M/S. AURO LAB TRUST,,MADURAI vs. ITO, MADURAI

The Commissioner of Income Tax (Appeals) erred in holding that continuation of registration u/s. 12A is a pre-requisite for granting exemption u/s. 11 and 12 of the Income Tax Act, 1961. Section 12A which deals with conditions for applicability of section 11 and 12 stipulate that on an application made by the trust, the trust should be registered under section 12AA. It does not stipulate that the registration u/s. 12AA should be in force.

The Commissioner of Income Tax (Appeals) erred in holding that appellant has published the price list in its website and has enabled facilities such as online placement of or orders for supply of products. These are factually incorrect and not supported by any material.

The Commissioner of Income Tax (Appeals) erred in observing in para 5 of the order that arguments made by the appellant were similar to those made before the Hon'ble ITAT in the appeal against the order of cancellation of registration of registration u/s. 12A of the Income Tax Act, 1961. The appellant had explained how the visionary had drafted the objects of the deed and how it was implemented till date, which details were not discussed in the order of the Hon'ble ITAT dated 11/05/201 1. 5 The Commissioner of Income Tax erred in ignoring that the working model of the appellant was not appreciated by the Tribunal while dismissing the appeal against cancellation of registration u/s.12A of the Income Tax Act, 1961. 6. Generation of surplus alone, would not make an entity a business entity. Any Business is carried on for the benefit of shareholders/stakeholders. In the case of the appellant, none of the trustees are benefited out of the surplus. Even the assessing officer has not made any allegations that the surplus is being misused by the trustees. The allegation that the donations are made to other trusts, Where there are common trustees also do not merit consideration. As the trusts to which donations were made also enjoy exemption under Income Tax Act, 1961 and have been subject to regular scrutiny by the department. Therefore, denial of exemption on the ground of surplus being generated is invalid in the eyes of law. Without prejudice to the above,

The Commissioner of Income Tax (Appeals) erred in ignoring the submissions made on excluding Rs.11,65,89,634/- from the total income of the appellant. This amount can be added only u/s. 11 and if the Commissioner of Income Tax (Appeals) takes a view that provisions of section 11 and 12 will not apply in the absence of registration u/s. 12A, then this amount of Rs.11,65,89,634/ - cannot be brought to tax in the Asst. Year 2011-12. 8. For these and such other grounds that may be permitted to be raised during the For Aurolab Trust hearing of the appeal.”