2020 (2) TMI 545 - HC - 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 - Whether ITAT is correct in holding that a public charitable Trust does not require to comply with local law of MP requiring registration under MP Public Trust Act 1951 ? - HELD THAT - In the present case, the registration was applied for by the respondent under Section 12AA(1)(b)(i) of the Act and the provisions under Section 12AA(1) of the Act also refers to the trust or institution and there is no mandate under Section 12AA of the Act that the application seeking exemption is required to be applied only by a registered Trust or Institution under the local laws i.e. M.P. Public Trust Act, 1951. Tribunal considering the provisions of Section 12AA(1) of the Act has specifically held that for registering the Trust or Institution for the purposes of the said Act, the Principal Commissioner or Commissioner, is required to satisfy itself about the objects of the applicant Trust or Institution and the genuineness of its activities. Under the said provision, there is no requirement for a Trust to be mandatorily registered as a Public Charitable Trust under the local Act. In the absence of any provision requiring registration as a Public Charitable Trust before applying for registration under Section 12AA(1) of the Act, the findings arrived at by the learned Tribunal cannot be faulted and said to be illegal or perverse in any manner. No reason to take a different view from the one taken by the learned Tribunal as there was no statutory requirement under the Act for the assessee Trust to get itself registered under any law before applying for registration. No infirmity could be found in the order of learned Tribunal warranting interference - No substantial question of law

Summary

Issues:
1. Whether a public charitable Trust needs to comply with local law of MP requiring registration under MP Public Trust Act 1951?
2. Whether genuineness of the activities of the trust includes compliance with the requirement of local law namely MP Public Trust Act?

Analysis:
1. The appeal was filed challenging the order passed by the Income Tax Appellate Tribunal (the Tribunal) which allowed the appeal filed by the assessee Trust and set aside the order passed by the CIT(E), Bhopal. The appellant claimed that the Tribunal erred in holding that a public charitable Trust does not need to comply with the local law of MP requiring registration under MP Public Trust Act 1951.
2. The respondent Trust applied for registration under Section 12AA(1)(b)(i) of the Income Tax Act before the CIT(E), Bhopal, which was rejected on the ground that the Trust was not registered as a public Charitable Trust. The Tribunal, however, set aside this order and allowed the appeal, stating that denying registration based solely on the lack of registration as a Public Charitable Trust was not justified.
3. The appellant argued that the Trust was required to produce a copy of registration as a Public Charitable Trust during the application process under Section 12AA of the Act, but failed to do so. The Tribunal's decision was challenged on the grounds that the genuineness of the Trust's activities should include compliance with the local law, namely the M.P. Public Trust Act.
4. The High Court, after hearing the arguments, upheld the Tribunal's decision. It was noted that there is no statutory requirement under the Act for a Trust to be registered under any law before applying for registration under Section 12AA(1) of the Act. Therefore, the Tribunal's decision was found to be in accordance with the law, and no substantial question of law arose for consideration.
5. Consequently, the High Court dismissed the appeal, affirming the Tribunal's decision that there was no need for the Trust to be mandatorily registered as a Public Charitable Trust under the local law before seeking registration under Section 12AA(1) of the Act.