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Facts
The applicant Association filed applications for registration under Section 12AB and approval under Section 80G of the Income Tax Act. The CIT(E) rejected both applications on multiple grounds, including non-registration under the RPT Act, being a private trust, failure to prove genuineness of activities, and late filing.
Held
The Tribunal held that registration under the RPT Act is not a prerequisite for registration under Section 12AB. It also found that the Association was not a private trust but for public benefit and that the grounds for rejection regarding genuineness of activities and delay in filing were not sustainable.
Key Issues
Whether registration under the RPT Act is mandatory for Section 12AB registration and whether the Association qualifies as a public charitable trust for registration and approval.
Sections Cited
12AB, 80G, 12A
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Income Tax Appellate Tribunal, JAIPUR BENCHES, “A-Bench” JAIPUR
Before: SHRI GAGAN GOYAL, AM & SHRI NARINDER KUMAR, JM vk;djvihy la-@ITA No. 683 & 684/JP/2024
vkns'k@ORDER PER: NARINDER KUMAR, JUDICIAL MEMBER This common order is to dispose of above captioned 2 appeals filed by the applicant- Association. The applicant Association is feeling aggrieved by the two orders passed by the ld.CIT(E), disposing of two applications filed there. 2. Vide one of the impugned orders dated 27-03-2024, Ld. CIT(E) rejected the application of the Association submitted online for its registration u/s 12AB of the Income Tax Act, 1961 (in short ‘’the Act’’).
& 684/JP/ 2024 JECRC ALUMNI ASSOCIATION VS CIT (E), JAIPUR Vide separate impugned order, ld. CIT(E) rejected the application submitted by the applicant Association seeking approval u/s 80G of the Act. Grounds of Rejection of applications 3. The first mentioned application i.e. u/s 12AB of the Act was rejected on following three grounds:- (i) That Non-registration of applicant Association under RPT Act, 1959. (ii) That Association being a private trust was not eligible for registration u/s 12A of the Act. (iii) That Applicant Association failed to prove the genuineness of the activities. The second mentioned application u/s 80G of the Act came to be rejected on following two points: (i) No approval u/s 80G can be granted without its registration first u/s 12AB of the Act. (ii) Late filing of the application seeking approval having regard to date of commencement of the activities.
Arguments heard. Files perused. Non registration of applicant under RPT Act 5. Ld AR of the assessee has submitted that for the purposes of registration under section 12 AB of the Act, no registration under RPT Act is required. In this & 684/JP/ 2024 JECRC ALUMNI ASSOCIATION VS CIT (E), JAIPUR regard, as argued by the Learned AR, recently ITAT, Jaipur Bench, has held in the case of APJ Abdull Kalam Education and Welfare Trust vs CIT (E), in that no registration under RPT Act is required for the purpose of registration u/s 12AB of the Act. Therefore, the contention is that the ld. CIT(E) erred in rejecting the application u/s 12AB on this ground. In the course of arguments, the ld. DR for the Department has submitted that he stands by the reasons recorded by the ld. CIT(E), so far as the registration of the applicant under RPT Act, 1959 is concerned, but, at the same time, admitted that Coordinate Bench, Jaipur has decided that for the purpose of Section 12AB, no registration under RPT Act is required. Herein, as per the Constitution Paper of the Association, it has been formed with various objectives, including to act as non-profit organization and work for over all development to strengthen Alma – mater, Aluminy affairs and welfare of the students, academically and financially, without consideration of caste, creed or religion. In the above referred ITA titled as APJ Abdul Kalam Education and Welfare Trust’s case, it has held as under:-…. “8. There is no law which is required to be complied with for achieving the objects of the assessee trust. Section 17 of the RPT Act, 1959 requires that trustees of the trust has to apply for registration of a public trust, however, there is no section in the RPT Act, 1959 which prohibits a trust to carry out its objects if it is not registered under the RPT Act, 1959. In our considered opinion, both the statutes have their own provisions and implications and none of them have overriding effect. Even if, the assessee trust is not registered with the RPT Act, 1959 and the concerned officials under the RPT Act, 1959 deems it necessary to get the entity & 684/JP/ 2024 JECRC ALUMNI ASSOCIATION VS CIT (E), JAIPUR registered under section 17 of the RPT Act, 1959, appropriate action can be taken and against the trustees of the trust. But this issue can’t be a hurdle in getting registration before the Income Tax Department u/s. 12AB of the Act.
9. In view of discussion (supra), we do not find any force in the findings of the Ld. CIT (E), Jaipur while holding registration application untenable in the absence of registration under the RPT Act, 1959. ”
In view of the decision by the Co-ordinate Bench, and applying the same to the present case, it can safely be said that the applicant Association was not required to be registered under RPT Act, for the purposes of its registration under section 12 AB of the Income Tax Act, 1961. Therefore, this ground raised by Learned CIT(E) for rejection of the application is hereby set aside. Whether the applicant Association is a Private Trust?
