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2018 (4) TMI 1130 - AT - Income TaxRejecting registration u/s 12AA - denying of approval u/s 80G - part of the donations received from the donors have not been routed through Income & Expenditure Account but directly taken to the Balance Sheet - donation received throughout the year have been deposited in Bank account during demonetization period amounting to more than ₹ 1,00,000 with no reasonable explanation - Held that - Going by the specific words in section 12AA what is germane to the issue is only as to the genuineness of the Trust and its activities. We note that there is no such finding in the impugned order of the ld. CIT(Exemption) that activities of the trust were not genuine. As per provisions of section 12A and 12AA we hold that the grounds raised by the ld. CIT(E) (Registering Authority) for rejecting of registration to the assessee trust cannot be sustained and ld. CIT(Exemption) ought to have examined whether activities of the trust are charitable in nature or not - direct the ld. CIT(Exemption) to examine the genuineness of the Trust and its activities and objectives and adjudicate the issue in accordance with law - Decided in favour of assessee for statistical purposes.
Issues involved:
Challenge to rejection of registration under section 12AA and denial of approval under section 80G of the Income Tax Act, 1961. Detailed Analysis: 1. Rejection of Registration under Section 12AA and Denial of Approval under Section 80G: - The appeals were filed against the orders by the Commissioner of Income Tax (Exemption) rejecting registration under section 12AA and denying approval under section 80G of the Income Tax Act, 1961. - The assessee trust applied for registration under section 12A but was refused registration and approval under section 80G due to certain reasons. - The reasons for rejection included donations not routed through the Income & Expenditure Account and direct deposit of donations during demonetization without a reasonable explanation. - The rejection was based on the grounds that the activities of the trust were not in compliance with the requirements for registration and approval under the Act. 2. Jurisdiction of CIT(Exemption) and Interpretation of Sections 12A and 12AA: - The Tribunal analyzed the jurisdiction of the CIT(Exemption) concerning the registration under section 12AA and highlighted that the CIT's role is to verify the charitable nature of the trust's objectives and the genuineness of its activities. - It was emphasized that the CIT's scrutiny is limited to ensuring that the trust is genuine and not formed solely for tax benefits, as per the provisions of sections 12A and 12AA. - The Tribunal referred to relevant legal precedents, including a judgment of the High Court of Kerala, to support the interpretation that the focus during registration is on the genuineness of the trust and its activities, not the nature of the charitable activities themselves. - The Tribunal concluded that the grounds for rejection by the CIT(Exemption) did not align with the requirements of sections 12A and 12AA, directing the CIT(Exemption) to reexamine the genuineness of the trust and its activities in accordance with the law. 3. Decision and Outcome: - The Tribunal allowed the appeals for statistical purposes, indicating that the rejection of registration and denial of approval were not justified based on the grounds provided by the CIT(Exemption). - Both appeals filed by the assessee were allowed, and the CIT(Exemption) was directed to reassess the genuineness of the trust and its activities to determine the eligibility for registration under section 12AA and approval under section 80G of the Income Tax Act, 1961. This detailed analysis of the judgment highlights the issues involved, the legal interpretations made by the Tribunal, and the ultimate decision regarding the rejection of registration and denial of approval under the Income Tax Act, 1961.
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