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Income Tax Appellate Tribunal, MUMBAI BENCH “B”, MUMBAI
Before: SHRI G.S.PANNU & SHRI AMARJIT SINGH
ORDER PER G.S.PANNU,A.M:
The captioned appeal filed by the assessee is directed against an order passed by Commissioner of Income Tax-1, Thane dated 29/01/2014, passed under section 12AA(1) of the Income Tax Act, 1961 (in short ‘the Act’).
In this appeal, assessee has raised the following revised Grounds of appeal:-
“1. On the facts and circumstances of the case, the learned Commissioner of Income Tax erred in passing an Order under section. 12AA(1) of the I.T.Act on 29.1.2014, particularly when the Appellant Trust had filed an Application on 13.3.2013 seeking Registration under section 12A i.e. after six months from the end of month in which the Application was made.
2. On the facts and circumstances of the case, the ld. Commissioner of Income Tax erred in rejecting the Application for Registration without establishing that the activities of the Trust as well as objects of the Trust are not genuine.
3. On the facts and circumstances of the case, the ld. Commissioner of Income Tax erred in rejecting the Application of Registration without appreciating that the Trust has started its activities in subsequent years as per the objects of the Trust.”
Although the assessee has raised multiple Grounds of appeal, but the pertinent dispute is that the CIT(A) has erred in denying registration to the assessee under section 12A of the Act. In this regard, brief facts are that appellant is a Trust formed on 20/02/1975 and its objects include promotion of social welfare, to work for the spread of education and literacy, to render medical aid and relief to the poor, to aid cultural, literary and other social activity, etc. The assessee Trust filed an application on 13/03/2013 with the Commissioner seeking registration under section 12A of the Act, which has since been rejected. As per the Commissioner, he was not satisfied about the genuineness of the activities of the Trust and, therefore, he has denied registration. Against such a decision of the Commissioner, assessee is in further appeal before the Tribunal.
Before us, the Ld. Representative for the assessee vehemently pointed out that the Commissioner has rejected the application of the assessee on insufficient reasons and pointed out that there is no justification to reject the genuineness of the assessee Trust. It was pointed out that the objectives of the Trust are charitable in nature and the same is also not disputed by the Commissioner. A reference has also been made to the documents submitted before the Commissioner, which, inter-alia, include balance sheets and Income & Expenditure Accounts for the various years, which clearly demonstrate that there was no activity which could be said to be in violation of the objects or ingenuine.
On the other hand, Ld. Departmental Representative has reiterated the observations of the Commissioner in support of the case of the Revenue.
We have carefully considered the rival submissions. Section 12AA(1)(b) of the Act empowers the Commissioner to satisfy himself about the objects of the Trust and genuineness of its activities before granting registration under section 12A of the Act. In the present case, the assessee is a Public Charitable Trust formed on 20/02/1975 and its objects, as emerging from the Trust Deed, are as follows:-
“2. The objects of the Trust shall be:- (a) to promote social welfare, (b) to work for the spread of education and literacy (c) to render medical aid and relief to the poor and needy and for that purpose to open up hospital, dispensaries, first-aid centres, (d) to aid cultural, literacy charitable and other social activities, (e) to start schemes with a view to providing nourishment to under nourished children; (f) To work for the up-lift of villages and women (g) and to undertake any other activities calculated to advance the welfare of society.” 6.1 The Commissioner has also noticed the objects of the Trust and nothing adverse has been commented by him. Therefore, in so far as the objects of the Trust are concerned, we find no objection on the part of the Commissioner. The only objection raised by the Commissioner is with regard to the genuineness of the activities of the Trust. In this context, as per Commissioner, assessee was holding a property in the Trust since 1995, which has been sold in the previous year relevant to the assessment year 2010-11 and money so received have been invested in fixed deposits, which have yielded interest income. According to the Commissioner, the incomes so earned by the assessee Trust have not been utilized for the objects of the Trust and, therefore, he was not satisfied about the genuineness of the activities of the Trust. We have carefully considered the aforesaid objection and find that the same is not sufficient to reject assessee’s plea for registration. Quite clearly, there is no finding by the Commissioner that any of the incomes earned by the assessee Trust have been utilized for any activity other than the objects of the Trust. In fact, the relevant balance sheets and Income and Expenditure Account for various years are placed in the Paper Book and it is quite evident that the outgoings are only towards salary, audit fee and other small expenses. The Ld. Representative for the assessee pointed out that in fact, assessee has not started its main charitable activities at all and, therefore, there cannot be any doubt on its genuineness. It has been explained that the assessee-trust is now engaged in the process of staring its activities towards attainment of its objects. Having regard to the material on record, there is nothing to establish that the activities of the Trust are either ingenuine or it has carried out any activities, which are not professed in the Trust Deed. The stand of the Commissioner that the income earned has not been utilized for the objects of the Trust does not defeat its genuineness because there is no material to suggest that the income earned has been otherwise expended on any activity other than the objects of the Trust. Considering the entirety of circumstances, in our view, there was no justification for the Commissioner to doubt the genuineness of the Trust and, therefore, we uphold the plea of the assessee for registration under section 12A of the Act . As a consequence, the impugned order of the Commissioner is set-aside and it is directed that registration be allowed in terms of the application made by the assessee on 13/3/2013.
In view of the aforesaid decision, Ground of appeal No.1, raised by the assessee become academic in nature is not being addressed.
In the result, appeal of the assessee is allowed, as above.
Order pronounced in the open court on 21/10/2016