2016 (1) TMI 238 - AT - Income Tax

Registration u/s 12AA denied - objection for refusing registration u/s 12AA is that the assessee has failed to produced the audited accounts and details about the activities - Held that -In the present case, the main objects of the assessee-trust are only charitable objects. The assessee has distributed some books to the poor students. Simply because the details were not filed in respect of the books donated to the poor students, it cannot be said that the assessee has not carried out any charitable activities particularly when the assessee assessee is in the beginning stage of carrying on its charitable activities. Keeping in view the facts and circumstances and by following the judgment of the Hon ble Madras High Court in M/s RJBV Vasudevan Educational & Charitable Trust( 2014 (8) TMI 207 - MADRAS HIGH COURT ), we quash the order passed by the DIT(E) and grant registration u/s 12AA of the Act to the assessee-trust. - Decided in favour of assessee

Summary

Issues:

1. Condonation of delay in filing the appeal.
2. Refusal of registration u/s 12AA of the Income-tax Act, 1961.
3. Assessment of charitable activities and eligibility for registration.

Issue 1: Condonation of Delay

The appeal was filed with a delay of 150 days, citing reasons related to the illness of one of the trustees. The appellant submitted an affidavit explaining the delay due to medical reasons. The counsel for the appellant argued that the delay was justified due to the circumstances. After considering both parties' submissions, the Tribunal found sufficient cause for the delay and decided to condone the delay, allowing the appeal to be admitted.

Issue 2: Refusal of Registration u/s 12AA

The appellant, a charitable trust, sought registration under section 12AA of the Income-tax Act. The Director of Income-tax(Exemptions) denied registration citing failure to provide audited accounts and details of activities, specifically mentioning the lack of information on donations made to poor students. The appellant contended that the trust was genuinely committed to charitable activities, emphasizing that the denial was based on an isolated incident. The Tribunal noted that the trust's primary objects were charitable in nature, and the denial was based on procedural grounds rather than the trust's legitimacy. Relying on a judgment of the Madras High Court, the Tribunal held that the trust deserved registration under section 12AA, as the objects were charitable and genuine.

Issue 3: Assessment of Charitable Activities and Eligibility

The trust's objects primarily focused on charitable activities, including assisting poor students, awarding scholarships, and supporting various educational initiatives. The Tribunal observed that the trust's activities were genuinely charitable and that the denial of registration was unjustified based on the lack of detailed documentation on a specific activity. Emphasizing that the Director's inquiry should focus on the nature and legitimacy of the trust rather than procedural lapses, the Tribunal granted registration under section 12AA, following the precedent set by the Madras High Court. The Tribunal quashed the Director's order and allowed the appeal, recognizing the trust's eligibility for registration.

In conclusion, the Tribunal granted registration under section 12AA to the appellant charitable trust, emphasizing the trust's genuine commitment to charitable activities and overturning the Director's denial based on procedural shortcomings.