2020 (9) TMI 570 - AT - Income Tax

Exemption u/s 11 - application of the assessee trust/ society for seeking registration u/s 12AA - 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:
The primary issue in ITA No. 1062/JP/2019 is the rejection of the assessee's application for registration under Section 12AA of the Income Tax Act. The CIT (Exemptions) rejected the application on the grounds that the assessee did not submit original documents regarding the establishment of the trust/society and evidences in support of its claim, as required under Rule 17A read with Section 12AA(1)(b) of the Act. The CIT (Exemptions) emphasized that the original or certified copy of the instrument establishing the trust must be verified.

The assessee argued that the CIT (Exemptions) misinterpreted the provisions and rules, particularly the amended Rule 17A, which came into effect on 19-02-2018. The amended rule requires only self-certified copies of documents, not the originals. The assessee had submitted a notarized copy of the Memorandum of Association (MOA) and other necessary documents, which should suffice under the amended rules.

The Tribunal analyzed the pre-amended and amended Rule 17A and concluded that the amended rule applicable in this case does not require the submission of original documents. The Tribunal found that the CIT (Exemptions) had erred in insisting on the original documents, which was contrary to the specific provisions of the amended rules.

The Tribunal also noted that the assessee had submitted all other required documents and fulfilled all other conditions. The Tribunal cited several case laws supporting the contention that non-production of original documents, when self-certified copies are provided, is a mere technical breach and should not result in the denial of registration.

In conclusion, the Tribunal restored the matter to the file of the CIT (Exemptions) for fresh examination, directing the CIT to consider the self-certified documents as sufficient for verification.

2. Rejection of Approval under Section 80G:
The issue in ITA No. 1063/JP/2019 concerns the rejection of the assessee's application for approval under Section 80G(5)(vi) of the Income Tax Act. The Tribunal found that this issue is interconnected with the registration under Section 12AA. Since the matter of registration under Section 12AA was restored to the CIT (Exemptions) for fresh consideration, the Tribunal similarly restored the issue of approval under Section 80G to the CIT (Exemptions) for fresh examination.

The Tribunal directed the CIT (Exemptions) to reconsider the application for approval under Section 80G in light of the fresh examination of the registration under Section 12AA.

Conclusion:
Both appeals of the assessee were allowed for statistical purposes, with the matters being restored to the file of the CIT (Exemptions) for fresh consideration. The Tribunal emphasized that self-certified copies of documents are sufficient under the amended Rule 17A, and the insistence on original documents by the CIT (Exemptions) was unwarranted. The Tribunal directed the CIT (Exemptions) to re-examine the applications for registration under Section 12AA and approval under Section 80G accordingly.