2024 (11) TMI 192 - AT - Income Tax

Rejection of provisional registration granted u/s 12AB r.w.s. 12A(1)(ac)(iii) - assessee trust has failed to substantiate the charitable nature of the trust as well as the genuineness of its activities - HELD THAT - We have gone through the above documents and evidences, and noticed that assessee has satisfied the genuineness of its activities and the nature of activities. After going through the objects of the assessee- trust, we find that objects of the assessee -trust are for general public benefit and not restricted to a particular community or caste. Assessee - trust, under consideration is not for the benefit of any particular religious community or cast, it is open for the benefit of the general public, as evident from the object of the assessee - trust, therefore we do not accept the contention raised by Revenue, to the effect that the assessee- trust was created only for the benefit of particular persons or community or caste. As per the objects of the trust, the assessee - trust under consideration, is open for benefit for all sections of society and general public. That is, the facilities provided by the assessee- trust are intended to serve the needs of attendees of various activities without any discrimination based on caste, colour, or creed. Hence, assessee - trust deserve for registration. Activities of running Atithigruh and Bhojansala - We find that these are not commercial activity. The Atithigruh facilities are intended to serve the needs of attendees of various activities without any discrimination based on caste, colour, or creed, hence, it is not a commercial activity. Besides, Bhojansala is only for providing food to the poor and needy persons of the general public without any discrimination. It is open only for poor and needy persons to provide them food. No any specific community and caste is taking benefit, exclusively, for the Atithigruh and Bhojansala these Atithigruh and Bhojansala are needed to run the charitable activities. Therefore, none of the objects of the assessee-trust, are restricted to any particular community and caste. Expenditure incurred on the objects of the trust - We find that assessee -trust has applied Rs. 4,06,455/- out of total receipt of Rs. 6,61,437/- by way of establishment expenses and registration charges. In future, the assessee-trust would spend the amount for charitable- activities, as pointed out by ld. Counsel. Besides, the construction of a crematorium and the maintenance thereof is for the objects of the trust, which is not for particular caste, or community. No infirmity in the objects and activities of the trust. Therefore, we direct the CIT(E) to examine the objects and activities of the trust and grant the registration, in accordance with law. CIT(Exemption), Pune assuming proper jurisdiction under the law - We find that assessee -trust is situated in Gujarat, therefore CIT (E) - Ahmedabad, would have jurisdiction, over the assessee, who, will pass the order in accordance with law.

Issues Involved:

1. Rejection of application for registration under Section 12A of the Income Tax Act, 1961.
2. Jurisdictional authority to pass the order.
3. Genuineness of the trust's activities and the charitable nature of its objectives.
4. Compliance with procedural requirements under Rule 17A of the Income Tax Rules, 1962.

Issue-wise Detailed Analysis:

1. Rejection of Application for Registration under Section 12A:

The primary issue in this case was the rejection of the assessee's application for registration under Section 12A of the Income Tax Act, 1961. The Commissioner of Income Tax (Exemption) [CIT(E)] rejected the application citing that the assessee trust failed to substantiate the charitable nature of the trust and the genuineness of its activities. The CIT(E) noted discrepancies such as the lack of expenditure on the trust's objectives and the commercial nature of some activities like running a "Guest House" and "Canteen."

The assessee contended that these facilities were intended to serve attendees of various activities without discrimination. However, the CIT(E) found that the trust's explanations deviated from the original Trust Deed, and the trust could not prove that its objects were not for a particular caste, creed, religion, or community. The assessee was unable to demonstrate that the activities were not commercial in nature.

2. Jurisdictional Authority to Pass the Order:

The assessee raised an objection regarding the jurisdiction of the CIT(E), Pune, arguing that the order was passed without proper jurisdiction. The Tribunal found that since the trust is situated in Gujarat, the CIT(E) Ahmedabad would have jurisdiction over the assessee. Therefore, the Tribunal directed that the CIT(E) Ahmedabad should examine the objects and activities of the trust and grant registration in accordance with the law.

3. Genuineness of the Trust's Activities and Charitable Nature of its Objectives:

The Tribunal assessed the genuineness of the trust's activities and the nature of its objectives. The assessee argued that the trust's objects were for the benefit of all individuals, irrespective of caste, color, or creed. The Tribunal noted that the trust's activities, such as running "Atithigruh" and "Bhojansala," were not commercial activities. These facilities were intended to serve the needs of attendees of various activities without discrimination and were open to the general public, not restricted to any particular community or caste.

The Tribunal found that the trust's objects were for general public benefit and not restricted to a particular community or caste. The trust had applied a portion of its receipts towards establishment expenses and registration charges, and it was anticipated that future expenditures would be directed towards charitable activities. The Tribunal concluded that the trust deserved registration as its objects and activities were in line with charitable purposes.

4. Compliance with Procedural Requirements under Rule 17A:

The CIT(E) had noted that the assessee failed to comply with Rule 17A(2)(g) of the Income Tax Rules, 1962, by not furnishing self-certified copies of annual accounts for the previous three years. The Tribunal considered the documents and evidence submitted by the assessee, including the Trust Deed, audit report, and financial statements. It found that the assessee satisfied the genuineness of its activities and the nature of its objectives.

In conclusion, the Tribunal directed the CIT(E) to examine the trust's objects and activities and grant registration in accordance with the law. The appeal of the assessee was allowed for statistical purposes.

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