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Facts
The appellant society challenged the order of the Commissioner of Income Tax (Exemption), Jaipur, which rejected its application for registration under Section 12AB of the Income Tax Act. The rejection was based on grounds including non-registration under the Rajasthan Public Trust Act, engaging in business activities, violation of FCRA Act, and activities of an international nature.
Held
The Tribunal noted that the appellant society has since been registered under the Rajasthan Public Trust Act and submitted the certificate. Regarding the business activities, MOUs were produced, which were not submitted before the CIT(E) earlier. The FCRA Act violation was not specified with relevant provisions. The international nature of activities was also not substantiated to violate Section 11(1)(a) of the Act.
Key Issues
Whether the rejection of the application for registration under Section 12AB was justified on the grounds of non-registration under the Rajasthan Public Trust Act, engaging in business activities, FCRA violation, and international activities.
Sections Cited
12AB, 11(1)(a), FCRA Act, 2010
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, JAIPUR BENCHES,”B-Bench” JAIPUR
Before: SHRI GAGAN GOYAL, AM & SHRI NARINDER KUMAR, JM
vkns'k@ORDER PER: NARINDER KUMAR, JUDICIAL MEMBER .
By way of present appeal, appellant society has challenged order dated 31.03.2024 passed by Learned Commissioner of Income Tax (Exemption), Jaipur, whereby its application submitted in Form No. 10AB, seeking registration u/s 12AB of the Income Tax Act, 1961 (hereinafter referred to as “the Act”) on 25.09.2023, has been rejected, on following four grounds:- Non registration under Rajasthan Public Trust Act, 1959.
Alliance Francaise De Jaipur Society Assessee having business income and doing business in garb of charity. Profitability. Violation of FCRA Act. Activities of international nature/violation of section 11(1)(a).
Arguments heard. File perused. Discussion 3. Non registration under Rajasthan Public Trust Act, 1959:- Vide impugned order, Learned CIT(E) has observed in para 2.5 that the applicant society was not eligible for registration u/s 12AB of the Act for want of its registration under Rajasthan Public Trust Act, 1959 (in short RPT Act) and non production of any such certificate. As regards this ground of rejection, Ld. AR for the appellant has submitted that the applicant society has been recently registered on 04.12.2024 under RPT Act, and that today, he has submitted copy of said certificate, while applying one copy thereof to Ld. DR, as well. True copy of certificate dated 04.12.2024 reveals the factum of registration of the applicant society under RPT Act, but the said document is to be considered by Learned CIT(E) on production of the requisite certificate and its verification.
Assessing Having Business income and doing business in garb of charity & profitability:-
Alliance Francaise De Jaipur Society Learned CIT(E) also rejected the application on the above said two grounds. As per observations made in para 3.4 of the impugned order, the applicant society was found to have been providing services to Birla Education, Mayo College, IICS and to have deducted TDS, but, despite specific query raised before the applicant society, it did not submit any MOU which was called for to verify as to whether the amount received by the applicant society was by way of fees from students or towards professional services, said to have been rendered to the three institutions, Learned CIT(E) went on to observe that the applicant society deliberately did not furnish copies of MOUs, with an to conceal that the society has actually been doing business. On this aspect, Ld. AR for the applicant society has referred to the paper book submitted to the Registry on 30.10.2024. As per certificate appended to the Index of the said paper book, documents shown at serial No. 5(a) i.e. MOU for Birla Education Trust, and at serial No. 5(b) i.e. MOU for Indian Institute of Crafts & Design (IICD), now made available from page 34 to 39 and 40 to 45, were not submitted by the applicant society before Learned CIT(E).
Alliance Francaise De Jaipur Society When confronted with this certificate appended to the Index of the paper book, Ld. AR for the appellant admits in the course of arguments that these two documents running from page 34 to 38 and 40 to 45 were not submitted before Learned CIT(E). As regards non production of the above said two arguments, Ld. AR has orally submitted that the applicant society could not get sufficient time for their production before Learned CIT(E), and has further requested that same may be taken on record.
As regards the explanation now furnished for non production of the above said MOUs before Learned CIT(E), record reveals that Learned CIT(E) issued notices to the assessee for 20.12.2023 and 12.03.2024, and further that request made by the representative of the applicant to submit certain details on or before 26.03.2024, was not acceded to as Learned CIT(E) took into account that the prescribed period for disposal of said application was going to expire. The fact remains that the MOUs deserve to be considered by Learned CIT(E) to comply with the directions issued by him.
Violation of FCRA Act:- Learned CIT(E) rejected the application while observing that this is a case of violation of provisions of FARA act, 2010, due to the fact that the Alliance Francaise De Jaipur Society applicant society received donation worth Rs. 8,87,705/32 from Fench Embassy in Delhi for its use. In para 5.3 of the impugned order, Learned CIT(E) extracted relevant part of the reply submitted by the appellant society as regards said amount. The contention raised by the Ld. AR for the appellant is that nowhere in the impugned order, Learned CIT(E) specified as to which provision of FCRA,2010 was violated by the applicant society by receiving the said amount, particularly when the applicant society had claimed that in reality furniture/other assets were used by the said society at Jaipur office and in order to account for the said assets, already put to use ever since in its incorporation, when it was part of the French Embassy in India, said assets were shown in the books of accounts, as donation in kind and reflected as such even in ITR.
Ld. DR for the Department does not dispute that Learned CIT(E) has not referred to any specific provisions of FRCA-2010 which according to him the applicant society was found to have violated. In case of any violation of provisions of any other law, Learned CIT(E) is required to specify about the provision in the impugned order. In absence of any specification of relevant provision of law i.e. of FCRA, it cannot be said that Learned CIT(E) rejected the application on Alliance Francaise De Jaipur Society valid ground. Accordingly, it is held that said ground could not be taken into consideration for rejection of the application, and findings recorded in the impugned order are set aside.
Activities of International nature/violation of section 11(1)(a):- The only incident/activity (and not activities) referred to by Learned CIT(E) in para 6.1of the impugned order is that Dr. Toolika Gupta, from the applicant society, had visited France to participate in the annual invitation by the French President , extended to all the Presidents to the said society all over the world. Learned CIT(E) observed that the applicant society was admittedly not created for the purposes which tends to promote cause of International welfare in which India is interested. It is significant to note that from the copy of the invitation available on record, it transpires that same is in French. Without having translation of the said invitation, it could not be decided that the purpose of the visit was or was not in consonance with the objects of the society. From very beginning, it is the case of the applicant that prior to its incorporation, it was working as part of the French Embassy in India; that invitation was annual invitation extended to all Presidents of the society spread all over the world.