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Facts
The applicant-samiti's application for registration under Section 12AB and approval under Section 80G of the Income Tax Act was rejected by the CIT(E). The grounds for rejection included non-registration under the Rajasthan Public Trust Act, 1959, and failure to prove the genuineness of activities.
Held
The Tribunal held that registration under the Rajasthan Public Trust Act, 1959, is not a mandatory requirement for obtaining registration under Section 12AB of the Income Tax Act. Furthermore, the Tribunal found that the CIT(E) had not properly considered the documents submitted by the applicant regarding the genuineness of its activities.
Key Issues
Whether registration under the Rajasthan Public Trust Act, 1959 is a prerequisite for registration under Section 12AB of the Income Tax Act, and whether the applicant proved the genuineness of its activities.
Sections Cited
12AB, 12A, 80G, 10(23C)
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Income Tax Appellate Tribunal, JAIPUR BENCHES,”A-Bench” JAIPUR
Before: SHRI GAGAN GOYAL, AM& SHRI NARINDER KUMAR, JM
vkns'k@ORDER PER: NARINDER KUMAR, JUDICIAL MEMBER .
On 29.03.2024, Learned CIT(E), Jaipur, has dismissed an application u/s 12AB of the Income Tax Act, 1961 (hereinafter referred to as “the Act”), filed by the applicant-samiti, thereby rejecting its prayer for its registration under the Act. The prayer has been rejected on the following two grounds:- Due to non registration of the applicant under Rajasthan PublicTrust Act, 1959.
Vide same order, Learned CIT(E) cancelled the provisional registration of the applicant-Samiti under sub clause (vi) of clause (ac) of sub-section (1) of Section 12A of the Act. Hence, the first mentioned appeal -ITA No.754/JP/2024.
Another appeal-ITA No. 755/JPR/2024 has also been filed by the applicant, feeling aggrieved by order dated 29.03.2024, passed by Learned CIT(E) whereby application of the assessee seeking approvalu/s 80G of the Act has been rejected on the following four grounds:- Approval u/s 80G cannot be granted without registration u/s 12AB. Religious Trust are not eligible u/s 80G(5). Expenditure incurred for religious purposes. Commencement of activities. 4. At the same time, provisional approval already granted to the applicant under clause (iv) of first proviso to sub-section (5) of section 80G of the Act, has also been cancelled.
3 & 755/JPR/2024 Shri Digambar Jain Samaj Samiti 5. This common order is to disposed off both the above captioned appeal, as Learned AR for the appellant and Ld. DR for the department have argued the same together, as common questions are involved.
6. Arguments heard. Files perused. ITA No.754/JP/2024 The applicant-appellant claims itself to be a public charitable society. It was incorporated on 23.10.1996 and on the same day got registered under RPT Act, 1959.
7. As per copy of the Constitution (Rules) of the applicant samiti, it was constituted with the following objects:- “"�ाचीन िदग�र जैन ��ों का संचय व िजण��ार करना, साव�जिनक उपयोग के िलए भवन, �थानािद का िनमा�ण करना, जन उपयोगी औष�ालय साधुओं के ठहरने का �थान, �वचन हॉल, उपयोगी सािह� का �काशन कराना, वाचनालय की �थापना (भारत गणरा� के सम� जन-पदों म� िनवास करने वाले सव�-समाज) के सभी वग� के सवा�गीण िवकास के िलए �य� करना, सुसंगिठत, सुिवकिसत एवं सुसं�ृत बनाना तथा सामािजक चेतना के िलए समाज के िविभ� वग� म� एक�पता एवं सौहाद� भावना हेतु �य� करना। िदग�र जैन तीथ� �े� व मंिदरािद �मुख �प से एवं अ� धम� के �थानों का सु�ब� करना एवं सम� धम� एवं अ� जाितयों के अिधकारों की र�ा करना, युवक, मिहला, आिद समाज के िविभ� अंगों के िवकास के िलए युवा मंच, मिहला सिमित का गठन करना।"
Non registration of the Samiti under RPT Act, 1959 4 & 755/JPR/2024 Shri Digambar Jain Samaj Samiti 8. Admittedly, the applicant society was not registered under RPT Act, 1959. Learned CIT(E) made it one of the grounds for refusing registration of the applicant under Income Tax Act,. Ld. AR for the appellant has submitted that registration of the applicant Samiti under RPT Act is not one of the requirements for its registration under the Income Tax Act . In support of his contention, Ld. AR has relied on a decision by the Co-ordinate Bench of Jaipur Benches, in ITA No. 567/JPR/2024, APJ Abdul Kalam Education and Welfare Trust v. CIT(E),delivered on 15.01.2025. The contention is that in view of said decision, the impugned order as regards this ground of rejection deserves to be set aside.
