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TMI Blog2014 (8) TMI 207X X X X Extracts X X X X X X X X Extracts X X X X ..... inst Revenue. - Tax Case (Appeal) No.729 of 2013 - - - Dated:- 22-7-2014 - R. Sudhakar And G. M. Akbar Ali,JJ. For the Appellant : Mr. J. Narayanaswamy Standing Counsel for Income Tax For the Respondent : Mr. R. Janakiraman JUDGMENT (Delivered by R. Sudhakar,J.) This Tax Case (Appeal) is filed at the instance of the Revenue as against the order of the Income Tax Appellate Tribunal raising the following substantial question of law: Whether on the facts and in the circumstances of the case, the Tribunal was right in holding that assessee Trust is entitled to registration under Section 12AA? 2. The Director of Income Tax (Exemptions), Chennai appears to have been on the wrong premise in the whole case where the respondent/assessee seeks registration under Section 12AA of the Income Tax Act as a charitable institution. At the outset we would like to point out a specific line in the order, which has been totally misquoted or misconstrued by the original Authority, which reads as follows: As per Rule 17A read with Section 17B, audited accounts of the last 3 years should have been enclosed in Form No.10B 3. We find, Section 17B of the Income Tax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... table or religious trust or institution shall be made in duplicate in Form No.10A and shall be accompanied by the following documents, namely:- (a) where the trust is created, or the institution is established,under an instrument, the instrument in original, together with one copy thereof; and where the trust is created, or the institution is established, otherwise than under an instrument, the document evidencing the creation of the trust or the establishment of the institution, together with one copy thereof: Provided that if the instrument or document in original cannot conveniently be produced, it shall be open to the Commissioner to accept a certified copy in lieu of the original; (b) where the trust or institution has been in existence during any year or years, prior to the financial year in which the application for registration is made, two copies of the accounts of the trust or institution relating to such prior year or years (not being more than three years immediately preceding the year in which the said application is made) for which such accounts have been made up. All that is required to be submitted at the time of application for registration is that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r institution as computed under this Act without giving effect to **the provisions of section 11 and section 12 exceeds the maximum amount which is not chargeable to income-tax in any previous year, the accounts of the trust or institution for that year have been audited by an accountant as defined in the Explanation below sub-section (2) of section 288 and the person in receipt of the income furnishes 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 accountant and setting forth such particulars as may be prescribed. (c) Inserted by Finance Act, 2001, with effect from April 1, 2002, omitted by the Finance Act, 2002. (2) Where an application has been made on or after the 1st day of June, 2007, the provisions of sections 11 and 12 shall apply in relation to the income of such trust or institution from the assessment year immediately following the financial year in which such application is made. 11. Section 12AA of the Income Tax Act reads as follows: 12AA. Procedure for registration.--(1) The Commissioner, on receipt of an application for registration of a trust or instituti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he respondent/assessee satisfies the requirement of Rule 17A and had submitted Form 10A along with requisite documents, the assessee is entitled to seek registration under Section 12AA of the Income Tax Act, unless there is some material to decline such registration as is provided in the said Section. The Original Authority has not recorded his subjective satisfaction in this case. Also, the reasoning given by the Authority is not in consonance with the provisions of law. The Original Authority declined registration on the ground that the assessee had spent only small amounts towards charitable activities. The bonafides of the Trust should not be doubted on this ground. The Authority has to test the nature and the activity of the Trust to grant registration. In the present case, the Original Authority has not doubted the bona fides of the Trust or the activity of the Trust, but on the ground that the Trust had spent low quantum towards charitable activity, the Authority had declined registration of the Trust. A Trust can only do activities within its financial capability. A Trust is not measured by its financial clout but by its philanthropic disposition. 13. The finding that no ..... X X X X Extracts X X X X X X X X Extracts X X X X
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