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Facts
The assessee filed applications for registration under sections 12AB and 80G of the Income-tax Act, 1961. The Commissioner of Income-tax (Exemptions) rejected these applications, citing that the trust's object clause allowed for the application of funds beyond the territory of India, and that certain required documents were not furnished.
Held
The Tribunal noted that the assessee was willing to modify its object clause to remove provisions allowing application of income outside India. Therefore, the matter was restored to the CIT(E) for re-examination of the modified object clauses.
Key Issues
Whether the assessee's application for registration under sections 12AB and 80G is maintainable given its object clause, and if so, whether the rejection by the CIT(E) was justified.
Sections Cited
11(1), 12AB, 80G, Income-tax Act, 1961
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Income Tax Appellate Tribunal, MUMBAI BENCH “D” MUMBAI
Before: SHRI OM PRAKASH KANT & MS. KAVITHA RAJAGOPAL
In the grounds raised, the assessee has sought for setting In the grounds raised, the assessee has sought for setting In the grounds raised, the assessee has sought for setting aside the order of the Ld. CIT(E aside the order of the Ld. CIT(E).
We have heard rival submission of the parties and perused the We have heard rival submission of the parties and perused the We have heard rival submission of the parties and perused the relevant material on re relevant material on record. In the case, the Ld. CIT(E . In the case, the Ld. CIT(E) has rejected the registration of the assessee u/s 12AB and 80G of the Act mainly the registration of the assessee u/s 12AB and 80G of the Act mainly the registration of the assessee u/s 12AB and 80G of the Act mainly for the reason that the object clause for the reason that the object clause of the assessee trust contained of the assessee trust contained scope of application of the funds beyond the scope of application of the funds beyond the terrritory terrritory of the country. The relevant finding of the Ld. CIT(E) relevant finding of the Ld. CIT(E), while rejecting registration u/s 12AB is reproduced as under : registration u/s 12AB is reproduced as under :
“3. On verification of the application in Form 10AB filed by the On verification of the application in Form 10AB filed by the On verification of the application in Form 10AB filed by the assessee, it was found that the application was not complete, assessee, it was found that the application was not complete, assessee, it was found that the application was not complete, and all the documents required to be accompanying the and all the documents required to be accompanying the and all the documents required to be accompanying the application were not furnished. Hence, a notice was issued to the application were not furnished. Hence, a notice was issued to the application were not furnished. Hence, a notice was issued to the applicant vid applicant vide DIN & Notice No. ITBA/EXM/F/EXM43/2023 e DIN & Notice No. ITBA/EXM/F/EXM43/2023- 24/1058708320(1) dated 13.12.2023 requesting the assessee to 24/1058708320(1) dated 13.12.2023 requesting the assessee to 24/1058708320(1) dated 13.12.2023 requesting the assessee to furnish the complete set of documents mentioned in Rule 17(2). furnish the complete set of documents mentioned in Rule 17(2). furnish the complete set of documents mentioned in Rule 17(2). The assessee has not filed its submission. Further, a reminder The assessee has not filed its submission. Further, a reminder The assessee has not filed its submission. Further, a reminder notice was issued to the app notice was issued to the applicant ITBA/EXM/F/EXM43/2023 licant ITBA/EXM/F/EXM43/2023- 24/1060056978(1) vide DIN & Notice No. dated 24.01.2024 24/1060056978(1) vide DIN & Notice No. dated 24.01.2024 24/1060056978(1) vide DIN & Notice No. dated 24.01.2024 requesting the assessee to furnish the complete set of documents requesting the assessee to furnish the complete set of documents requesting the assessee to furnish the complete set of documents mentioned in Rule 17A(2). The assessee has filed submission on mentioned in Rule 17A(2). The assessee has filed submission on mentioned in Rule 17A(2). The assessee has filed submission on 30.01.2024. On perusal of the submission o 30.01.2024. On perusal of the submission on record, it is found n record, it is found that in objects of the company as evident from the MoA the that in objects of the company as evident from the MoA the that in objects of the company as evident from the MoA the following discrepancy was observed. following discrepancy was observed. "IlI(B) (xiii). To enter into any arrangement with any Government "IlI(B) (xiii). To enter into any arrangement with any Government "IlI(B) (xiii). To enter into any arrangement with any Government or authority, Indian or Foreign, municipal, local body or other or authority, Indian or Foreign, municipal, local body or other or authority, Indian or Foreign, municipal, local body or other public or quasipublic or any body corporate or quasipublic or any body corporate -----. (xv). To enter in to partnership or any agreement for sharing, (xv). To enter in to partnership or any agreement for sharing, (xv). To enter in to partnership or any agreement for sharing, union