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2015 (11) TMI 299 - AT - Income TaxRegistration u/s 12AA denied - whether aims and objectives of the Trust are charitable in nature? - Held that - Respondent society which was admittedly running a Polytehnic College and the activities were interwoven for furthering the projects and activities pertaining to education, registration should be granted to the respondent society with the rider that the same could always be cancelled if it came to the notice of the CIT that the society was not carrying on the activities as per its objects. See Commissioner of Income Tax Versus Varanasi Welfare Trust, Varanasi 2014 (11) TMI 446 - ALLAHABAD HIGH COURT - Decided in favour of assessee.
Issues Involved:
1. Justification of the CIT, Ghaziabad in rejecting the application for registration under Section 12A of the Income Tax Act. 2. Verification of the genuineness of the activities of the assessee Trust. 3. Opportunity of being heard provided to the assessee Trust. 4. Issuance of a specific show cause notice to the assessee Trust. 5. Timeliness of the CIT's order in accordance with Section 12AA(2) of the Income Tax Act. 6. Whether the order dated 30.09.2014 was barred by limitation. Issue-wise Detailed Analysis: 1. Justification of the CIT, Ghaziabad in rejecting the application for registration under Section 12A of the Income Tax Act: The CIT, Ghaziabad rejected the application for registration under Section 12AA of the Income Tax Act on the grounds that the assessee Trust had not taken any steps in pursuance of its aims and objects except for the acquisition of land. The CIT concluded that the genuineness of the activities of the Trust could not be verified. This decision was challenged on the basis that the Trust had submitted all required facts and evidence. 2. Verification of the genuineness of the activities of the assessee Trust: The Tribunal found that the CIT's reason for refusing registration was not legally tenable. It was noted that the Trust had commenced activities by acquiring land and that the State Government had exempted the Trust from paying stamp duty on land purchases, acknowledging the charitable nature of its objectives. The Tribunal cited several judgments, including those from the Allahabad High Court and the Delhi ITAT, which established that non-commencement of activities cannot be a ground for refusal of registration under Section 12AA of the Act. The Tribunal emphasized that at the stage of registration, only the genuineness of the objects should be tested, not the activities. 3. Opportunity of being heard provided to the assessee Trust: The assessee contended that proper opportunity of being heard was not given. The Tribunal's decision implicitly supported this contention by directing the CIT to grant registration, indicating that the procedural fairness might have been compromised. 4. Issuance of a specific show cause notice to the assessee Trust: The assessee argued that no specific show cause notice stating the reasons for rejection was given. The Tribunal's directive to grant registration suggests that the lack of a specific show cause notice was a procedural lapse that needed rectification. 5. Timeliness of the CIT's order in accordance with Section 12AA(2) of the Income Tax Act: The assessee Trust argued that the CIT's order dated 30.09.2014, sent through Speed Post on 01.10.2014, was not within the six-month period stipulated by Section 12AA(2) of the Income Tax Act. The Tribunal did not explicitly address this issue but directed the CIT to grant registration, implying that the timing of the order might have been a factor in their decision. 6. Whether the order dated 30.09.2014 was barred by limitation: The Tribunal's decision to direct the CIT to grant registration suggests that the order dated 30.09.2014 was considered to be barred by limitation, as it was not issued within the statutory period. Conclusion: The Tribunal concluded that the CIT's action of refusing to grant registration to the assessee Trust under Section 12AA of the Income Tax Act was not in accordance with the law. The Tribunal directed the CIT, Ghaziabad to grant registration to the assessee Trust, emphasizing that at the stage of registration, only the genuineness of the objects should be tested, not the activities. The appeal of the assessee was allowed for statistical purposes.
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