9. In the above cited case, the applicant trust was refused registration under section 12AB of the Act and one of the grounds was non registration of the applicant-appellant under RPT Act, 1959. While dealing with the issue of registration under RPT Act, the Co- ordinate Bench has observed as under:- “3. The assessee submitted before us the copy of application filed online before the DevasthanVibhag, Rajasthan vides dated: 22.09.2024, as required by the Ld. CIT (E), Jaipur. Although the requirement of obtaining registration with the DevasthanVibhag, Rajasthan as per the Rajasthan Public Trust Act, 1959 is really required or not in the context of section 12AB (1) (b) (ii) (b) of the Act, is a matter raised before us by the counsel of the assessee and certainly a question of law to be decided by us in the coming paras of this order considering the 5 & 755/JPR/2024 Shri Digambar Jain Samaj Samiti provisions of section 12AB (1) (b) (ii) (B) of the Act, Judicial Pronouncements relied upon by the Ld. CIT(E), Jaipur. For sake of clarity and ready reference we are reproducing herein below the relevant provisions of section 12AB of the Act as under: Procedure for fresh registration. 12AB. (1) The Principal Commissioner or Commissioner, on receipt of an application made under clause (ac) of sub-section (1) of section 12A, shall, — (a) Where the application is made under sub-clause (i) of the said clause, pass an order in writing registering the trust or institution for a period of five years; (b) Where the application is made under sub-clause (ii) or sub-clause (iii) or sub- clause (iv) or sub-clause (v) [or item (B) of sub-clause (vi)] of the said clause, — (i) Call for such documents or information from the trust or institution or make such inquiries as he thinks necessary in order to satisfy him about— (A) The genuineness of activities of the trust or institution; and (B) the compliance of such requirements of any other law for the time being in force by the trust or institution as are material for the purpose of achieving its objects; (ii) after satisfying himself about the objects of the trust or institution and the genuineness of its activities under item (A) and compliance of the requirements under item (B), of sub-clause (i), — (A) Pass an order in writing registering the trust or institution for a period of five years; or (B) If he is not so satisfied, pass an order in writing, — (I) in a case referred to in sub-clause (ii) or sub-clause (iii) or sub-clause (v) of clause (ac) of sub-section (1) of section 12A rejecting such application and also cancelling its registration; (II) In a case referred to in sub-clause (iv) or in item (B) of sub-clause (vi) of sub- section (1) of section 12A, rejecting such application, after affording a reasonable opportunity of being heard.
The relevant provisions reproduced (supra) in bold and underlined, is an attempt by us to analyze the provision in proper perspective of Law in the light of Judicial Pronouncement of Hon’ble Apex Court, specifically the citations being relied upon by the Ld. CIT (E), Jaipur, i.e. [2012] 20 taxmann.com 46 (A.P.) Aurora Educational Society vs. CCIT, relevant paras are reproduced as under:
6 & 755/JPR/2024 Shri Digambar Jain Samaj Samiti “10. The scope and amplitude of section 10(23C) (vi) of the Income-tax Act, the provisos there under and the rules and forms applicable thereto, which were the subject-matter of examination in New Noble Educational Society vs. Chief CIT [2011] 334 ITR 303/201 Taxman 33/ 12 taxmann.com 267(AP) and in R. R. M. Educational Society vs. Chief CIT [2011] 339 ITR 323 (AP) can, conveniently, be summarized as under:
1.
As section 20A of the A. P. Education Act prohibits individuals from establishing educational institutions, it is only societies/associations/ trusts which can establish educational institutions in the State of Andhra Pradesh.” “19. On a conjoint reading of sub-sections (3) and (4) of section 8 of the A. P. Societies Registration Act, 2001, it is only when the amendment to the objects of a society (educational agency) is intimated and the Registrar, on being satisfied that the amendment is not contrary to the provisions of the Act, registers and certifies such an alteration, would it be a valid alteration under the Act. It is only from the date the Registrar certifies the alteration that the amendment, to the objects of the society, comes into force.”
