2020 (9) TMI 569 - AT - Income Tax

Exemption u/s 11 - Registration u/s 12AA(1)(b) and u/s 80G(5)(vi) - Application for registration of charitable or religious trusts, etc u/r 17A - HELD THAT - Assessee had filed an application before the ld. CIT (Exemption) for seeking registration u/s 12AA of the Act. The assessee had also furnished the copy of MOA notorized by the Notary Officer, Bhilwara. CIT (Exemption) rejected the application filed by the assessee on the ground that as per Rule 17A read with section 12AA(1)(b) of the Act , the certified copy of the instrument establishing the trust needs to be verified with originals. CIT (Exemption) also held that he is empowered to call for such documents/ information from the trust to satisfy himself about the genuineness of the activities of the trust or to make necessary enquiries as he may deem fit in this behalf. CIT (Exemption) further observed the since under rule 17A of Income Tax Rules, 1962, the assessee society/trust is required to produce original/ certified instrument regarding establishing the trust/society for verification but the assessee society/ trust has failed to comply with the said mandatory requirements under Rule 17A of Income Tax Rules. Therefore, the assessee society was not entitled for registration u/s 12AA. As per amended rule 17A of the Income Tax Rules, which are applicable in the case of the assessee, the assessee was not required to furnish the original copy of the documents rather self attested or self certified copy of each and every documents/ instruments was sufficient for the purpose of verification by the ld. CIT (E). This appeal of the assessee society is restored to the file of the ld. CIT(E) for afresh examination of the issue in question and act accordingly. Appeal of the assessee as to grant of approval u/s 80G is interconnected with the appeal of the assessee relating to registration u/s 12AA of the Act. Therefore, this appeal of the assessee is also restored to the file of the ld. CIT(E) for afresh consideration and act accordingly. Appeal allowed for Statistical purposes.

Summary

Issues Involved:
1. Rejection of registration under Section 12AA of the Income Tax Act.
2. Rejection of approval under Section 80G of the Income Tax Act.

Issue-wise Detailed Analysis:

1. Rejection of Registration under Section 12AA of the Income Tax Act:
The assessee society filed an application for registration under Section 12AA of the Income Tax Act, 1961. The CIT (Exemptions) rejected the application on the grounds that the assessee did not submit original documents regarding the establishment of the trust/society, as required under Rule 17A of the Income Tax Rules, 1962. The CIT (Exemptions) insisted on the verification of original documents to satisfy the genuineness of the trust's activities.

The assessee argued that the CIT (Exemptions) misinterpreted the provisions of Rule 17A. The amended Rule 17A, effective from 19-02-2018, requires only self-certified copies of documents for registration, not the original documents. The assessee had submitted a self-certified copy of the Memorandum of Association (MOA) notarized by a Notary Officer, which should suffice under the amended rules.

The tribunal noted that the CIT (Exemptions) erroneously applied the pre-amended Rule 17A, which required original documents. The amended Rule 17A, applicable at the time of the assessee's application, mandates only self-certified copies. The tribunal also observed that the assessee had provided a notarized copy of the MOA and produced the original amended deed, fulfilling the requirements under the amended rules.

The tribunal referred to the decision of the Hon'ble Rajasthan High Court in CIT(E) vs. Arihant Charitable Trust, Pali, which held that self-certified copies are sufficient for registration under Section 12AA. Consequently, the tribunal restored the matter to the file of the CIT (Exemptions) for fresh examination, directing the CIT (Exemptions) to consider the self-certified documents as per the amended Rule 17A.

2. Rejection of Approval under Section 80G of the Income Tax Act:
The appeal concerning the rejection of approval under Section 80G(5)(vi) of the Income Tax Act was found to be interconnected with the appeal for registration under Section 12AA. Since the tribunal restored the matter of registration under Section 12AA to the CIT (Exemptions) for fresh consideration, the appeal for approval under Section 80G was also restored for fresh consideration.

The tribunal directed the CIT (Exemptions) to reconsider the approval under Section 80G in light of the fresh examination of the registration under Section 12AA, ensuring compliance with the amended rules and the tribunal's observations.

Conclusion:
Both appeals were allowed for statistical purposes, and the matters were restored to the CIT (Exemptions) for fresh examination and consideration, ensuring adherence to the amended Rule 17A and relevant judicial precedents. The tribunal emphasized the sufficiency of self-certified documents for registration and approval under the respective sections of the Income Tax Act.