9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2016 (2) TMI 563 - AT - Income TaxRegistration u/s 12A and approval u/s 80G denied - Held that - Once the objects of the trust are found to be charitable the CIT has no option but to grant registration. The issues such as violation of provisions of sec.13 and the exemption u/s 11 and 12 can be examined by the AO after the return of income is filed. It is only after the activities of the trust are commenced the genuineness of the objects can be examined during the course of assessment proceedings after the grant of registration by the IT Authorities. Applying the above legal position to the facts of the present case it is not the case of the ld.CIT(Exemptions) that the objects of the trust are not charitable in nature. The objects of the appellant-trust clearly fall within one of the limbs of charity i.e. education and the appellant-trust had complied with all the procedural requirements and filed the details as called for by the ld.CIT(Exemptions). The only grievance of the ld.CIT(Exemptions) appears to be that the son of the settler is constructing a building in the name of the entity in which he was interested as a shareholder or director and not in the name of the trust proposed to be used for the purpose of the appellant-trust. This does not in any way militate against the charitable character of the objects of the appellant-trust. It is not the case of the ld.CIT(Exemptions) that the funds of the appellant-trust were used for the construction of the building in the name of that entity. This neither infringes the provisions of sec.13 nor can be examined at the stage of granting registration. The genuineness of the activities of the trust can be examined only after commencement of the activities of the appellant-trust. Thus we direct the ld.CIT(Exemptions) to grant registration u/s 12A of the IT Act. Following the same parity of reasoning give by us in the appeal filed against denial of registration u/s 12A we direct the ld.CIT(Exemptions) to grant the approval u/s 80G. - Decided in favour of assessee.
Issues Involved:
1. Denial of registration under Section 12A of the Income Tax Act, 1961. 2. Denial of approval under Section 80G of the Income Tax Act, 1961. Issue-wise Detailed Analysis: 1. Denial of Registration under Section 12A: The appellant-trust, formed on 01-09-2014, applied for registration under Section 12A of the Income Tax Act, 1961, on 30-12-2014. The CIT (Exemptions) denied the registration on the grounds that the proposed activities of the trust were commercial in nature, citing the construction of a building by the son of the settler in the name of Ozone Orbana Infra Pvt. Ltd., and inferred a violation of Section 13(2)(g) of the Act. Additionally, the CIT (Exemptions) argued that the genuineness of the activities could not be verified due to the absence of relevant details and commencement of activities. The appellant-trust contended that the objects of the trust were charitable and not commercial, and the activities being carried out in rented premises did not render the objects commercial. They argued that the issue of violation of Section 13 could be examined during assessment proceedings and that the genuineness of activities could only be tested after the commencement of activities. They supported their arguments with various judicial precedents, including CIT vs. A.S.Kuppuraju Brothers Charitable Trust, DIT(E) vs. Meenakshi Ammal Endowment Trust, and Garden City Educational Trust. The tribunal held that the approach of the CIT (Exemptions) was erroneous. It cited several judgments, including Sri Gururaja Seva Samithi and A.S.Kuppuraju Bros. Charitable Foundation Trust, which established that the question of verifying the activities of a trust could only be considered after it is registered and carries on activities. The tribunal emphasized that at the time of granting registration under Section 12A, the CIT is only empowered to look at the objects of the trust to determine if they are charitable. Once the objects are found to be charitable, registration must be granted. The tribunal concluded that the objects of the appellant-trust were charitable, falling within the limb of education, and directed the CIT (Exemptions) to grant registration under Section 12A. 2. Denial of Approval under Section 80G: The appellant-trust also applied for approval under Section 80G of the Income Tax Act, 1961, on 20-02-2015. The CIT (Exemptions) denied the approval for the same reasons as the denial of registration under Section 12A. The tribunal noted that since it had directed the CIT (Exemptions) to grant registration under Section 12A, the issue of approval under Section 80G was consequential. Following the same reasoning, the tribunal directed the CIT (Exemptions) to grant approval under Section 80G. Conclusion: The tribunal allowed the appeals filed by the appellant-trust, directing the CIT (Exemptions) to grant both the registration under Section 12A and the approval under Section 80G of the Income Tax Act, 1961. The order was pronounced in the open court on 13th January 2016.
|
