9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2021 (10) TMI 963 - AT - Income TaxNon granting registration u/s 12A - denial of registration as object of the trust is only for the benefit of worker/employee of the company who has created the trust and does not appear to be for the general charitable cause - As argued activities of the Appellant are charitable in nature and conducted to support the activities of International Center For Research On Women which is the its self a section 25 company under companies act 1956 and engaged in charitable activities - HELD THAT - In the case of Hiralal Bagwati 2000 (4) TMI 14 - GUJARAT HIGH COURT the trust was created for the benefit of employees of the 16 institutions with the object of providing aid in case of sickness and disablement. The Hon ble High Court following the decision of Hon ble Supreme Court in the case of Ahmedabad Rana caste Association 1971 (9) TMI 8 - SUPREME COURT held that an object beneficial to a section of the public is an object of general public utility. The registration of the assessee trust cannot be rejected merely on the ground that it is for the benefit of a restricted group of employees of the company ICRW . However, we find some merit in the argument of the Ld. DR that trust has been engaged in discharging the statutory obligation of the company ICRW of making gratuity payment to their employees. But in this regard the competent authority has not examined the activities actually carried out by the trust, sources of funds and how the same are distributed to the employees, whether by way of creating the trust, the company is getting some benefit of saving of money, whether any activity of welfare of the employees other than making gratuity payment has been carried out by the trust etc. The assessee has also not filed any information with regard to its activities before us. Therefore, examining those issues need enquiry at the end of the Ld.CIT(E) - We restore this issue back to the Ld. CIT(E) for re-examination of the application of the assessee trust as per the provisions of the law, in the light of the decision in the case of Ahmedabad Rana caste Association (supra) and the decision of the Hon ble High Gujrat of in the case of Hiralal Bhagwati (supra) - Appeal of the assessee is allowed for statistical purposes.
Issues Involved:
1. Rejection of registration under section 12AA of the Income Tax Act, 1961. 2. Charitable nature of the trust's activities. 3. Compliance with statutory obligations. Detailed Analysis: 1. Rejection of Registration under Section 12AA: The appeal was directed against the order dated 27/02/2018 by the Commissioner of Income-Tax (Exemption), Delhi, rejecting the assessee's application for registration under section 12AA of the Income Tax Act, 1961. The primary contention was that the CIT(E) erred in law by not granting the registration. The assessee argued that their activities were charitable and aligned with the objectives of the International Center for Research on Women (ICRW), which is already registered under section 12A and 80G of the Act. 2. Charitable Nature of the Trust's Activities: The assessee, a trust named 'ICRW Group Gratuity Trust', was established to protect the financial interests of ICRW employees by setting aside gratuity payments. The CIT(E) rejected the application on the grounds that the trust's objectives were solely for the benefit of ICRW employees and not for a general charitable cause. The assessee relied on the Supreme Court decision in Ahmedabad Rana Caste Association, which stated that a charitable purpose does not need to benefit the whole of mankind but can benefit a section of the public. The Gujarat High Court decision in Hiralal Bhagwati also supported the notion that a trust formed for the benefit of employees could be entitled to registration under section 12A. 3. Compliance with Statutory Obligations: The CIT(E) argued that creating a trust for discharging a company's statutory requirement of gratuity payment does not constitute a charitable activity. It was contended that the trust was merely fulfilling ICRW's statutory duty rather than engaging in welfare activities. The Tribunal noted that while the trust's objective was to benefit a specific group (ICRW employees), the CIT(E) had not examined the actual activities of the trust, sources of funds, and their distribution. The Tribunal emphasized the need for a detailed inquiry into whether the trust's creation provided any financial benefit to the company or if it engaged in any welfare activities beyond gratuity payments. Conclusion: The Tribunal concluded that the registration could not be rejected solely because the trust benefited a restricted group of employees. However, it acknowledged the need for further examination of the trust's activities and financial arrangements. The case was remanded back to the CIT(E) for re-evaluation in light of the Supreme Court and Gujarat High Court decisions. The CIT(E) was instructed to provide the assessee with an adequate opportunity to present their case. The appeal was allowed for statistical purposes. Order Pronouncement: The order was pronounced in the open court on 21.10.2021.
|
