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TMI Blog2016 (6) TMI 129X X X X Extracts X X X X X X X X Extracts X X X X ..... essee arises out of the order of the Learned CIT, Kol- XXI, Kolkata in Proceedings M.No.CIT-Kol-XXI/12A 80G/2012-13/4297-99 dated 30.1.2013 refusing to grant registration u/s 12AA of the Income Tax Act, 1961 (hereinafter referred to as the Act ). 2. The basic facts of this issue are that the assessee was established on 26.7.2006 and registered on 2.8.2006 by Addl.Registrar of Assurance, Govt. of West Bengal. The assessee society preferred an application in Form 10A seeking registration u/s 12AA of the Act on 31.1.2012. The Learned CIT made the following observations in his order :- (i) Application in Form 10A signed by secretary without mentioning any date. (ii) The applicant society has not furnished the original trust deed along with Form 10A. Thus the application for registration u/s 12A was neither filled in properly nor accompanied by the documents as required by Rule 17A of the Rules. (iii) Besides the society has not filed the application within the stipulated time period of one year from the creation of the trust as per provisions of section 12A(1)(a) of the IT Act. For this reason petition for registration u/s 12A cannot be acted upon. The rejecti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 26.7.2006, as per entries in the cash book. Hence, contrary to the deposition by the settlors in the Trust Deed, the trust fund i.e nucleus of a starting fund is, sum of ₹ 9,00,000/- was not available with the settlors for deposition of the trustees. Further, as per letter dated 7.12.2012, the trust was not maintaining any bank account, which was only opened on 16.3.2011. As per the Indian Trusts Act, 1882, a trust may be created for any lawful purpose. The purpose of trust is lawful unless it is (a) forbidden by law, or (b) is of such a nature that, if permitted, it could defeat the provisions of any law, or (c) is fraudulent. Every trust of which purpose is unlawful is void. As per section 5 of Indian Trusts Act, 1882, no trust in relation to movable property is valid unless declared by a non-testamentary instrument in writing signed by the author of the trust or the trustee and registered or unless the ownership of the property is transferred to the trustee. In case of movable property the trust may be declared either (i) by a non-testamentary document or by will in the case of immovable property , (ii) by mere transfer of ownership of the property without ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing objects and genuineness of its activities. 3. That in the facts, circumstances as well as under the Law, the Ld. C.l.T.-XXI, Kolkata, erred in referring to Section (5) and (6) of the Indian Trusts Act, 1882, when there has been no violation as such of the provisions of Section (5) and (6) of the Indian Trusts Act, 1882. 4. That in the facts, circumstances as well as under the law, Ld. C.I.T.-XXI, Kolkata. should have granted 'Registration' u/s 12AA in view of the 'Rectification Deed' executed to the original Deed of Trust removing the apparent mistake therein. 5. That the appellant craves leave to adduce, modify, add, rescind, revise any of the ground(s) in course of proceedings before the Honourable I.T.A.T., Kolkata. The assessee had also raised the following additional ground :- (1A) THAT in the facts, circumstances as well as under the law, the ORDER passed by Ld. CIT - XXI on 30.08.2012, refusing grant of Registration u/s 12AA in violation of statutory period of six months as required u/s 12AA(2), got barred by limitation and the Appellant, in consequence, should be presumed to be granted Registration . [2004]91 ITDI (BANG). ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gh School, duly recognized and approved by Govt. of West Bengal Secondary Education Board, vide their reference no. S/RCC09/2011/83. The running of school in the name of the assessee trust is not disputed by the revenue. We find that the Learned CIT had not disputed the objects of the trust as charitable in nature. We find that he had only pointed out certain defects in the trust deed which are curable in nature and which would not disturb the root of the existence of the trust per se. We find that the assessee had replied before the Learned CIT that a sum of ₹ 4,33,000/- were seized and possessed with the settlors being the initial corpus fund of the trust and had undertook to invest the balance promised amount of ₹ 4,67,000/- in future to the trust. We find that the Learned CIT had called for a report from the Learned AO to satisfy himself as to the genuineness of the activities of the Trust as well as its objects in terms of section 12AA(1)(a) of the Act. It was argued that admittedly no adverse remarks were sent by the Learned AO in this regard. However, the Learned CIT had proceeded initially to reject the application on the ground that the same was not made within ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on of ₹ 500 made by the founder of the trust and dedicated to the objects of the trust was hardly sufficient to carry out the charitable activities of the trust. The sufficiency or otherwise of the initial contribution made by the founder to the trust fund is not a relevant factor while dealing with an application for registration under section 12AA. The section in terms did not make it a consideration for the grant of registration. Further, there was a board of trustees constituted by the trust deed and the board had been authorized to collect contributions