BANDI CHHOR EDUCATIONAL CHARITABLE TRUST (GWALIOR),TARN- TARAN vs. COMMISSIONER OF INCOME TAX (EXEMPATION), CHANDIGARH

At the outset, the ld. counsel for the assessee submitted that the ld. CIT(A) has no objection to the charitable nature of objects and the genuineness of the activities of the assessee’s trust except questioning the claim of transportation expenses. The counsel further stated that it was explained before the ld. CIT(A) that the applicant is maintaining regular books of account and the transportation charges were debited under the wrong head i.e. salary account to the extent of Rs.7,04,500/- although the same was being paid through bank transfers. However, the ld. CIT(E) was not satisfied with the explanation of the ld. counsel and held that the two transportation expenses claimed to be paid by bank transfers by Mohna School and Madhya Pradesh Gramin Bank were not matching and held that the assessee was not maintaining its books of account properly and in turn the activities of the societies cannot be ascertained.

The counsel for the assessee has submitted that the assessee has filed all the details before the ld. CIT(A) including Income and expenditure account, bank account, affidavit, bank statement of income and expenditure reflecting transport expenses duly signed by the CA of the assessee trust. But the CIT(E) without appreciating the facts of the case, rejected its application for registration. The Ld. AR pleaded that the assessee may be granted registration u/s 12AA.

The ld. DR stands by the order of the ld. CIT(E). However, the ld. CIT DR has no objection to the contention of the ld. AR except that income expenditure statement filed by the assessee was required to be certified by the CA.

We have heard both the sides, perusal of record and the impugned order. We find that the ld. CIT(A) has not disputed the objects and genuineness of the activities of the trust, and that the only objection raised by the ld. CIT(E) was as regards to the claim of transportation charges being not shown in the relevant year under consideration and being not satisfied with the explanation of the assessee duly supported with the income and expenditure statement signed by the Chartered Accountant of the assessee trust, duly reflecting the transportation expenses incurred during the financial year under consideration and which are being explained to be wrongly debited under the salary account by the ld. counsel during the course of hearing before the bench.

The ld. counsel argued that the two entries of transportation expenses were inadvertently accounted for under the head salary account which has not been appreciated by the ld. CIT(E) and jumped upon the conclusion that books of account were not properly maintained. Although, he has not raised any objection to the charitable nature of the objects and genuineness of the activities of the assessee’s society by way of pointing out any adverse comments on the genuineness of the activities in

Considering the factual matrix of the case, we hold that the assessee society/trust has a justified claim for registration u/s 12AA of the Income Tax Act. Since the CIT(E) was satisfied with the two basic conditions required for the grant of registration u/s 12AA of the Act, i.e., objectives of the trust and the genuineness of activities. Further, the applicant society was an ongoing entity, and the assessee society is only required to produce a certificate of the CA of the assessee’s society to the effect of correction of the two accounting entries to the effect that the transportation expenses were accounted under the salary head (APB pg. no. 79A) before the ld. CIT(E) for the grant of registration. Accordingly, the ld. CIT(E) is directed to grant registration to the appellant society after verification of the CAs certificate on the expenditure of accounting of transportation expenses in its books of account at an early date.

In the result, the appeal of the assessee is allowed in the terms indicated as above.