2008 (2) TMI 882 - HC - Income Tax

Granting registration u/s 12A - Approval under section 80G - ignoring the fact that it had religious purpose and not charitable purpose - HELD THAT - We find ourselves in agreement with the view of the Madras High Court in New Life in Christ Evangelistic Association v. CIT 1998 (8) TMI 8 - MADRAS HIGH COURT that the question of exemption under sections 11 and 12 of the Act or as the case may be u/s 80G of the Act would come only when such exemptions are claimed by the trust at the time when it is assessed to tax. In this backdrop of the legal position the statement of the AR before the CIT that purpose of seeking registration u/s 12A is to get the approval u/s 80G of the Act does not come in the way of the assessee in seeking registration u/s 12A if otherwise a case for such registration is made out. The Tribunal thus cannot be said to have erred in setting aside the order of the CIT insofar as the order passed on the application for registration u/s 12A was concerned. The Tribunal also did not err in observing that at the stage of enquiry the CIT cannot insist upon the trust to show upon the application of fund. However in our considered view the consequential order of registration of the trust ought not to have been made by the Tribunal and matter ought to have been remitted to the CIT for fresh consideration and disposal of the application made by the trust u/s 12A of the Income-tax Act in accordance with law. We answer the question No. (ii) accordingly. The application made by the trust for registration u/s 12A of the Income-tax Act is restored to the file of CIT for fresh consideration and disposal accordingly. Since the appeal to the Tribunal from the order of the CIT under section 80G of the Act has been held to be not maintainable it will be open to the assessee to assail the legality and correctness of the order passed by the CIT in appropriate proceedings if so advised. Order accordingly.

Summary

Issues:
1. Granting approval to the assessee-trust under section 80G of the Income-tax Act.
2. Granting registration to the assessee-trust under section 12A of the Income-tax Act.

Analysis:
1. The first issue pertains to the approval granted to the assessee-trust under section 80G of the Income-tax Act. The Income-tax Appellate Tribunal approved the trust under section 80G, but it was contested whether the Tribunal had the jurisdiction to hear the appeal against the Commissioner's order under section 80G. It was acknowledged that no appeal lay to the Tribunal from the Commissioner's order on the 80G application. Consequently, the Tribunal's decision was deemed without jurisdiction, and the appeal was heard and admitted at this stage.

2. Moving on to the second issue, regarding the registration of the assessee-trust under section 12A of the Act, the counsel for the revenue did not dispute that religious institutions could be registered under section 12A, as long as they also had charitable purposes. The Tribunal's decision to register the trust with religious objectives was supported by the legal position that institutions with religious and charitable purposes could claim registration under section 12A. However, the Tribunal's consequential order of registration was deemed premature. It was decided that the matter should be remitted to the Commissioner of Income-tax for fresh consideration and disposal of the application under section 12A in accordance with the law.

3. In conclusion, the Tribunal's decision on both issues was analyzed. The Tribunal was found to be correct in setting aside the Commissioner's order on the 80G application and in granting registration to the trust under section 12A. However, the registration order was deemed premature, and the matter was directed to be reconsidered by the Commissioner. The appeal to the Tribunal on the 80G issue was held to be not maintainable, allowing the assessee to challenge the Commissioner's order through appropriate proceedings.