2013 (5) TMI 308 - AT - Income Tax

Registration u/s 12A - denial of claim - Held that - There is no dispute that the applicant herein is a Convent coming under the exclusive control of the Generalate through the hierarchies of Sacred Heart Congregation . It is directed under Chapter X to form further small units viz., local communities. From these discussions, it can be fairly concluded that the assessee appears to be one of the branches coming under the Sacred Heart Congregation . In the absence of any other documents, the applicant cannot be considered to be a separate and independent institution. As pointed out by CIT, the assessee has failed to prove that it is an independent institution, having its own bye-laws and regulations. Accordingly no infirmity in the order passed by CIT in declining the registration u/s 12A - against assessee.

Summary

Issues:
- Registration u/s 12A of the Income Tax Act - Rejection of application by Ld CIT, Kottayam
- Whether the assessee qualifies as a separate institution under the Act

Analysis:
1. Registration u/s 12A Rejection:
The appeal challenges the order rejecting the application for registration u/s 12A of the Income Tax Act. The Ld CIT based the rejection on the report by the Income Tax Officer, stating that the applicant, a convent, is not a separate entity but part of the Sacred Heart Congregation. The Ld CIT emphasized the absence of separate bye laws and inability to verify the trust's objects and requirements for registration u/s 12A.

2. Contentions of the Parties:
The assessee's counsel highlighted the hierarchy of the congregation, explaining the structure and submission of the constitution of the congregation to prove existence. The counsel argued that documents beyond a formal trust deed, like revenue records and affidavits, could establish the trust's existence. In contrast, the Departmental Representative contended that the assessee, as part of the larger Sacred Heart Congregation, lacked separate bye laws hindering verification of its objects.

3. Legal Analysis and Decision:
The Tribunal analyzed the requirements under section 12AA(1) of the Act, emphasizing the Commissioner's duty to ensure the trust's objects and genuineness of activities before registration. The Tribunal noted the absence of separate entity status for the applicant, being a convent under the Congregation. Referring to the constitution's Chapter X, the Tribunal found the applicant under the exclusive control of the Generalate, lacking independence and separate regulations. Consequently, the Tribunal upheld the Ld CIT's decision, dismissing the appeal due to the applicant's failure to establish itself as an independent institution with distinct bye laws.

In conclusion, the Tribunal's decision focused on the lack of separate entity status and independent regulations for the applicant, leading to the rejection of the registration application u/s 12A of the Act. The judgment underscores the importance of demonstrating independence and fulfilling statutory requirements for trust registration under the Income Tax Act.