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Income Tax Appellate Tribunal, PUNE BENCH “बी” PUNE
Before: SHRI INTURI RAMA RAO, AM & SHRI PARTHA SARATHI CHAUDHURY, JM
आदेश / ORDER
PER SHRI PARTHA SARATHI CHAUDHURY,
This appeal preferred by the assessee emanates from the order of the ld. Commissioner of Income Tax (Exemption), Pune dated 04.10.2020 passed u/s 12AA(1)(b)(ii) of the Income Tax Act, 1961 (hereinafter referred to as “the Act”) as per the following grounds of appeal on record :
“1. The Learned Commissioner of Income Tax (Exem), Pune erred in refusing to grant registration of the appellant Trust u/s 12AA of the Income Tax Act, 1961 on the ground which are not relevant for the purpose of granting registration u/s 12AA of the I.T. Act, 1961.
2. The Learned Commissioner of Income Tax (Exem), Pune erred in considering the activity of providing Primary and Secondary education is not a charitable activity and thereby erred in granting registration u/s 12AA of the I.T. Act, 1961.
3. The Learned Commissioner of Income Tax (Exem), Pune erred in considering activities of providing Primary and Secondary education as a business model and not genuine educational activities and thereby erred in granting registration u/s 12AA of the I.T. Act, 1961”.
The solitary grievance of the assessee is the rejection of application for the grant of registration u/s 12AA of the Act by the learned Commissioner of Income Tax (Exemption) (hereinafter called as “ld.CIT(E)”).
The brief facts in this case are that the assessee had made online application in Form No.10A for approval of the trust / institution u/s 12AA of the Act on 27.11.2019 under the category of charitable trust / institution. The assessee trust is registered under the Bombay Public Trust Act, 1950 with registration No.E-7182/Pune dated 30.06.2015.
That on perusal of the order of the ld.CIT(E) vide paragraphs 2, 3.1, 3.2 and 3.3, he had spelt out his observations and reasons for rejection of the application for registration under Sec.12AA of the Act by the assessee.
We find that at Para 3.3., ld.CIT(E) has observed as follows :
“3.3. Before the period of grant of registration, all voluntary contributions – including the ones with specific direction that they shall form part of the corpus – is income of a charitable, religious or charitable cum religious trust. Hence, after taking donations under the said head as income, if the applicant becomes liable to pay tax, then the registration u/s 12AA cannot be granted unless the tax is paid.”
Therefore, the only ground for which the registration u/s 12AA had been rejected by the ld.CIT(E) is that the assessee had received voluntary contributions which ultimately have become part of the corpus fund and hence, being the income of the assessee trust / institution, the assessee was liable to pay tax and without the payment of the tax, registration u/s 12AA of the Act cannot be granted.
We find that ld.CIT(E) has not found fault with the objects of the assessee trust nor has given any specific finding whether the activities of the trust are un-genuine. More so, he has not raised any doubt regarding the charitable nature of the objects of the trust or the genuineness of the activities of the trust. The only reason why the application for registration u/s 12AA of the Act of the assessee was rejected by the ld.CIT(E) was that on the corpus fund created through receipt of donations the consequent taxes which were supposed to be paid were not paid by the assessee at the time of making the application for registration u/s 12AA of the Act.
At the time of hearing, the learned counsel for the assessee brought to our notice at pages 36 and 37 of the Paper Book i.e., the acknowledgment of the return filed by the assessee dated 21.01.2020 wherein the self-assessment tax of Rs.1,21,222/- had been paid by the assessee. That further, the counsel for the assessee submitted that at the time of granting of registration as per the requirement of Sec.12AA of the Act, the ld.CIT(E) shall have to be satisfied regarding the objects of the assessee trust and the genuineness of the activities carried out and nothing more. The issue of payment of taxes in respect of income of assessee trust is the matter to be looked into at the time of assessment proceedings. The learned counsel for the assessee placed strong reliance on the decision of the Pune Tribunal in the case of Shree Lakdipool Vitthal Mandir Vs. CIT(Exemption) in dated 25.05.2021.
7. Per contra, the ld.D.R. relied heavily on the order of the ld.CIT(E).
We have perused the records, heard the rival contentions and considered the judicial pronouncements placed before us. That on perusal of the order of ld.CIT(E), we find that the sole reason as enshrined at Para 3.3. of his order that the application for registration u/s 12AA of the Act by the assessee was rejected for the reason that the assessee trust had received certain voluntary donations / contributions which formed the corpus fund of the trust and being income, it was liable for tax. That since the consequent taxes on those receipts were not paid by the assessee, the application u/s 12AA of the Act was refused by the ld.CIT(E). We were faced with identical issue on similar facts and circumstances while deciding the case of Shree Lakdipool Vitthal Mandir (supra) which has been relied on by the assessee. In that case also, the assessee trust had collected voluntary donations and ld.CIT(E) was of the opinion that all these voluntary contributions forms part of the corpus fund of the trust and hence, it is income of the assessee. Thus, on the said income, assessee trust was liable to pay the tax as per law. Since the requisite taxes were not paid by the assessee trust, the ld.CIT(E) was of the opinion that the assessee should have paid the taxes before the date of application for registration u/s 12AA of the Act. While deciding this issue, we had referred to the decision of Hon'ble Supreme Court in the case of Anand Social and Educational Trust Vs. CIT, 272 Taxman 7 (SC). In our decision (supra), we had observed as follows :
“6. We have heard the submissions of rival sides and perused the materials available on record. We are of the considered view that the provisions of Section 12AA of the Act provides that the Ld. CIT(Exemption) at the time of granting registration to the assessee trust or society shall look into the objects of the trust/society and be satisfied about the genuineness of the activities carried out by such applicant trust/ society at the time of granting registration u/s.12AA of the Act. Whether any tax had accrued to be paid or Shree Lakadipool Vitthal Mandir whether such taxes have been paid or not are to be looked into at the stage of assessment proceedings.
