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2020 (8) TMI 14 - AT - Income TaxExemption u/s 11 - grant of registration under section 12AA - Assessee object is restricted to a mere class or a community the object of the Trust are for educational benefit and for providing assistance to Modh Vanik children - HELD THAT - Income Tax Act, 1961 came into force with effect from 01.04.1962 i.e. after the registration of the Act and hence the trust was already in existence before the Act came into force. Even assuming it can be denied under section 12AA of the Act for the failing to satisfy the conditions not having the object restricted to a particular community, the Explanation 2 of Sec. 13 gives a free hand to the assessee to claim the benefit as sought for. The word Schedule Cast, backward classes, Schedule Tribe and women and children means if the Trust is established for the benefit of the women and children then it is eligible to get such grant of relief under section 12AA of the Act. Thus, we must note that the Ld. Advocate appearing for the AR argued this particular aspect of the matter which we found is having real substance on merit. Taking into consideration the entire aspect of the matter we find there cannot be any doubt relating to the claim of the assessee either on the count of date of registration or the object of the Trust which specifically provides benefit to the children though of a particular community is certainly entitled to get the relief under section 12AA of the Act. Hence, we direct the Ld. CIT to grant the registration under section 12AA of the Act as sought for on the basis of the observation made hereinabove. Appeal filed by the assessee is allowed.
Issues Involved:
1. Date of registration of the Trust. 2. Applicability of Section 13(1)(b) of the Income Tax Act, 1961. 3. Eligibility for registration under Section 12AA of the Income Tax Act, 1961. 4. Pronouncement of the order beyond 90 days due to Covid-19 lockdown. Issue-wise Detailed Analysis: 1. Date of Registration of the Trust: The primary issue was the date on which the Trust was registered. The Commissioner of Income Tax (Exemption) [CIT] argued that the Trust was registered on 24.11.2014, while the assessee contended that the Trust was originally registered on 03.03.1962 under the Bombay Public Trust Act, 1961. The Tribunal found that the Trust was indeed registered on 03.03.1962, as evidenced by the registration certificate issued by the Assistant Commissioner of Rajkot Region, Rajkot Morbi District. The Tribunal noted that the certificate dated 24.11.2014 was merely a reissuance due to administrative changes and not the original date of registration. Consequently, the Tribunal concluded that the CIT's contention was incorrect. 2. Applicability of Section 13(1)(b) of the Income Tax Act, 1961: The CIT rejected the Trust’s application for registration under Section 12AA on the grounds that its activities were restricted to the 'Modh Vanik' community, invoking Section 13(1)(b) of the Act, which disallows benefits to trusts created for a particular community. However, the Tribunal referred to Explanation 2 of Section 13, which states that a trust established for the benefit of Scheduled Castes, backward classes, Scheduled Tribes, or women and children shall not be deemed to be created for the benefit of a religious community or caste. The Tribunal found that the Trust’s objectives, which included providing educational benefits and assistance to 'Modh Vanik' children, fell within this explanation and were thus eligible for benefits under Section 12AA. 3. Eligibility for Registration under Section 12AA of the Income Tax Act, 1961: The Tribunal examined whether the Trust met the criteria for registration under Section 12AA. The CIT had expressed doubts about the genuineness of the Trust’s charitable activities. However, the Tribunal found that the Trust's objectives were indeed charitable, focusing on educational benefits and assistance to children. Given the Trust’s long-standing existence since 1962 and its compliance with the requirements, the Tribunal directed the CIT to grant the registration under Section 12AA. 4. Pronouncement of the Order Beyond 90 Days Due to Covid-19 Lockdown: The Tribunal addressed the procedural issue of pronouncing the order beyond the 90-day period due to the Covid-19 pandemic. Referring to the case of DCIT vs. JSW Ltd., the Tribunal noted that the lockdown constituted "extraordinary circumstances" that justified the delay. The Tribunal highlighted that the Supreme Court and various High Courts had extended limitations due to the pandemic, acknowledging the unprecedented disruption in judicial work. Therefore, the Tribunal concluded that excluding the lockdown period while computing the limitation was reasonable and pronounced the order within the extended timeframe. Conclusion: The Tribunal allowed the appeal filed by the assessee, directing the CIT to grant the registration under Section 12AA of the Income Tax Act, 1961, and justified the delayed pronouncement of the order due to the Covid-19 lockdown. The decision was pronounced in the open court on 30th July, 2020 at Rajkot.
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