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Facts
The assessee, a charitable trust, applied for registration under Section 12AB of the Income Tax Act, 1961. The CIT(E) rejected the application on three grounds: activities of international nature, absence of an irrevocable clause, and non-genuineness of activities.
Held
The Tribunal noted that the assessee had amended its trust deed to restrict activities to India and included an irrevocability clause. It also observed that the CIT(E) had not given sufficient opportunity for the assessee to prove the genuineness of its activities.
Key Issues
Whether the CIT(E) was justified in rejecting the trust's application for registration based on the stated grounds, especially after the trust amended its deed and submitted additional documents.
Sections Cited
12AB, 11
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Income Tax Appellate Tribunal, JAIPUR BENCHES, “B-Bench” JAIPUR
Before: SHRI RATHOD KAMLESH JAYANTBHAI, AM & SHRI NARINDER KUMAR, JM vk;dj vihy la-@ITA No. 446/JPR/2024
vkns'k@ORDER PER: NARINDER KUMAR, J.M.
The assessee – appellant claims itself to be a charitable trust. Its Head Office is in the area of Sikar, Khatu, Khatushyamji, Sikar (Rajasthan.). On 12-08-2023, the said trust submitted online, an application in Form No. 10AB seeking its registration u/s 12AB of the Income Tax Act, 1961 (hereinafter 2 SHRI SHYAM JAN KALYANARTH MANSUSHREE CHARITABLE TRUST, SIKAR VS ITO CIT (E), JAIPUR referred to as the ‘’Act’’). Vide order dated 08-02-2024, the ld CIT(E), rejected the said application on the following three grounds:- Activities of International nature. Absence of dissolution / irrevocable clause. Non genuineness of activities and non compliance. 2.1 Hence, this appeal. 2.2 Arguments heard. File perused. 2.3 Today, on behalf of the appellant trust, additional evidence in the form of copies of following four documents has been submitted, as Ld. AR for the appellant submited that same are relevant for effective adjudication of the matter:
1. 1. Copy of Trust Deed. 2. Copy of Supplementary Trust Deed. 3. Copy of Form No. 8 filed before Devsthanam Deptt.
4. Copy of Trust Registration certificate issued by Devsthanam Deptt. 2.4 First objection raised by the ld CIT(E), for declining its registration is that the activities of the trust are of international nature. Ld. AR for the appellant has submitted that the appellant trust has recently amended its trust deed by executing supplementary trust deed on 10-06-2024.
Ld. AR has submitted in the course of arguments that the trust deed has been presented before the competent authority, for its registration under the relevant law, and soon after registration thereof, it shall be presented on restoration of the matter to Ld. CIT(E). The contention is that when the trust has limited the area of its activities only to India, the trust deserves to be registered u/s 12AB of the Act, and as such, the matter may be restored to the files of Ld. CIT(E) for decision afresh, having regard to the provisions of said supplementary trust deed. 2.5 From the supplementary trust deed, the area of activities of the appellant trust appears to have been restricted only to India, so as to abide by the essential requirements for registration under section 12 AB of the Act. But, we may observe that in case in a trust deed or in Form No. 10AB, the area of activities of a trust, seeking registration under section 12 AB of the Act, has been shown as India and beyond India, this may not be a just ground for rejection of prayer for registration. We so observe, having regard to the provisions of section 11 of the Act.
4 SHRI SHYAM JAN KALYANARTH MANSUSHREE CHARITABLE TRUST, SIKAR VS ITO CIT (E), JAIPUR As per Section 11 of the Act, the kind of income specified therein is not to be included in the total income of the previous year of the person in receipt of income and the same includes the income derived from property held under trust wholly for charitable or religious purposes to the extent to which such income is applied to such purposes in “India”. In other words, after registration under section 12 AB of the Act, total income of the such trust for charitable or religious purposes shall not include income to the extent to which the income accumulated or set apart or applied to such purposes in India. Such a trust may be found not entitled to the benefit of section 11 of the Act as regards income applied to approved purposes beyond India. However, it is for the Ld. CIT(E) to consider if supplementary trust deed can be implemented with retrospective effect or from a back date. 2.6 The second ground for rejection of application of the trust is absence of clause pertaining to dissolution / irrevocable clause. In this regard, while referring to the supplementary trust deed, ld.AR for the appellant has submitted that as per Point No. 16 & 17, a clause regarding irrevocability has been inserted, by way of supplementary trust deed, by providing that in case of its dissolution in difficult situation, trust property shall be transferred to another trust having same object.
5 SHRI SHYAM JAN KALYANARTH MANSUSHREE CHARITABLE TRUST, SIKAR VS ITO CIT (E), JAIPUR When the initial trust deed has been amended by supplementary trust deed by inserting by Point No.16 & 17 as noticed above, the matter needs to be reconsidered by the ld. CIT(E) for decision afresh.
3.1 The Third ground which led ld. CIT(E) to reject the application of the trust is that its activities are not genuine. 3.2 As mentioned in the impugned order, the applicant was called upon to furnish details as regards genuineness of its activities. In this regard, letter dated 6- 12-2024 was issued by the ld. CIT(E), but, the applicant reportedly failed to furnish any such details, as per note sheet entry dated 29-12-2023. In absence of documents like ‘’copies of bank statement, photographs of activities, details of expenses, genuineness of the activities, as observed by the ld.CIT(E)’’ could not be proved. 3.3 In this regard, in the course of arguments, ld.AR for the appellant has not pointed out if any such document was submitted before the ld. CIT(E) and, if not, why. No such document has been presented before us. When the matter needs reconsideration, as pointed out above, Ld. CIT(E) to provide another reasonable opportunity to the appellant of being heard, so that principles of natural justice are complied with.
3.4 Ld. AR for the appellant has referred to para 2 of the supplementary trust deed dated 10-06-2024 whereby provision has been made for arranging religious congregation/ broadcast/ telecast of such programmes by electronic means so as to enlighten the people and provide them maximum benefit.
Having regard to the fact that the trust deed has been supplemented by way of supplementary trust deed, this aspect may also be reconsidered by Ld. CIT(E), by providing reasonable opportunity of being heard. 3.5 No provision under the Act has been brought to our notice for providing of an opportunity to suchlike applicant for amendment of such like applications presented in Form No.10AB, before Ld. CIT(E), so that same is fully in consonance with the essential requirements of Section 12 AB of the Act, before the same is rejected by Ld. CIT(E) on any technical ground or objection. To our mind, such a provision in the Act, seeking amendment of such an application, at the first opportunity available, would certainly reduce the litigation. In the peculiar facts and circumstances of the case, and for the reasons recorded above, this appeal is disposed off for statistical purposes, and the application presented before Ld. CIT(E) is restored to its original number, for its 7 SHRI SHYAM JAN KALYANARTH MANSUSHREE CHARITABLE TRUST, SIKAR VS ITO CIT (E), JAIPUR disposal in accordance with law, after providing reasonable opportunity of being heard, to the appellant-applicant. Order pronounced in the open court on 27 /06/2024.