2018 (10) TMI 1800 - AT - Income Tax

Exemption u/s 11 - refusing to grant the Registration u/ s 12AA - Appellant is not registered under the provisions of the MP Public Trust Act, 1951 - HELD THAT - Provisions of Section 12AA(1) of the Act provides that Principal Commissioner or Commissioner, on receipt of application for registration of the Trust or Institution made under Clause a or Clause aa of Sub-Section 1 of Section 12A can call for such documents or information as he thinks necessary in order to satisfy himself about the objects and genuineness of activities of the Trust or Institution and also make such enquiries as he may deem necessary in this behalf and after satisfying himself about the objects of the Trust or Institution and the genuineness of its activities he may pass an order in writing registering the Trust or Institution or if he is not so satisfied, he may pass an order in writing refusing to register the Trust or Institution. Provision of Section 12AA(1) of the Act refers to the Trust or Institution . There seems to be no requirement for a trust to be mandatorily registered as a Public Charitable trust in the State of India where it is located. The action of Ld.CIT-Exemptions denying the registration merely for the reason that the assessee Trust was not registered as a public Charitable Trust cannot be held to be justified. Issue of registration u/s 12AA of the Act needs to be set aside to the file of Ld.CIT-Exemptions for denovo adjudication as per the provisions of I.T. Act so as to satisfy himself about the genuineness of the activities as well as objects of the Trust to be a charitable in nature. Appeal of the assessee is allowed for statistical purpose.

Summary

Issues:
1. Denial of registration under section 12AA of the Income Tax Act based on non-registration as a Public Trust under the MP Public Trust Act, 1951.

Analysis:
The appeal was against the order of the Ld. Commissioner of Income Tax-Exemptions, Bhopal denying registration under section 12AA of the Income Tax Act. The main contention raised by the assessee was that the denial was unjust as there is no requirement in the Income Tax Act for a trust to be registered as a Public Trust under the MP Public Trust Act, 1951, to obtain registration under section 12AA. The Ld. Counsel for the assessee argued that the denial was solely based on the lack of registration as a Public Trust and not on the objects of the trust or the genuineness of its activities.

The Tribunal noted that the provisions of section 12AA(1) of the Act require the Commissioner to satisfy himself about the objects and genuineness of activities of the trust before granting registration. The Tribunal observed that the denial of registration solely on the grounds of non-registration as a Public Charitable Trust was not justified. The Tribunal emphasized that there is no mandatory requirement for a trust to be registered as a Public Charitable trust in the state where it is located. The Tribunal directed the issue of registration under section 12AA to be sent back to the Ld. CIT-Exemptions for fresh consideration, emphasizing the need for a thorough assessment of the genuineness of the trust's activities and its charitable nature, with proper opportunity for the assessee to present its case.

In conclusion, the Tribunal allowed the appeal of the assessee for statistical purposes, setting aside the denial of registration under section 12AA and ordering a reevaluation by the Ld. CIT-Exemptions to ensure compliance with the provisions of the Income Tax Act regarding the genuineness of the trust's activities and charitable objectives.