LIONS CLUBS INTERNATIONAL FOUNDATION INDIA,MUMBAI vs. CIT (E), MUMBAI

The assessee has filed the present appeal against the order dated 31.03.2015 passed by the Commissioner of Income Tax (Exemptions), Mumbai [hereinafter referred to as the “CIT(E)”] wherein the application for registration u/s.12A of the Act has been rejected.

The assessee has raised the following grounds:- “1. The Honourable Commissioner of Income Tax (Exemption) (hereinafter referred as “A.O.”) has erred in rejecting application of the appellant company for granting of registration u/s.12AA of the Income Tax Act, 1961 on the pretext that two directors out of three directors of the appellant company are foreign citizens / nationals and non residents and thereby the same will defy the structure of the applicant company for charitable purpose / activities in India. It is to state that such inference drawn by the AO is out of context and without considering the facts and circumstances of the case and submissions made in this regard. Accordingly, we pray your honour to squash the order passed by the AO and direct AO to grant registration u/s.12AA of the Income Tax Act, 1961.”

We have heard the arguments advanced by the learned representative of the parties and perused the record. The learned representative of the appellant has argued that the appellant company is a company in view of the provision of the Companies Act but the Assessing Authority dismissed the application by invoking the provision under Indian Trust Act therefore, in the said circumstances the order passed by the authority is not justifiable and in accordance with law. However, on the other hand the learned departmental representative has placed reliance upon the order passed by the CIT(E) in question. On appraisal of the order dated 31.03.2015, it is not in dispute that the appellant has been registered with Registrar of Companies, Mumbai on 12.09.2013 vide registration No.U85191MH2013NPL248146 (Mumbai). In view of the provision of Indian Trust Act the application of the appellant has been rejected on the basis of this fact that two Directors of the Company are foreign citizens. While deciding the matter of controversy the DIT(E) invoked the provision of the Explanation 1of the Section 60 of the Indian Trust Act and Section 73 of the Indian Trust Act and the provisions of Section 12AA(1)(b) of the Indian Trust Act and accordingly decided the application. The provision of Companies Act 1956 has not been taken into consideration while deciding the application moved by the appellant. In this regard there are specific provision u/s.80G of the Act and in this regard we also found support of law settled in GIA India Vs. DIT(E) [2013] 38 taxmann.com 323 (Mumbai – Tribunal). Since the matter of controversy was not taken into consideration by taking into consideration of provision of Companies law, therefore, we are of the view that the order passed by the DIT(E) is not liable to be sustainable in the eyes of law, therefore we set aside the order in question and remand the case to the CIT(E) to reconsider the matter by taking into the consideration of the provision of Company law as well as connected law of Indian Trust Act and to decide the matter afresh in accordance with law by giving an opportunity of being heard to the assessee.