2014 (1) TMI 602 - AT - Income Tax

Rejection of registration u/s 12AA - Held that - Following Bai Hirbai Rahim Aloo Paroo & Kesarbai Dharmamsey Kakoo Charitable & Religious Trust 1967 (9) TMI 26 - BOMBAY High Court - There is no basis for distinction drawn by the Tribunal between a religious purpose so far as personal law of the settler is concerned and a religious purpose within the meaning of Income-tax Act - The High Court found that income of the trust arising from the scheme of the management was exempt u/s 4(3)(i) of the Act. The assessee mainly contends that death anniversary of some of the personalities were observed and the philosophy of Sree Narayanan Guru was propagated among the general public - This contention of the assessee was not examined by the Commissioner - The Commissioner proceeded on the footing that the creation of the sangham itself was not established by producing necessary evidence - Even though the assessee claims that the sangam was registered with Registrar of Joint Stock Companies, the copy of the registration certificate was not produced before the Commissioner of Income-tax - The Commissioner of Income-tax doubted the very existence of the trust - This Tribunal is of the considered opinion that unless and until the assessee establishes the creation of the trust by producing necessary material it cannot claim any registration u/s 12AA of the Act - It is obligatory on the part of the assessee to produce necessary material for its existence in law - Giving one more opportunity to the assessee to produce necessary material to establish the creation of the trust may not prejudice the interest of the revenue in any way The issue was restored to the CIT(A) for fresh adjudication.

Summary

Issues:
Appeals against rejection of registration u/s 154 and u/s 12AA of the Act.

Analysis:
1. Registration u/s 12AA of the Act:
- The appellant, a society engaged in charitable activities, applied for registration u/s 12AA, claiming to propagate Sree Narayana Guru philosophy for universal brotherhood.
- Appellant's representative cited precedents where celebrating lives of great leaders was considered charitable.
- Commissioner rejected the application citing lack of evidence and non-submission of original registration certificate.
- Tribunal emphasized the need for the appellant to establish the trust's creation and genuineness before claiming registration.
- Tribunal remitted the issue back to the Commissioner for fresh examination with an opportunity for the appellant to provide necessary material.

2. Rejection of application u/s 154 of the Act:
- Appellant also filed an application u/s 154 for rectification, which was rejected by the Commissioner.
- Commissioner found no error in the original rejection order due to the absence of the original registration certificate.
- Tribunal stressed the importance of substantiating the creation of the trust and providing all relevant documents.
- Tribunal allowed the appeals for statistical purposes, directing the Commissioner to re-examine the issue considering the material submitted by the appellant.

3. Legal Precedent Consideration:
- Tribunal referred to the judgment of the Bombay High Court regarding the exemption of income of a trust based on religious and charitable activities.
- Highlighted the need for the appellant to prove the establishment of the trust and the genuineness of its activities to qualify for registration u/s 12AA.

4. Final Decision:
- The Tribunal set aside the lower authorities' orders and remitted the issue back to the Commissioner for fresh examination.
- Appellant was granted the opportunity to submit all necessary documents, including the registration certificate, for the Commissioner's review.
- The Tribunal clarified that it was not expressing any opinion on the trust's creation or activities, leaving the decision to the Commissioner after considering the appellant's contentions.

In conclusion, the judgment focused on the importance of establishing the trust's creation and genuineness to qualify for registration under section 12AA of the Act, providing the appellant with an opportunity to submit the required documents for re-evaluation by the Commissioner.