6.1 The Hon’ble Allahabad High Court in the case of Fifth Generation Education Society Vs. CIT (1990) 185 ITR 634 (All) has held that “the Commissioner is not to examine the application of income at the stage of application made by assessee for granting registration u/s.12AA of the Act. The Commissioner may examine whether the application was made in accordance with the requirements of Section 12AA r.w.r 17A and whether Form 10A has been properly filled up. He may also see whether the objects of the trust are charitable or not. At that stage, it is not proper to examine the application of income.”
6.2 That further, the Department in this case before us has not disputed the objects of the trust or genuineness of activities conducted by the assessee trust. In this scenario, it was observed by the Pune Bench of the Tribunal in the case of Kai Shri Mahadebrao Naykude Dnyanvikas Prabhodhini Trust Vs. Commissioner of Income Tax (Exemption) (2020) 208 TTJ (Pune) 296 that when the objects of the trust were not disputed by the Department, nor they have disputed genuineness of activities of the assessee trust, then non filing of return u/s. 139(4A) of the Act cannot be the ground to deny registration u/s.12AA of the Act to the assessee. It is only at the assessment proceedings, the Assessing Officer can take appropriate steps as per law regarding the non-filing of return. However, at the time of granting registration, the object of the assessee trust has to be looked into and genuineness of the activities of the assessee trust should be considered. Shree Lakadipool Vitthal Mandir
Reverting to the facts of the present case, the Ld. CIT(Exemption) has not granted registration u/s.12AA of the Act since whatever donations were received by the assessee trust, the taxes were not paid and on this premise, the registration u/s.12AA cannot be denied. It is left always to the Assessing Officer to take appropriate steps at the time of assessment proceedings with regard to payment of taxes and application of income of the trust/society. Further, we find the Hon’ble Bombay High Court in the case of CIT Vs. Manekji Mota Charitable Trust (2019) 267 TAXMAN 0016 (Bombay) has held “at the time of the registration of the trust u/s.12A, the question of application of income of the trust is premature.” Thus, whether taxes are due to be paid on any income received that issue has to be looked into only at the time of assessment proceeding.
8. The Hon’ble Supreme Court in the case of Anand Social and Educational Trust Vs. CIT, 272 Taxman 7 (SC) has held that even in the absence of any activities a trust can be considered for registration u/s.12AA of the Act and the term “activities” contemplated u/s.12AA of the Act includes „proposed activities. At the time of granting registration, the only issue to be examined by the Ld. CIT(Exemption) is regarding the true nature of the objects of the trust i.e. whether charitable or not.
In the present case, the objects of the trust are not doubted by the Department and they have also not disputed the charitable nature of the activities conducted by the assessee trust. Meaning thereby, all the relevant records were submitted before the Ld. CIT(Exemption) and he had verified the same and was satisfied on this aspect fulfilling the requirement of Section 12AA of the Act. Shree Lakadipool Vitthal Mandir Considering the aforesaid judicial pronouncements, facts and circumstances in this case, we are of the considered view that this is not a fit case for rejection of application for registration u/s.12AA of the Act on the reasons mentioned in the order of the Ld. CIT(Exemption). There is no finding on facts that the activities carried out by the assessee are not genuine. Further, the Ld. CIT(Exemption) has not mentioned in his finding that the objects of the trust were not in order or that the application made for registration was also not in accordance with law. In absence of these findings, just because, the taxes were not paid on the donations/voluntary contributions received cannot be the ground for rejection of application u/s.12AA of the Act. These things can be examined by the Department and scrutinized at the assessment stage. When all the requirements of registration u/s.12AA of the Act have been satisfied by the assessee trust, registration therein should be granted. In view thereof, we set aside the order of the Ld. CIT(Exemption) and direct the Department to grant registration u/s. 12AA of the Act to the assessee trust.”
9. Since the facts are parametria, in this case also, following the same parity of reasoning, we set aside the order of ld.CIT(E) and direct the Department to grant registration to the assessee u/s 12AA of the Act.
Before parting, we also observe that the Department shall be at liberty to determine the amount of taxes payable, if any, in respect of the income of the assessee trust at the time of assessment proceedings as per law.
In the result, the appeal of assessee is allowed.
Order pronounced on 24th day of June, 2021.