2021 (1) TMI 229 - AT - Income Tax

Registration u/s 80G(5)(vi) denied - CIT(E) held that the assessee-trust is a private religious trust and therefore, cannot be held as a charitable trust within the meaning of Section 2(15) - AR has submitted that the assessee-trust is duly registered U/s 12AA - contention raised by the ld. AR that the impugned order has been passed beyond the limitation period - HELD THAT - Assessee-trust has moved its application on 01.08.2019 and therefore, the limitation period has to be counted from the end of the month in which the application has been filed and the said period expired on 28.02.2020. In the instant case, the impugned order was passed on 19.02.2020, therefore, the same was passed within the limitation period as so prescribed and therefore, the contention so advanced by the ld. AR cannot be accepted. Assessee-trust is a private religious trust which doesn t enure for the benefit of public at large and thus cannot be held as charitable within meaning of section 2(15) - merely the fact that the trustees belongs to a single family cannot be a sole reason for holding that it is a case of private trust as compared to a public trust more so when we find that the assessee-trust has already been registered U/s 12AA of the Act as well as under the Rajasthan Society Registration Act. The trustees are the same at the time of applying for registration U/s 12AA of the Act as well as while applying for the impugned approval U/s 80G of the Act and therefore, where the Revenue has already taken a view that the assessee is a public trust, in such a scenario, basis the same documents, the Revenue cannot plead and take a different view in the matter. Having granted registration U/s 12AA of the Act which continues to remain in force and which has not been withdrawn as on date, the main character of the assessee-trust as that of the public trust cannot be challenged in the impugned proceedings. Regarding the Bhairav Temple being described as property of the assessee trust as per the amended trust deed and carrying on the activities of running of the temple, assessee-trust which has been established on 27.09.2017 is operating out of the temple premises, therefore, it is a case of a trust which is operative as on the date of seeking registration and it thus becomes essential to examine the exact nature of the activities so undertaken by the assessee-trust. The assessee trust has claimed that the necessary information/documents have been submitted before the ld CIT(E) however, on perusal of the records, we are unable to decipher any information and documents which have been submitted by the assessee-trust in relation to Temple related activities and corresponding expenditure. Assessee trust deserve one more opportunity to submit the necessary information/documents thus we are setting aside the matter to the file of ld. CIT(E) for the purposes of examining the activities of the assessee s trust including the activities in relation to Bhairav Temple and basis the same, decide the matter afresh - Appeal of the assessee is allowed for statistical purposes.

Summary

Issues:
1. Rejection of trust application seeking registration U/s 80G(5)(vi) of the Act by ld. CIT(E), Jaipur.
2. Challenge against the rejection and findings of ld. CIT(E) by the assessee trust.
3. Examination of the activities of the assessee-trust to determine its charitable status.
4. Consideration of the nature of the trust's activities, especially related to Bhairav Temple.
5. Assessment of the limitation period for passing the order on the trust application.

Issue 1:
The appeal was filed by the assessee against the rejection of the trust application seeking registration U/s 80G(5)(vi) of the Act by ld. CIT(E), Jaipur. The ld. CIT(E) held that the assessee-trust is a private religious trust and not a charitable trust under Section 2(15) of the Act. The rejection was based on the trust's failure to provide necessary clarification and details as requested.

Issue 2:
During the hearing, the assessee's representative argued that the trust was duly registered under U/s 12AA of the Act and also under the Rajasthan Society Registration Act. They contended that the necessary information was submitted as requested, and the order was passed beyond the prescribed 6-month limitation period. The representative urged for the order's reversal and grant of registration U/s 80G.

Issue 3:
The ld. DR argued that the grant of registration U/s 12AA does not automatically entitle the trust to seek registration U/s 80G. The trust's activities were questioned, especially regarding the Bhairav Temple, and it was deemed a private religious trust due to trustee relationships and lack of public benefit. The trust was issued notices for information, but satisfactory explanations were not provided.

Issue 4:
The Tribunal examined whether the trust's activities catered to the public at large or were limited to specific individuals or communities. It was noted that the trust had already been registered as a public trust under U/s 12AA, and the Revenue could not change this characterization without valid reasons or violations of conditions. The nature of activities related to Bhairav Temple and public benefit was crucial for determining charitable status.

Issue 5:
Regarding the limitation period for passing the order, it was clarified that the order was within the prescribed timeframe based on the application date. The Tribunal set aside the matter to the ld. CIT(E) for reevaluation of the trust's activities, particularly those related to Bhairav Temple, to decide the matter afresh within three months.

In conclusion, the Tribunal allowed the appeal for statistical purposes, emphasizing the need for a thorough examination of the trust's activities, especially those related to the Bhairav Temple, to determine its charitable status under U/s 80G of the Act.