2009 (8) TMI 841 - AT - Income Tax

Grant registration u/s 12AA - delay of more than 52 years in filing the application for registration u/s 12A(a) - unsatisfactory explanation - registration to be granted with prospective effect? - The trust is registered under Bombay Public Trust Act - whether objects of the Trust are for religious and charitable purposes? - trust has awakened only after Department s advertisement in media that registration of trust will be effective only for the following assessment years HELD THAT - In Surya General Traders 1997 (3) TMI 596 - ANDHRA PRADESH HIGH COURT observed and held that When an appellant has a good case on merits, defeat of his claim on technical plea of limitation would ultimately lead to injustice. State should not stand by a technical plea of limitation of the citizen s case was otherwise meritorious. In Kadur Vidhya Pratishtana v. CIT 2006 (5) TMI 422 - ITAT BANGALORE , the Tribunal after considering the various decisions including the decision in Society of Divine Providence s case 1997 (10) TMI 41 - MADHYA PRADESH HIGH COURT , Motilal Padampat Sugar Mills Co. Ltd. v. State of UP 1978 (12) TMI 45 - SUPREME COURT and Collector, Land Acquisition v. Mst. Katiji 1987 (2) TMI 61 - SUPREME COURT has held Society receives voluntary contributions from the persons for a charitable cause. The payments are not received by the Society for diverting towards payment of taxes. The spirit with which the payments are made are also to be considered and if there is a bona fide reason for filing the application for registration belatedly then the delay should be condoned so that the purposes for which contributions have been received is achieved. If the Society knowingly ignores the provisions of law then necessarily it has to bear the burden. In the instant case it has not been established as a matter of fact that the trustees or the persons, who are managing the affairs of the Society were aware of filing the application u/s 12A. CIT should have condoned the delay. Accordingly, we feel that it is a fit case where the delay should be condoned and provisions of sections 11 and 12 should not be made applicable in respect of the Society from its inception. Applying the ratio of the above decisions to the facts of the present case we are of the view that since the objects of the Trust and genuineness of its activity that it is for religious and charitable purposes are not in doubt inasmuch as the registration was granted with prospective effect from 1-4-2007 and the reasons for delay for filing of the application were not found to be false or untrue, the delay is condoned and registration is granted to the assessee with effect from 1-7-1973. Accordingly, the grounds taken by the assessee are allowed. Therefore, Appeal is assessee's favour.

Summary

Issues:
Delay in filing application for registration under section 12A(a) of the Income-tax Act, 1961 and the grant of registration with effect from 1-4-2007 instead of 1-7-1973.

Analysis:
The appeal pertains to the delay in filing the application for registration under section 12A(a) of the Income-tax Act, 1961, and the subsequent grant of registration with effect from 1-4-2007 instead of 1-7-1973. The appellant Trust, established in 1574, was registered as a Public Charitable Trust in 1955. The Trust applied for registration under section 12A(a) in 1974-75, believing it was registered, but the certificate could not be located. The Trust regularly filed income tax returns, claiming exemptions. The Finance Act, 2007, required registration by 1-6-2007 for exemption benefits. The Trust applied on 21-5-2007, citing genuine reasons for the delay. The Commissioner granted registration from 1-4-2007, citing unsatisfactory explanation for the delay.

The Tribunal noted that the Trust was constituted in 1955 and regularly claimed exemptions. The Trust applied for registration post an advertisement in 2007, seeking condonation of delay. The Commissioner rejected the delay condonation, granting registration from 1-4-2007. The Tribunal cited relevant provisions, including the requirement to apply by 1-7-1973 or within one year of creation, extendable to 15-8-1973. The Commissioner's rejection lacked reasoning on the unsatisfactory explanation for the delay, leading to a prospective registration from 1-4-2007.

Citing legal precedents, the Tribunal emphasized the sufficiency of reasons for delay in application filing. It highlighted that unsatisfactory explanation alone cannot be a reason for rejection without detailed justification. Referring to other cases, the Tribunal stressed that technical limitations should not defeat meritorious claims. Considering the Trust's genuine activities and the lack of false reasons for delay, the Tribunal condoned the delay and granted registration from 1-7-1973. Consequently, the Tribunal allowed the appeal, granting registration with effect from the latter date.

In conclusion, the Tribunal's decision focused on the delay in filing the registration application under section 12A(a) of the Income-tax Act, 1961. The Tribunal analyzed the Trust's history, the reasons for delay, and the Commissioner's decision to grant registration from 1-4-2007. Emphasizing the need for sufficient reasons for delay and the lack of detailed justification for rejection, the Tribunal condoned the delay and granted registration from 1-7-1973.