2019 (8) TMI 977 - AT - Income Tax

Condonation of delay of 52 days - refusal of registration u/s.12AA - Assessee was not aware of the fact that the impugned orders were appealable and approached a consultant to make another application for grant of registration u/s.12AA and 80G - HELD THAT - Reasons given in the petition for condonation of delay in filing appeals which is duly supported by an affidavit of P.R. Ramakrishnan, one of the Trustee of the Assessee. Under similar circumstances, delay in filing appeal was condoned by the Hon ble Madras High Court in the case of United Christmas Celebrations Committee Charitable Trust Vs. ITO 2017 (3) TMI 1519 - MADRAS HIGH COURT Hosanna Ministries Vs. ITO 2017 (3) TMI 1387 - MADRAS HIGH COURT . We are of the view that the delay in filling the appeal is not deliberate or wanton, but due to bona fide circumstances set out above. We therefore condone the delay in filing the appeals. Registration u/s.12AA refused - author is property developer and trust deed also have clauses that Trustees had powers to sell and convert trust funds into any other property - HELD THAT - None of the reasons given for refusing registration to the Assessee are acceptable. The objects of the Assessee are charitable in nature being solely for the purpose of education and all activities spring from and are to be read in conjunction with clause 2 (b) of the Deed of Trust, which we have extracted in the earlier part of this order. The Hon ble Karnataka High Court in the case of DIT(E) Vs. D.R. Ranka Charitable Trust 2018 (12) TMI 220 - KARNATAKA HIGH COURT has laid down that at the time grant of registration u/s.12A the charitable object of the Assessee and genuineness of its activities has to be seen and it is only in assessment the actual activities, whether charitable or not, has to be seen. There are sufficient safeguards in the Act in the event of the object not being carried out in accordance with the deed of trust or wherever there is personal benefit. There is nothing brought on record by the CIT(E) to show the objects of the Assessee are not charitable or that its activities are not genuine. In the circumstances, we are of the view that the Assessee ought to have been granted registration u/s.12AA. We direct that the registration u/s.12A being allowed to be Assessee. Grant of registration u/s 12A of the Act, does not automatically enable an assessee to claim exemption u/s 11 12 of the Act. The AO even in a case, where a trust or charitable organization for which registration u/s 12A subsists has to go in to the question, as to whether the income has been applied for charitable purposes and to the extent contemplated by Sec.11 12 of the Act. Even in a case, where the trust or charitable organization applies its income for charitable purposes, but does not have registration u/s 12A, such trust or charitable organization cannot claim the benefit of Sec.11 12. Thus, this appeal by the assessee is allowed.

Summary

Issues:
- Delay in filing appeals by the Assessee against orders refusing approval u/s.80G(5)(vi) and registration u/s.12AA(1)(b)(ii) of the Income Tax Act, 1961.
- Refusal of registration u/s.12AA of the Act.
- Refusal of approval u/s.80G of the Act.

Delay in Filing Appeals:
The Assessee filed appeals against orders refusing approval u/s.80G(5)(vi) and registration u/s.12AA(1)(b)(ii) of the Income Tax Act, 1961, with a delay of 52 days. The delay was explained as due to a lack of awareness regarding the appealability of the orders. The Tribunal, considering the reasons and an affidavit supporting the delay, condoned the delay, citing similar instances where delays were condoned under bona fide circumstances.

Refusal of Registration u/s.12AA:
The Assessee, a Trust formed for educational purposes, faced rejection of registration u/s.12AA of the Act by the CIT(E). The rejection was based on the perception that the Trust was formed with commercial intentions rather than charitable motives. The CIT(E) highlighted clauses in the Trust Deed related to commercial activities and powers granted to the Trustees to engage in non-genuine activities. However, the Tribunal disagreed, emphasizing that the Trust's objects were charitable in nature, primarily focused on education, and all activities aligned with the Trust Deed's clause. The Tribunal found the reasons for refusal unacceptable and directed the registration u/s.12A to be granted to the Assessee.

Refusal of Approval u/s.80G:
The refusal of approval u/s.80G was solely due to the non-grant of registration u/s.12A. As the Tribunal directed the registration u/s.12A to be allowed, it logically followed that the approval u/s.80G should also be granted. Therefore, the Tribunal allowed both appeals in favor of the Assessee, emphasizing the interconnected nature of the registration and approval processes under the Act.

This detailed analysis of the judgment from the Appellate Tribunal ITAT BANGALORE highlights the issues of delay in filing appeals, refusal of registration u/s.12AA, and refusal of approval u/s.80G, providing a comprehensive overview of the Tribunal's decision and reasoning behind granting relief to the Assessee.