5. Above discussed, judicial pronouncement is specifically applicable to the educational institutions, where a specific law is there to regulate such type of institutions and are in harmony with the provisions of section 12AB (1) (b) (ii) (B) of the Act, i.e. the compliance of such requirements of any other law for the time being in force by the trust or institution as are material for the purpose of achieving its objects. In the matter under consideration, the Ld. CIT (E), Jaipur is duty bound to establish that how the compliance with RPT Act, 1959 is material for the purpose of achieving its objects. In our opinion, both the statutes, i.e. The Income Tax Act, 1961 and RPT Act, 1959. All the authorities relied upon by the assessee are w.r.t. educational institutions, where context is different, i.e. students at large and issues like capitation fee, allocation of seats, pay scale of teachers and curriculum of the syllabus etc. are in focus. For public benefit and reasonability, such regulations are there, specifically the states where big institutions are indulged in imparting education in the field of Medical, Engineering and Managements etc.
The next judicial pronouncement relied upon by the Ld. CIT (E), Jaipur is from the court of Hon’ble Apex Court as under:
7 & 755/JPR/2024 Shri Digambar Jain Samaj Samiti [2022] 143 taxmann.com 276 (SC) New Noble Educational Society vs. CCIT, relevant paras are reproduced as under: “It is held that wherever registration of trust or charities is obligatory under state or local laws, the concerned trust, society, other institution etc. seeking approval under section 10(23C) should also comply with provisions of such state laws. This would enable the Commissioner or concerned authority to ascertain the genuineness of the trust, society etc. This reasoning is reinforced by the recent insertion of another proviso of section 10(23C) with effect from 1-4-2021. [Para 76]”
Again referring our considered opinion as discussed (supra) vide para 5, this citation relied upon by the Ld. CIT (E), Jaipur is again w.r.t. an educational institution and our findings (supra) again confirmed. It is also observed that in both the citations discussed (supra) also discussed and relied upon the judicial precedents applicable to educational institutions only. None of the precedents discussed in the case of Aurora Educational Society vs. CCIT and New Noble Educational Society vs. CCIT matches with character of the assessee under consideration, which is being further fortified with the language of the Income Tax Act, 1961 itself as mentioned (supra). Plain reading of section 12AB (1) (b) (ii) (B) of the Act speaks in a way that compliance of requirement of any other law is required if compliance under the Act is material for achieving its objects.
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 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.
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. (a) In CIT v. Kids-R-Kids International Education & Social Welfare Trust [2018] 99 8 & 755/JPR/2024 Shri Digambar Jain Samaj Samiti taxmann.com 384 (Punjab & Haryana), the Punjab and Haryana High Court held that the only requirement for granting registration under section 10(23C) (vi) is the satisfaction of the prescribed authority with regard to the genuineness of the activities of the assessee. Since the Principal CIT had not doubted the genuineness of the activities of the society, the Tribunal rightly directed the Principal CCIT to grant registration under section 10(23C) irrespective of non- compliance of the Right to Education Act, 2009. (b) In Paramount Education Charitable Trust v. CIT [2015] 61 taxmann.com 283 (Chandigarh - Trib.), the assessee-trust filed an application for registration under section 12A. Commissioner rejected assessee's application on ground that assessee-trust was not registered under new Haryana Registration & Regulation of Societies Registration Act, 2012. The Tribunal held that aims and objects of assessee were of general public utility as well as to provide education and were covered by provisions of section 2(15). If the activities of assessee were charitable in nature, registration of assessee couldn't be denied merely on fact that it was not registered under Societies Act. In the light of above, objection of the Ld. CIT (E), Jaipur is dismissed and further directed that registration can’t be denied on this ground. In the result relevant ground raised
by the assessee is allowed.” Conclusion For the purpose of consistency and respectfully relying on the above said decision of the Co-ordinate Bench, when registration of the Samiti under RPT Act is not one of the essentials for its registration under the Income Tax Act, it is held that Learned CIT(E) erred in rejecting prayer for registration u/s 12AB of the Act, for want of its registration under RPT Act. Genuineness of activities of the applicant
10. As regards the other ground made basis for rejecting registration of the applicant Samiti that the appellant had failed to justify genuineness of 9 & 755/JPR/2024 Shri Digambar Jain Samaj Samiti activity, as is available from the impugned order vide notice dated 19.12.2023, Learned CIT(E) called upon the assessee to furnish various details for the purpose of verification of its activities, and the appellant submitted reply on 12.01.2024. Since few discrepancies were noticed, another notice dated 04.03.2024 was issued by Learned CIT(E) seeking following clarifications in respect thereof:- “1. Furnish copy of final account for the F.Y. 2023-24 (Provisional/prepared) 2. Assessee is mainly established for maintain of Jain Temple, please give following details: - (a) Details of all expenses along with ledger and bill related to temple/religion activity. including of Pujari Salary, Pooja expense, Dus Lakshan exp. (b) Whether details of expenses to temple and religious activity maintained separately if not, how it can be ascertained whether expenses bogus or not. (c) Details of all construction/repair in mandir exp with proof that exactly what work is done. (i) Letter of work given (ii) Photos of work etc.”
