2018 :- 4 -:
We have gone through the paper-book filed by the Assessee and find that the Assessee has received donations from various persons to an extent of Rs.500/- to Rs.25,000/-. However, the Assessee has not received anything in the form of fee. Most of the amounts received are from Indian contributors and a few were received from foreign contributors also. However, there is nothing on record to show that the Assessee Trust has applied the income outside India. We find that the learned Commissioner of Income Tax (Exemptions) misconstrued the object of the affiliation with foreign universities that may lead to application of income outside India. Thus, we find that the above findings are incorrect, as all the objects of the Assessee Trust clearly shows that they are charitable in nature and that it is a genuine trust and thus the Assessee deserves for registration u/s.12AA of the Income Tax Act, 1961.
The Hon’ble Madras High Court in the case of New Life in Christ Evangelistic Association Vs. Commissioner of Income Tax & Another (supra) has considered the role of the Commissioner of Income Tax (Exemptions) at the time of granting the :- 5 -: registration u/s.12AA of the Income Tax Act, 1961 and observed as under:
“A perusal of the provisions of section 12A of the Income Tax Act, 1961, would show that unless a society or trust, as the case may be, is registered under section 12A of the Act, it would not be entitled to claim the benefits under sections 11 and 12 of the Act. The caption of the section says “conditions as to the registration of the trust”. The two conditions which are provided are, firstly, that the person concerned should have made an application for registration in the prescribed form and in the prescribed manner to the authorities named in that section before the first day of July, 1973 or before the expiry of the period of one year from the date of the creation of the trust or establishment of the institution. The second condition provides for the keeping of the accounts in a particular manner and further that such accounts should be audited. The language of the section does not show that in order to be able to get registration under section 12A of the Act, there is necessity of first establishing as to how the concerned institution or, as the case may be, the society would be able to claim the exemptions under sections 11 and 12 of the Act. There is nothing in the language to suggest that an institution of a religious nature is precluded from getting registration under section 12A of the Act. The question of exemptions under sections 11 and 12 of the Act or, as the case may be, under section 80G of the Act, would come only when the said exemptions are claimed by the society at the time when it is assessed to tax. To consider whether the said society would be entitled to the benefits under section 12 and 12 of the Act, as the case may be, under section 80G of the Act would be prejudging the issue before the grant of the certificate. At the stage of grant of certificate under section 12A of the Act, the only enquiry which could possibly be made would be whether the society has actually made an application in time and whether the accounts of the society are maintained in the manner as suggested by the said section. Beyond that, the scope of enquiry would not go: Held, that, in the instant case, there was no question of considering how the income of the society would be applied. The view of the Commissioner that unless the religious aspect of the society was removed from the bye- laws, the application could not be taken for consideration was clearly erroneous. At this stage of enquiry, the Commissioner could not insist upon the society showing that its income was not going to be spent for religious purposes. The rejection of the application under section :- 6 -: 12A was not justified. [CIT directed to consider the application].”
We have gone through the above judgement of the Hon’ble Jurisdictional High Court. The Hon’ble Jurisdictional High Court has held that at the time of granting registration u/s.12A of the Income Tax Act, 1961, all that the learned Commissioner of Income Tax (Exemptions) may examine is whether Form No.10A is properly filled up. He may also see as to whether the objects of the Trust are charitable in nature or not. It is improper to examine the application of income at the stage of granting registration u/s.12A of the Income Tax Act, 1961.
In the present case, the learned Commissioner of Income Tax (Exemptions) has rejected the registration u/s.12A of the Income Tax Act, 1961 on the ground that there may be a possibility of application of income abroad which is contrary on the view taken by the Hon’ble Jurisdictional High Court. We therefore, by considering the objects of the Assessee Trust which are genuinely charitable in nature and also by following the judgement of the Hon’ble Madras High Court in the case of New Life in Christ Evangelistic Association Vs. Commissioner of Income Tax & Another (supra), are of the opinion that it is a fit case to grant :- 7 -: registration u/s.12A to the Assessee Trust. Accordingly, registration under section 12A is granted to the Assessee. Ordered accordingly and the appeal filed by the Assessee is allowed.
In the result, the appeal filed by the Assessee in /Chny/2018 is allowed.
Order pronounced on 15th February, 2021 in Chennai.