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Facts
The assessee-trust, 'Retired Bank Employees Charitable and Educational Trust,' was formed by retired bank employees who opted for a voluntary retirement scheme. The trust was registered under the Bombay Public Trust Act in 2007. The assessee applied for regular registration under Section 12AB of the Income Tax Act, 1961.
Held
The CIT(E) rejected the assessee's application for regular registration and cancelled its provisional registration, holding that the application was premature as the trust was not provisionally registered. The Tribunal noted that the process of registration under Section 12AB is a preliminary stage to examine the genuineness of the trust's objects and activities.
Key Issues
Whether the CIT(E) erred in rejecting the application for regular registration and cancelling provisional registration without proper examination of the trust's objectives and activities, and whether the application was indeed premature.
Sections Cited
12AB, 12A(1)(ac), 2(15), 115TD, 11, 12, 10(23C)
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Income Tax Appellate Tribunal, RAJKOT BENCH: RAJKOT
Before: DR. ARJUN LAL SAINI & SHRI DINESH MOHAN SINHA
O R D E R
PER DINESH MOHAN SINHA, JUDICIAL MEMBER:
This appeal by the assessee is directed against the order passed by the Ld. Commissioner of Income Tax (Exemption), Ahmedabad [hereinafter referred to as “CIT(E)”], dated 30/03/2024, rejecting the application for registration under section 12AB of the Income Tax Act, 1961 (hereinafter referred to as “the Act”).
The brief facts of the case are that the assessee-trust is "Retired bank employees charitable and educational trust." In the year 2001, the Indian Bank Association offered a voluntary retirement scheme with some lucrative offer. The majority of bank employees having age Retired Bank Employees Charitable and Educational Trust vs. CIT ( E) between 50 to 55 years opted for this scheme. This group of retired bank employees thought to offer their services to the general public instead of sitting idle at home at this age. Most of them were holding key position during their services in bank and were financially sound. Hence, they decided to carry out activities from their own contribution only and decided not to receive any contribution from the general public. With this thought, the trust formed by such retired bank employees and was registered under the Bombay Public Trust Act on date 12.02.2007. 2.1. The appellant-trust applied for regular registration under section 12A(1)(ac) (iii) of the Act vide application No. CIT (Exemption), Ahmedabad/2023-24/12AA/13192. CIT (Exemption) rejected the application for regular registration and cancelled provisional registration vide DIN and Notice No. ITBA/EXM/F/EXM45/2023- 24/1063720148(1) on date 30.03.2024 on the ground that objects of the trust are not for the General public utility and charitable purpose as defined under section 2(15) of the Act.
The CIT(E) observed that the assessee-trust is not provisionally registered u/s.12AB of the Act and, therefore, held that the present application filed in Form No.10AB under sub-clause (iii) of clause (ac) of sub-section (1) of section 12A of the Act is premature/non-maintainable and liable to be rejected and, accordingly, filed in Form No.10AB for the registration u/s.12AB of the Act is rejected.
2 Retired Bank Employees Charitable and Educational Trust vs. CIT ( E)
Aggrieved by the order of CIT(E), the assessee is in appeal before us with following grounds of appeal:
(1) The Learned CIT (Exemption) erred in law and is not just in facts in rejecting the application for regular registration under section 12AB of the Act and also cancelling provisional registration of the appellant trust. (2) The Learned CIT(Exemption) erred in law and is not just as facts of the case in holding that the activities of the trust are not conducted for the benefit of general public and are not charitable in nature. (3) The Learned CIT (Exemption) has ignored genuineness of activity actually conducted by the trust. (4) The Learned CIT(Exemption) erred in law in holding that objects of the trust are not for the general public utility and for charitable purpose as defined under section 2(15) of the Act. (5) Order of Learned CIT(Exemption) to compute tax liability of the appellant under section 115TD read with Rule 17CB of IT Rules is not just. (6) The appellant trust craves the leave to add, amend, alter, vary or withdraw any of the above grounds of appeal before or at the time of hearing of appeal.
On perusal of the record, it is noted that the assessee trust had duly furnished documents apart from documents uploaded along with the application filed and had also never claimed exemption under section 11, 12 or section 10(23C) of the Act. In light of such disclosure, the application was rightly filed under section 12A(1)(ac) of the Act.
5.1. The Ld.Authorized Representative (AR) for the assessee submitted before the CIT(E) written submission dated 21/03/2024, however relevant documents and evidences are yet to be submitted, therefore Ld.Counsel requested that one more opportunity may be given to him to submit these documents and details.
3 Retired Bank Employees Charitable and Educational Trust vs. CIT ( E)
5.2. The Ld.Departmental Representative (DR) for the Revenue did not object to the restoration of the matter to the file of the CIT(E) for a fresh adjudication on merits.
5.3. We have heard the rival submissions and perused the material available on record. It is a settled principle of law that the process of registration under section 12AB of the Act is not an assessment of income, but rather a preliminary stage to examine the genuineness of the trust’s objects and proposed activities. When the trust has explicitly stated that it has not filed returns as it had no activities and thus no income chargeable to tax, it was incumbent upon the Ld. The CIT(E) to evaluate such explanation objectively and to call for any further clarifications or proposed activity plan rather than summarily rejecting the application.
5.4. It is evident from above facts that objects of the trust are for the benefit of general public and they are charitable in nature as defined under section 2(15) of the Act. Also submitted several documents for establishing activities of the trust actually conducted in past are genuine and charitable in nature.
5.5. In our considered view, the interest of justice would be served, if the matter is restored to the file of the Ld. CIT(E) for de novo adjudication. The assessee is directed to co-operate in the proceedings and furnish any further details that may be required to ascertain the genuineness of its 4 Retired Bank Employees Charitable and Educational Trust vs. CIT ( E) claim. At the same time, the Ld. CIT(E) shall decide the matter on merits and in accordance with law, after granting due opportunity of being heard. The assessee may also be permitted to make necessary correction in the application in Form No.10AB under sub-clause (iii) of clause (ac) of sub-section (1) of section 12A of the Act.
5.6. In view of the foregoing discussion, we set aside the impugned order of the Ld. CIT(Exemption), Ahmedabad dated 30/03/2024 and restore the matter to his file for deciding the application for registration afresh and in accordance with law, after providing adequate opportunity of hearing to the assessee.
In the result, the appeal of the assessee is allowed for statistical purposes.