Audit report in Form No. 10B in terms of rule 17B - Auditor can accept as a correct list of specified persons as given by managing trustee while filing report - Income Tax - 143/1974

Circular No. 143 Dated 20/8/1974 Audit report in Form No. 10B in terms of rule 17B - Auditor can accept as a correct list of specified persons as given by managing trustee while filing report 1. Under section 12A( b ), in the cases of charitable and religious trusts or institutions whose total income, without giving effect to the provisions of sections 11 and 12, exceeds 25,000 rupees in any previous year, the accounts of the trust or institution should have been audited by an accountant as defined in the Explanation below section 288(2) and the person in receipt of the income should furnish, along with the return of income for the relevant assessment year, the report of such audit in the prescribed form duly signed and verified by such authority and setting forth such particulars as may be prescribed. Rule 17B of the Income-tax Rules, 1962 lays down that the report of audit of accounts of the trust of the institution should be in Form No. 10B. The Annexure to Form No. 10B requires the auditor to certify, inter alia, as to the non-application or non-user of the income or property for the benefit of persons referred to in section 13(3). 2. The Board have considered a representation that while filing Form No. 10B and its annexure an auditor can accept as correct the list of persons covered by section 13(3), as given by the managing trustees, etc. The Board agree that an auditor can accept as correct the list of specified persons, till given further instructions, by the managing trustees and base their report on the strength of this certificate. Circular : No. 143 [F. No. 180/74/73-IT(A-I)], dated 20-8-1974 . Clarification one 1. Under section 12A( a ) of the I.T. Act every public charitable or religious trust is required to make an application for registration to the CC/CIT in order to qualify for exemption provided by sections 11 and 12 of that Act. 2. In terms of notification S.O.No. 829(E), dated 17-10-1989 jurisdiction over cases of such trusts was assigned to Directors of Income-tax (Exemptions) in Delhi, Bombay, Madras and Calcutta. In this context a question has been raised as to whether applications for registration under section 12A( a ) can be made with the Directors of Income-tax or should continue to be made with the CC/CIT. 3. The matter has been examined in the board and it is clarified that as hitherto applications for registration should continue to be made to the concerned CC/CIT at Delhi, Bombay, Calcutta and Madras. Accordingly the discretion to allow such applications to be made belatedly will also continue to be that of the CC/CIT. 4. It has also come to notice of the board that some CsIT are rejecting application under section 12A( a ) on the ground that the eligibility of the trust/institution to exemption under section 11 is open to question. In this context attention is invited to Instruction No.1472, dated 18-6-1982 in which it had been clarified that CsIT may admit applications under section 12A( a ) according to the procedure laid down in Instruction No. 751, dated 4-9-1974 without going at that stage into the eligibility of the trust for exemption under section 11. Instruction : No. 1838, dated 16-2-1990 . Clarification two 1. Attention is invited to the Board's Instruction No. 1838, dated 16-2-1990 on the above subject. 2. It has been brought to the notice of the Board that lot of problems are being faced by Commissioners in Bombay, Delhi, Madras and Calcutta in discharging the functions of admitting the applications for registration by trusts etc., as such cases have now been placed under the jurisdiction of Directors of Income-tax (Exemptions). 3. The above Instruction of the Board is, therefore, modified to the extent that application for registration under section 12A( a ) should be made to the Directors of Income-tax (Exemptions) in Bombay, Delhi, Madras and Calcutta, wherever the assessee concerned claims exemption under clauses ( 21 ), ( 22 ), ( 22A ), ( 23 ), ( 23A ) and ( 23C ) of section 10, section 11 and section 12 of the Income-tax Act, 1961 and is assessed or assessable by any income-tax authority having headquarters at the four metropolitan cities of Delhi, Bombay, Madras and Calcutta. Instruction : No. 1864, dated 13-11-1990 .