2022 (12) TMI 205 - AT - Income Tax

Exemption u/s 11 - rejecting the application for registration u/s 12AA - Non compliance with the provisions of rule 17A - applicant being a new trust - HELD THAT - We have been through the objects of the applicant, the trust shall be wholly and exclusively for any one or more objects and the purposes mentioned in clause (15) of section 2 of the Income-tax Act, 1961 and they shall always be known as charitable objects. The learned Commissioner of Income-tax (Exemption), it is seen, has not taken into consideration the trust deed filed by the applicant along with the original application for registration, e-filed on March 19, 2020. The objects of the applicant-trust were to be considered by the learned Commissioner of Income-tax (Exemption) while considering the application for grant of registration to this newly formed trust, there being no activities having been hitherto undertaken by the applicant. What has been held by the hon'ble Supreme Court in Ananda 2020 (2) TMI 1293 - SUPREME COURT . Post passing of the impugned order, to reiterate, the applicant has been granted registration vide order dated December 31, 2021, on the very same objects as e-filed by the applicant along with the original application for registration. In view of the mandate of Ananda (supra), in the case of a newly formed trust, in the absence of activities, the trust deed ought to have satisfied the learned Commissioner of Income-tax (Exemption) for grant of registration. We have seen the trust deed, which remains unchanged. We are satisfied with the trust deed. The requirement of filing of evidence under rule 17A of the Rules are not relevant for consideration of the application for registration. The applicant being a new trust, no activities have been carried out by it hitherto. In fact, while granting registration to the applicant vide order dated December 31, 2021, the very same trust deed had been taken into consideration. Commissioner of Income-tax (Exemption) is directed to grant registration to the applicant from the date of the first application, i. e., March 19, 2020. Appeal of assessee allowed.

Issues:
1. Rejection of application for registration under section 12AA of the Income-tax Act, 1961.
2. Consideration of trust deed and documents filed for registration.
3. Compliance with rule 17A of the Income-tax Rules for registration.
4. Grant of registration to a newly formed trust without prior activities.

Analysis:

Issue 1: Rejection of application for registration under section 12AA of the Income-tax Act, 1961:
The assessee appealed against the order rejecting the application for registration under section 12AA. The grounds raised included errors in law and facts by the Commissioner of Income-tax (Exemption), Lucknow. The rejection was challenged based on legal and factual discrepancies in the application process.

Issue 2: Consideration of trust deed and documents filed for registration:
The appeal highlighted that the trust deed was e-filed along with the application for registration on March 19, 2020. The documents were available on the ITBA portal of the Income-tax Department, supported by acknowledgments of e-filing. The counsel emphasized the timely submission and availability of all necessary documents for registration.

Issue 3: Compliance with rule 17A of the Income-tax Rules for registration:
The Departmental representative contended that the applicant failed to provide corroborative evidence in compliance with rule 17A, leading to the rejection of the registration request. However, the appellate tribunal noted that the trust deed was available on the ITBA portal and considered the subsequent application for registration filed on December 22, 2021, leading to the grant of registration on December 31, 2021.

Issue 4: Grant of registration to a newly formed trust without prior activities:
The tribunal referenced legal precedents, including the Ananda case, to support the registration of a newly formed trust within a reasonable timeframe, even without prior activities. The tribunal found that the trust deed satisfied the requirements for registration, and the absence of activities did not hinder the registration process. The tribunal directed the Commissioner of Income-tax (Exemption) to grant registration to the applicant from the date of the initial application, i.e., March 19, 2020.

In conclusion, the appeal was allowed, and the order rejecting the registration was reversed. The tribunal emphasized the timely submission of documents, the legal validity of the trust deed, and the grant of registration to the newly formed trust in line with legal precedents and the provisions of the Income-tax Act, 1961.

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