9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2016 (6) TMI 129 - AT - Income TaxRefusal to grant registration u/s 12AA - Held that - Sufficiency or some irregularities in bringing the initial corpus fund would not automatically make the trust as not to have come into existence. The charitable objects of the trust are not disputed by the Learned CIT. What is to be seen at the time of granting registration by the Learned CIT is only whether the objects of the trust are charitable and activities carried out are genuine in nature , which conditions have been duly satisfied by the assessee in the instant case. In any case, the order passed by the Learned CIT refusing registration u/s 12AA of the Act is beyond the stipulated period of six months as per section 12AA(2) of the Act and hence the assessee cannot be denied the benefit of registration u/s 12AA of the Act . - Decided in favour of assessee
Issues Involved:
1. Validity of the application for registration under section 12AA of the Income Tax Act, 1961. 2. Compliance with the procedural requirements under Rule 17A of the Income Tax Rules. 3. Timeliness of the application as per section 12A(1)(a) of the Income Tax Act. 4. The existence and validity of the trust as per the Indian Trusts Act, 1882. 5. The effect of the Commissioner’s delay in passing the order beyond the statutory period of six months. Issue-wise Detailed Analysis: 1. Validity of the Application for Registration under Section 12AA: The assessee filed an application in Form 10A seeking registration under section 12AA of the Income Tax Act on 31.1.2012. The CIT observed that the application was not properly filled and lacked necessary documents, including the original trust deed. Additionally, the application was filed beyond the stipulated one-year period from the creation of the trust. The CIT concluded that the trust did not come into existence validly due to the discrepancy in the initial corpus fund as mentioned in the trust deed. 2. Compliance with Procedural Requirements under Rule 17A: The CIT noted that the application was not accompanied by the required documents as per Rule 17A of the Income Tax Rules. Specifically, the original trust deed and accounts for earlier years were not submitted. The CIT emphasized that the trust's initial corpus fund of ?9,00,000 was not available with the settlors at the time of the trust's creation, which was a significant procedural lapse. 3. Timeliness of the Application as per Section 12A(1)(a): The CIT initially rejected the application on the grounds that it was not filed within one year from the date of creation of the trust, as required by section 12A(1)(a). The assessee argued that the application was made under section 12A(1)(aa) within the specified time. The tribunal found that the CIT should have granted registration from the date of the application if satisfied with the charitable objects and genuineness of the trust's activities. 4. Existence and Validity of the Trust as per the Indian Trusts Act, 1882: The CIT argued that the trust did not come into existence validly as the initial corpus fund of ?9,00,000 was not brought in by the settlors. The tribunal, however, found that the settlors had contributed ?4,33,000 initially and undertook to contribute the remaining amount in the future. The tribunal held that the sufficiency of the initial contribution is not a relevant factor for granting registration under section 12AA. The provisions of sections 5 and 6 of the Indian Trusts Act, 1882, were not violated as the trust deed indicated the intention to create a trust and the initial corpus fund was partially contributed. 5. Effect of the Commissioner’s Delay in Passing the Order: The tribunal noted that the CIT passed the order refusing registration beyond the statutory period of six months from the end of the month in which the application was filed, violating section 12AA(2) of the Act. The tribunal referred to the decision of the Co-ordinate Bench of Bangalore Tribunal in the case of Karnataka Golf Association vs Director of Income Tax, which held that if no order is passed within the statutory period, the authority cannot deprive the assessee of the benefit of registration. The tribunal also cited the Hon’ble Supreme Court's decision in CIT vs Society for the Promotion of Education, Allahabad, which supported the view that non-consideration of the registration application within the prescribed time results in deemed registration. Conclusion: The tribunal allowed the appeal of the assessee, holding that: - The sufficiency or irregularities in the initial corpus fund do not invalidate the trust's existence. - The charitable objects of the trust were not disputed. - The CIT should have examined only whether the objects of the trust were charitable and the activities genuine. - The order refusing registration was passed beyond the stipulated period, entitling the assessee to deemed registration under section 12AA.
|