from schools and society to meet the objects of the trust and had been directed to deposit the contributions into the corpus fund. The corpus fund was to be invested in the prescribed modes and the trust deed authorised the trustees to utilize the earnings from the corpus fund towards meeting the objects of the trust. In special cases, the trustees had been authorized 10 utilize the corpus fund also for such purposes. The trustees had collected a sum of ₹ 5,71,927 towards contribution to the trust which had been deposited with the bank. The statement of account issued by the bank, which was placed before the Commiss ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e to time. This action of the settlors according to us would not tamper the existence of the trust. It is not in dispute that the settlors had brought in ₹ 4,33,000/- as the initial corpus fund of the trust. That itself brings the trust into existence with charitable objects. Moreover, there is no allegation that the monies so brought in have been diverted to the personal benefit of the settlors. The monies so brought in remained in the coffers of the trust to be deployed for the charitable objects of the trust. 5.3. It is true that Rule 17A provides that assessee has to furnish the previous years accounts when application in Form 10A is filed. In our opinion, this requirement in Rule 17A asking for previous year accounts was relevant when the legislature had provided for condonation of delay in filing the application in Form 10A and granting registration with retrospective effect. Now the requirement of accounts had practically become redundant as the registration is granted only with effect from the date on which application is made after 1.6.2007. Hence viewing from this perspective, the assessee trust not bringing in the part of the promised initial corpus fund would n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... istration u/s 12AA of the Act. We draw support from the following cases in this regard:- (a) Hon ble Delhi High Court in the case of DIT vs Foundation of Ophthalmic and Optometry Research Education Centre reported in (2013) 355 ITR 361 (Del) (b) Hon ble Karnataka High Court in the case of DIT (Exemptions) vs Meenakshi Amma Endowment Trust reported in (2013) 354 ITR 219 (Kar) (c ) Hon ble Madras High Court in the case of DIT (Exemptions) vs Seervi Samaj Tambaram Trust reported in (2014) 362 ITR 199 (Mad) We are convinced on perusal of the trust deed that the objects enumerated therein are genuine and charitable in nature. 5.4. We find that the reliance placed by the Learned DR on proviso to Rule 11AA(6) of the IT Rules is not well founded . For the sake of convenience, the said provisions are reproduced hereunder:- Rule 11AA-Requirements for approval of an institution or fund under section 80G (6) The time limit within which the Commissioner shall pass an order either granting the approval or rejecting the application shall not exceed six months from the end of the month in which such application was made: Provided that in computing the peri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ht to the notice of the Learned CIT by the assessee which has not been taken into cognizance by the Learned CIT even in the second round of proceedings. We find that the Central Board of Direct Taxes had issued Instruction No. 16/2015 dated 6.11.2015 specifically addressing the impugned issue under dispute which is reproduced hereinbelow :- Instruction No.16/2015 F.No.197/38/2015-ITA.1 Government of India Ministry of Finance, Department of Revenue (Central Board of Direct Taxes) (ITA-1 Division) North Block, ITA.I Division Dated, the 6th November, 2015 To All the Principal Chief Commissioners of Income-tax All the Chief Commissioners Income-tax Chief Commissioner of Income-tax (Exemptions) All Directors General of Income-tax Sub : Following the prescribed Time limit in passing order u/s 12AA of the Incometax Act, 1961 Sub-section(2) of Section 12AA of the Income-tax Act, 1961 prescribes that every order granting or refusing registration under clause(b) of sub-section (1) of that Section shall be passed before the expiry of six months from the end of the month in which the application was rec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n arises whether upon lapse of the six months period without any decision, the application for registration should be treated as rejected or it should be treated as allowed. [Para 6] Taking the view that non-consideration of the registration application within the time fixed by section 12AA (2) would result in deemed registration, may, at the worst, cause loss of some revenue or income-tax payable by that individual assessee. This would be similar to a situation where the assessing authority fails to make the assessment or reassessment within the limitation prescribed for the same. That also leads occasionally to loss of revenue from that individual assessee. [Para 10] On the other hand, taking the contrary view and holding that not taking a decision within the time fixed by section 12AA(2) was of no consequence would leave the assessee totally at the mercy of the income-tax authorities, inasmuch as the assessee had not been provided with any remedy under the Act against non-decision. [Para 11] Besides, the said view would not create any irreversible situation, because under section 12AA(3), the registration can always be cancelled by the Commissioner, if he is satisfie ..... X X X X Extracts X X X X X X X X Extracts X X X X
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