2012 (5) TMI 742 - AT - Income Tax

Registration under section 12A - Held that - We have also gone through the documents placed on record. We are of the opinion that trusts with similar objects have been granted registration under section 12AA of the Act. In order to meet the ends of justice, we set aside the impugned orderpassed by the CIT-I, Coimbatore and remit the matter back to the CIT-I, Coimbatore to decide the matter afresh after taking into consideration the order/registration certificates granted by the Director of Income Tax (Exemptions), Kolkata and Commissioner of Income Tax, Mysore respectively. The assessee is directed to produce all necessary documents as may be required by CIT-I, Coimbatore while deciding the application for registration afresh.

Summary

Issues:
1. Rejection of application for registration under section 12A of the Income Tax Act, 1961 by CIT-I, Coimbatore.
2. Determination of whether the trust qualifies as a religious or charitable trust based on its objects and activities.

Analysis:
The appeal was filed by the assessee trust against the order of the CIT-I, Coimbatore rejecting its application for registration under section 12A of the Income Tax Act, 1961. The trust was constituted by deed and sought registration to avail tax benefits. The CIT-I rejected the application, stating that the trust's activities did not fall under 'Religious' or 'Charitable' purposes as it primarily dealt with interest-free loans for a specific community. The object clause of the trust highlighted its religious objectives, including promoting the religion of Islam, supporting religious education, and maintaining religious properties.

During the proceedings, the Authorized Representative argued that similar trusts with identical objectives had been recognized and registered as religious trusts by other tax authorities. Evidence of registration by the Director of Income Tax (Exemptions), Kolkata, and the Commissioner of Income Tax, Mysore was presented. The representative also submitted unaudited accounts to demonstrate the religious nature of expenditures. However, the Departmental Representative maintained that the trust did not qualify as religious or charitable.

Upon review, the ITAT Chennai found that trusts with similar objectives had been granted registration under section 12AA of the Act by other tax authorities. In the interest of justice, the ITAT set aside the CIT-I's order and remitted the matter back for fresh consideration. The CIT-I was directed to reevaluate the application, taking into account the registration certificates granted by the tax authorities in Kolkata and Mysore. The assessee was instructed to provide all necessary documents for the fresh evaluation. Ultimately, the appeal of the assessee was allowed for statistical purposes, indicating a favorable outcome for the trust.