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Facts
The assessee filed applications for registration under section 12AB and approval under section 80G. The CIT(E) rejected these applications citing grounds such as non-registration under the Rajasthan Public Trust Act, 1959, and the genuineness of activities. The appeals were filed after a delay, which was condoned.
Held
The Tribunal held that non-registration under the Rajasthan Public Trust Act, 1959, is not a bar to obtaining registration under the Income Tax Act, especially when the Act itself does not mandate such prior registration for achieving its objects. The issue of genuineness of activities was restored to the CIT(E) for re-examination with an opportunity to be heard.
Key Issues
Whether non-compliance with the Rajasthan Public Trust Act, 1959, can be a ground to deny registration under Section 12AB of the Income Tax Act, and the genuineness of the assessee's activities.
Sections Cited
12AB, 80G, 12A, 10(23C)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, JAIPUR BENCH “A”, JAIPUR
Before: Dr. S. SEETHALAKSHMI & SHRI GAGAN GOYAL
PER GAGAN GOYAL, A.M: This four appeals by the assessee is directed against the order of Ld. CIT(E), Jaipur dated 20.03.2024 passed u/s. 12AB (1) (b) (ii) (B) and 80G (5) of the Income Tax Act, 1961 (in short ‘the Act’). The assessee has raised the following grounds of appeal vide as under:
1. 1 That the order passed by Ld. Commissioner of Income Tax, Exemption, Jaipur by rejecting application 12AB (1)(b) of the I.T. Act, 1961 is wrong, unwarranted and bad in law. Kindly direct to register the same.
2. That the appellant craves permission to add to or amend to any of the above grounds of appeal or to withdraw any of them.
1 That the Ld. CIT (Exemption), Jaipur has erred in law and in facts of the case by neither recording the independent satisfaction for rejection of provisional registration and nor issued Show Cause Notice for rejection of provisional registration u/s. 12A of the I.T. Act 1961 which is wrong, unwarranted and bad in Law. Kindly restore the same.
2. That the Ld. CIT (Exemption), Jaipur has erred in law and in facts of the case in rejecting the provisional registration u/s. 12A without issuing separate DIN of the rejection order, which is against the circular & notification issued by the CBDT. So, the same is wrong, unwarranted and bad in Law. Kindly restore the same.
3. That the order passed by Ld. Commissioner of Income Tax (Exemption), Jaipur by rejecting provisional registration u/s. 12Aof the I.T. Act, 1961 is wrong, unwarranted and bad in law. Kindly direct to register the same.
4. That the appellant craves permission to add to or amend to any of the above grounds of appeal or to withdraw any of them. ITA No. 856/JPR/2024
1 That the order passed by Ld. Commissioner of Income Tax, Exemption, Jaipur by rejecting application u/s. 80G(5)(iii) of the I.T. Act, 1961 is wrong, unwarranted and bad in law. Kindly direct to register the appellant.
2. That the appellant craves permission to add to or amend to any of the above grounds of appeal or to withdraw any of them.
1. That the Ld. CIT (Exemption), Jaipur has erred in law and in facts of the case by neither recording the independent satisfaction for rejection of provisional approval and nor issued Show Cause Notice for rejection of provisional approval u/s. 80G of the I.T. Act 1961 which is wrong, unwarranted and bad in Law. Kindly restore the same.
2. That the Ld. CIT (Exemption), Jaipur has erred in law and in facts of the case in rejecting the provisional approval u/s. 80G without issuing separate DIN of the rejection order, which is against the circular & notification issued by the CBDT. So, the same is wrong, unwarranted and bad in Law Kindly restore the same.
3. That the order passed by Ld. Commissioner of Income Tax (Exemption) Jaipur by rejecting provisional approval u/s. 80G of the I.T. Act, 1961 is wrong, unwarranted and bad in law. Kindly direct to register the same.
4. That the appellant craves permission to add to or amend to any of the above grounds of appeal or to withdraw any of them.