Thereupon, the applicant furnished its response on 22.03.2024, but at the same time requested for a week’s time. However, Learned CIT( E ) was not inclined to grant any further adjournment.
Learned CIT(E) observed in the impugned order that the applicant neither furnished details of expenses alongwith ledger account, nor furnished any bills/vouchers. Learned CIT(E) further observed that no 10 & 755/JPR/2024 Shri Digambar Jain Samaj Samiti charitable activity was found to be undertaken by the applicant as was available from the income and expenditure account.
Ld. AR for the appellant has submitted on 16.03. 2024 certain documents were uploaded on the portal by the applicant Samiti., but Learned CIT(E) has neither mentioned about this fact in the impugned order nor considered or rejectedfrom consideration any such document, before rejecting the prayer for registration under the Act. In this regard, Ld. AR has referred to page 26 of the paper book.
Ld. DR for the department does not dispute filing of certain documents on the official portal by the assessee on 16.03.2024.
Page 26 of the paper book also supports the submission of Ld. AR for the appellant that the expenses of ledger, construction expenses ledger, copy of agreement and certain photofraphs pertaining to construction were uploaded on the official portal.
However, on perusal of the impugned order, we find that there is no mention therein about filing of the above said documents by the assessee on 16.03.2024, or say, uploading thereof on the portal of the department. Learned CIT(E) should have taken note of said documents and considered the same to find out if the discrepancies pointed out in the notice were or were not removed.
11 & 755/JPR/2024 Shri Digambar Jain Samaj Samiti 16. Since, the documents presented by the applicant by uploading the same on the portal were not at all considered, having regard to the nature of the documents placed in the Paper Book, we find that the applicant complied with the requirement as contained in the notice received from the office of Ld. CIT(E). Therefore, we do not find any substance in the second ground for rejecting prayer for registration of the Samiti under Income Tax Act. Result 17. As a result, ITA No. 754/JPR/2024 is hereby allowed, and Learned CIT(E) is directed to allow the prayer of the applicant for its registration u/s 12AB of the Act, in accordance with law. ITA No. 755/JPR/2024 18. Coming to this second mentioned appeal- ITA No. 755/JPR/2024, same has also been filed by the applicant, feeling aggrieved by order dated 29.03.2024, passed by Learned CIT(E) whereby application of the assessee u/s 80G of the Act seeking approval has been rejected on the following four grounds:- Approval u/s 80G cannot be granted without registration u/s 12AB. Religious Trust are not eligible u/s 80G(5). Expenditure incurred for religious purposes.
At the same time, provisional approval already granted to the applicant under clause (iv) of first proviso to sub-section (5) of section 80G of the Act, has also been cancelled.
As noticed above, filed by the appellant has been allowed with directions to Ld. CIT(E) for its registration under section 12AB of the Act. Therefore, first ground of rejection of approval u/s 80G of the Act, i.e. want of registration of the society u/s 12AB of the Act, does not survive.
A perusal of the impugned order passed on application u/s 80G of the Act, would reveal that the application was not maintainable due to the reason of same having been filed beyond prescribed period of limitation. In the recent past, we have come across directions issued by CBDT extending timelines for filing of certain applications. Taking judicial notice of said directions, and applying the same to the present matter, the application can safely be said to be within the extended period.
As regards other reasons, suffice it to observe that when the application was rejected being not maintainable, having been filed beyond 13 ITA No. 754 & 755/JPR/2024 Shri Digambar Jain Samaj Samiti the prescribed period of limitation, Learned CIT(E) could not proceed to reject the application on other grounds, without any discussion. As decided above, the ground of non maintainability of the application does not survive anymore. Conclusion 22. Furthermore, Learned CIT(E) did not consider the documents uploaded by the applicant on 16.03.2024. We are therefore of the considered view that the impugned order rejecting approval u/s 80G of the Act deserves to be set aside. We order accordingly. Result 23. As a result, ITA No. 755/JPR/2024 is also allowed, and Learned CIT(E) is directed to accord approval to the applicant Samiti under clause (iii) of first proviso to sub-section (5) of section 80G of the Act.
File consignment to the record room after the needful is done by the office. Copy of the order be also placed in the file of the connected appeal. Order pronounced in the open court on 28/01/2025.