2017 (6) TMI 872 - AT - Income Tax

Rejecting the application of the assessee for registration under Section 12A - proof of activities outside India - Held that - While granting the registration u/s.12AA(1), the DIT(E) on receipt of the application for registration of the institution has to satisfy himself about genuineness of the activities of the Trust and making such inquiries as may deem necessary in this behalf after satisfying himself about the objects of the trust or institution on the genuineness of his activities. In this regard as mentioned the objects of the trust are there to carry out the activities outside India but no activity as such has been carried out, and therefore, no approval of the Board is required to be taken from the Board. There is no necessity to make the amendment of the main objects. Also none of the activities has been brought to our notice by the learned DR and no material placed before us to show that any expenditure outside India has been incurred by the assessee or any activity outside India has been carried out. Thus the learned DIT(E) is not justified in denying registration u/s.12AA r.w.s. 12A of the Act. - Decided in favour of assessee.

Summary

Issues:
1. Rejection of application for registration under Section 12A of the Income Tax Act, 1961.

Analysis:
The judgment dealt with the appeal arising from the order of DIT(E) rejecting the application for registration under Section 12A of the Income Tax Act, 1961. The applicant had filed an application seeking registration, but due to non-compliance and lack of necessary documents, the application was rejected. The DIT(E) emphasized that Section 11(1) only applies to income applied for charitable purposes in India, thus institutions applying income outside India do not fall under the purview of Section 12A. The DIT(E) also highlighted the requirement of prior approval from the Board for applying income outside India, which was not met in this case. The rejection was based on the premise that the trust did not qualify for registration under Section 12A due to its international operations.

The assessee contended that there was no need for amending the registration of the institution as no activities were carried out outside India. They argued that since no activities abroad were conducted, there was no requirement for Board approval. The assessee also cited the decision of the Delhi High Court in a similar case to support their claim that the DIT(E) lacked the authority to deny registration under Section 12A. The assessee maintained that no expenditure was incurred for activities outside India, and the DIT(E) had no grounds to reject the application.

Upon considering the arguments, the Tribunal found that the DIT(E) had not demonstrated the necessity of amending the main objects or the application of Section 11(1) in the case. It was noted that no expenditure for activities outside India was identified, and the trust's objects included international operations without any actual activities abroad. The Tribunal emphasized that the DIT(E) must ensure the genuineness of a trust's activities before rejecting registration. Relying on the Delhi High Court decision, the Tribunal directed the DIT(E) to grant the registration as applied for by the assessee. Consequently, the sole ground of the assessee was allowed, and the registration was ordered to be granted.

In conclusion, the judgment addressed the rejection of the application for registration under Section 12A, highlighting the requirements for charitable activities in India and the need for Board approval for activities outside India. The Tribunal overturned the rejection based on the lack of actual activities abroad and directed the DIT(E) to grant the registration following the Delhi High Court precedent.