of interest, joint ventures, reciprocal concession or union of interest, joint ventures, reciprocal concession or union of interest, joint ventures, reciprocal concession or & 1992/MUM/2024 & 1992/MUM/2024 otherwise with any person, company or firm (Indian or Foreign) otherwise with any person, company or firm (Indian or Foreign) otherwise with any person, company or firm (Indian or Foreign) carrying on or engaged in carrying on or engaged in or --------- (xvii). To procure the Company to be registered or recognised in (xvii). To procure the Company to be registered or recognised in (xvii). To procure the Company to be registered or recognised in any part of the world. any part of the world. IV. The objects of the Company extend to the territories comprised IV. The objects of the Company extend to the territories comprised IV. The objects of the Company extend to the territories comprised in the Union of India and all other countries of the world. " in the Union of India and all other countries of the world. " in the Union of India and all other countries of the world. "
4. Accordingly, showcause 4. Accordingly, showcause notice was issued vide DIN & Notice notice was issued vide DIN & Notice No. No. ITBA/EXM/F/EXM43/2023 ITBA/EXM/F/EXM43/2023-24/1060878330(1) 24/1060878330(1) dated dated 13.02.2024 to the assessee, that why the application for 13.02.2024 to the assessee, that why the application for 13.02.2024 to the assessee, that why the application for registration should not be rejected. The assessee filed its registration should not be rejected. The assessee filed its registration should not be rejected. The assessee filed its submission on 21.02.2024. It is stated as under: submission on 21.02.2024. It is stated as under: "It is a general clause entered to cover all the future donations if s a general clause entered to cover all the future donations if s a general clause entered to cover all the future donations if any received from foreign contributions to be received we shall received from foreign contributions to be received we shall received from foreign contributions to be received we shall first apply for a FCRA certificate for the Section 8 company..." first apply for a FCRA certificate for the Section 8 company..." first apply for a FCRA certificate for the Section 8 company..." …………………… …………………… 5. As per provision of section 11(1) of the IT Act, 19 As per provision of section 11(1) of the IT Act, 1961 exemptions 61 exemptions subject to the grant of registration is accorded to income i.e. subject to the grant of registration is accorded to income i.e. subject to the grant of registration is accorded to income i.e. applied for charitable purpose for India. The above referred applied for charitable purpose for India. The above referred applied for charitable purpose for India. The above referred clauses in your trust proposed to apply public charitable funds clauses in your trust proposed to apply public charitable funds clauses in your trust proposed to apply public charitable funds received beyond Indian Shores. In view of the same, t received beyond Indian Shores. In view of the same, t received beyond Indian Shores. In view of the same, this application for grant of registration is not maintainable and the application for grant of registration is not maintainable and the application for grant of registration is not maintainable and the same is rejected. same is rejected.” 3.1 Before us, the Ld. counsel for the assessee submitted that Before us, the Ld. counsel for the assessee submitted that Before us, the Ld. counsel for the assessee submitted that assessee is willing to modify its object clause removing the relevant assessee is willing to modify its object clause removing the relevant assessee is willing to modify its object clause removing the relevant clause having scope for applicatio clause having scope for application of the income beyond the n of the income beyond the territory of the India. The Ld. counsel has filed a copy of such territory of the India. The Ld. counsel has filed a copy of such territory of the India. The Ld. counsel has filed a copy of such undertaking on record. In view of undertaking, we feel in undertaking on record. In view of undertaking undertaking on record. In view of undertaking appropriate to restore the matter back to the file of the Ld. CIT(E) appropriate to restore the matter back to the file of the appropriate to restore the matter back to the file of the for examining the modified modified object clauses of the assessee and of the assessee and decide the issue of registration u/s 12AB as well as 80G of the Act decide the issue of registration u/s 12AB as well as 80G of the Act decide the issue of registration u/s 12AB as well as 80G of the Act in accordance with law. in accordance with law. The grounds raised by the assessee in both The grounds raised by the assessee in both the appeals are accordingly allowed for statistical purposes. the appeals are accordingly allowed for statistical purposes. the appeals are accordingly allowed for statistical purposes.
& 1992/MUM/2024 & 1992/MUM/2024
In the result, both the appeals In the result, both the appeals of the assessee are allowed for of the assessee are allowed for statistical purposes.
Order pronounced in the open Court on nounced in the open Court on 22/10/2024. /10/2024.