All the appeals filed by the assessee are delayed by 19 days, to explain and justify the delay, the assessee filed an application for condonation of delay alongwith an affidavit dated: 10.09.2024. The assessee also filed screen shots of hearing notices on which same were issued, i.e. sonuarifkhan786@gmail.com. It is submitted by the assessee that this e-mail id was not in operation and rather primary e-mail address for communication was vconsultantllp@gmail.com and acc.ibirds@gmail.com was the trustee’s personal email-id as furnished with the application filed in Form No. 10AB.
None of these email-ids were there, while sending notices for communication by the department and rather all the communication was sent on sonuarifkhan786@gmail.com. After a long time of filing of application for permanent registration u/s. 12AB and approval u/s. 80G in Form No. 10AB, the members of the society personally visited the office of the Ld. CIT (E), Jaipur and came to know about the rejection order. We have gone through the contents of the affidavit also and the same were there before the Ld. CIT, DR also, but there was no challenge from their side also on the contents, hence the same is accepted and delay in filing of the appeal is condoned.
The brief facts of the case are that the assessee trust applied in Form No. 10AB of the Act vide dated: 27.09.2023. After considering the replies of the assessee in response to the notices issued by the office of the Ld. CIT (E), Jaipur, application of the assessee was dismissed on following grounds:
A). Not registered under the Rajasthan Public Trust Act, 1959 (RPT) and B). Genuineness of Activities.
In addition to the above, provisional registration granted earlier u/s. 12A (1) (ac)(vi) of the Act vide dated: 28.02.2023 is also cancelled. The assessee being aggrieved with the same preferred the present appeal before us. We have gone through the order of the Ld. CIT (E), Jaipur alongwith the submissions of the assessee and paper book submitted before us.
The assessee submitted before us the copy of registration issued by the Devasthan Vibhag, Rajasthan vide dated: 13.03.2024, as required by the Ld. CIT(E), Jaipur. Although the requirement of obtaining registration with the Devasthan Vibhag, 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 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 himself 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:
“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 summarised as under:
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.
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:
[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 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 alone, although the assessee has already obtained the relevant registration with the Devasthan Vibhag, Govt. of Rajasthan. In the result relevant ground raised by the assessee is allowed.
In the result both the ITAs No. 854 and 855/JPR/2024 of the assessee (As the identical issue is involved) are allowed, without deciding the issue as raised vide ground no. 2 in relating to issuance of DIN as the substantial issue is already decided in favour of the assessee in both the appeals.
Second and the last objection in this matter was about the genuineness of activities of the assessee trust. On this issue the Ld. CIT (E), Jaipur objected the registration on the ground that the assessee is not able to satisfy the Ld. CIT (E), Jaipur. As the matter was decided ex-parte, no response was there from the assessee’s side. In view of this fact, the matter is restored to the file of the Ld. CIT (E), Jaipur for re-examination of the matter after giving a reasonable opportunity of being heard and communications for hearing are to be done through the primary email-id as mentioned in form no. 10AB. The assessee trust is directed to participate in the proceedings without seeking any adjournment or default on designated date. In the Result on this issue appeal of the assessee is allowed for statistical purposes.
This appeal pertains to approval u/s. 80G of the Act. We have gone through the grounds taken by the assessee alongwith the order of the Ld. CIT (E), Jaipur. Ld. CIT (E), Jaipur have two objections while rejecting the application of the assessee as under:
A). Approval u/s. 80G of the Act can’t be granted with having registration u/s. 12AB of the Act & B). Commencement of the Activities.
First objection is no more relevant as and 855/JPR/2024, pertaining to registration u/s. 12AB of the Act (supra) has already been decided in favour of the assessee. As far as the second objection is concerned, it is found that the same is related to the issue discussed (supra) and restored to the file of the Ld. CIT (E), Jaipur. IN the result, this issue is also to be deciding afresh by the Ld. CIT (E), Jaipur, hence matter is restored back to the file of the Ld. CIT (E), Jaipur to be considered and decide in the light of the established judicial pronouncements.
In the result, all the four appeals of the assessee are allowed for statistical purposes.