6. As regards the second ground made basis for rejection of application u/s 12AB of the Act, the ld. AR for the appellant has submitted that applicant Association was formed with the objectives, including to act as non-profit organization and work for over all development to strengthen alma – mater, aluminy affairs and welfare of the students academically and financially without consideration of caste, creed or colour. The contention raised by the ld. AR is that in the impugned order, the ld. CIT(E), without any basis observed that the applicant Association is a private trust and not eligible for registration u/s 12AB of the Act.
& 684/JP/ 2024 JECRC ALUMNI ASSOCIATION VS CIT (E), JAIPUR 7. In the course of the arguments, the ld. DR for the Department has submitted that expression of ‘’Private Trust’’ has not been suitably used and that actually the ld.CIT)E) intended to express that applicant Association was found to have been constituted only for its members and not for general public. In this regard, ld DR has drawn our attention to para 3 of the impugned order. When we have enquired, in the course of arguments, if any of the objectives of the applicant Association is meant for only a particular caste, creed, religion or colour, Ld. DR for department has admitted that in view of the objectives, it cannot be said that applicant Association (trust) has been formed for any particular caste, creed, religion or colour.
From the objectives of the applicant Association, we too find that any activity as per the set objectives does not appear to be for a particular group of people and not for general public.
Therefore, the ld. CIT(E) was wrong in arriving at the conclusion that applicant is not a public charitable trust or not meant for public at large. Consequently, this ground made basis for rejection of registration of the applicant is also set aside. Genuineness of the activities 10. Ld. DR for the Department has referred to para 4.2 of the impugned order to point out that the ld. CIT(E) was not satisfied on the point of genuineness of the & 684/JP/ 2024 JECRC ALUMNI ASSOCIATION VS CIT (E), JAIPUR activities of the applicant, firstly, because the applicant failed to furnish final accounts for preceeding 3 financial years; secondly, that no bank statement or bank details were furnished in the requisite format; and thirdly, that from its inception, the applicant Association was found to have carried out only one activity i.e. providing Scholarship to 05 students.
On the other hand, Ld. AR for the appellant has submitted that even though the applicant institution was incorporated in Nov. 2008, it was for the first time in F.Y. 2022-23 that young alumni of JECRC University took initiative and that is how PAN was applied for on 29-12-2022. 12 In reply, Ld. DR for the Department has not pointed out anything to counter said submission put forth by ld.AR.
As regards the allegation of non-furnishing the bank statement, ld.AR of the assessee has pointed out that same was submitted while furnishing reply dated 9- 02-2024 but not considered by the ld.CIT(E). Copy of the reply dated 09-02-2024 is available from pages 25 to 27 of the paper book. Pre-fixed to the said reply is copy of the information available on the Income Tax Department portal reflecting the documents uploaded on 09-02-2024, while uploading the said reply. At point No. 6 of the said reply, it was specifically mentioned that certified copy of final accounts for the F.Y. 2022-23 were being annexed thereto. It was also & 684/JP/ 2024 JECRC ALUMNI ASSOCIATION VS CIT (E), JAIPUR explained in the same paragraph of the reply that prior to the said financial year, the activities performed by the assessee had no financial implication and, further that financial activities actually started for the first time from F.Y. 2022-23. Nothing to contrary has been pointed out by ld.DR for the Department.
Even if Scholarship was given by the applicant to 05 students and by way of the only activity in the year 2022-23, it could not be inferred that it was the case of ingenuine activities of the applicant, particularly when as per objectives of the applicant institution, the same has been created for such activities, without any discrimination ground of caste, creed, religion or colour.
Therefore, ld. CIT(E) erred in rejecting the application on this ground u/s 12AB of the Act. Consequently, said ground made basis of rejection of the application is also set aside. (As regards Application u/s 80G of the Act) 16. As noticed above, the ld. CIT(E) rejected the application firstly on the ground of rejection of its application u/s 12AB of the Act.
As noticed above, we have held that the ld.CIT(E) fell in care in rejecting prayer for registration of the applicant institution. Therefore, this ground of rejection of the application u/s 80G does not survive.
As regards the second ground that the applicant Association did not commence activities, and as such it was not entitled to approval u/s 80G of the Act, & 684/JP/ 2024 JECRC ALUMNI ASSOCIATION VS CIT (E), JAIPUR Ld. CIT(E) observed that the applicant Association commenced its activities only in F.Y. 2022-23 and failed to justify delay of more than 06 months between commencement of the activities and filing of application for regularization of this provisional registration.
Admittedly, the application seeking approval u/s 80G was uploaded on 30- 09-2023. At this stage, reference may be made to Circular No. 7 of 25th April, 2024 issued by the CBDT whereby time lines for submission of such like applications came to be extended.
Adopting a benevolent approach of CBDT as regards time lines in respect of such like applications, we of the view that delay in filing of said application deserves to be condoned. We order accordingly. Result 21. In view of the discussion, reasons and findings recorded above, both the applications of Section12AB and clause (iii) of first proviso to sub-section (5) of Section 80G of the Act, deserve to be allowed. Consequently, both the appeals are allowed and ld.CIT(A) is directed to give effect to this decision by allowing the prayer of the applicant Association made in each application referred to above, in accordance with law. Copy of the common order be placed in the file of connected appeal –ITA No.684/JP/2024.