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TMI Blog2019 (8) TMI 511X X X X Extracts X X X X X X X X Extracts X X X X ..... d copy of the order granting registration u/s 12A or Section 12AA, as the case may be. At the same time, even if there is an order rejecting the application for grant of registration u/s 12A or Section 12AA, the same has to be annexed along with the application under Rule 17A. The Appellate Tribunal, instead of addressing itself on the aforesaid issue, straightway looked into Section 2(15). Section 2(15) of the Act merely defines the term charitable purpose . The issue in the present case is with regard to the grant of approval u/s 80G in the absence of any valid registration certificate u/s 12A. Once a charitable trust is registered u/s 12A, the question whether the assessee Trust is for charitable purpose need not be gone into. Indisputably, in the case on hand, the charitable trust is not registered u/s 12A. The order passed by the Appellate Tribunal is not sustainable in law. This Tax Appeal succeeds and is hereby allowed. The impugned order passed by the Income Tax Appellate Tribunal is hereby quashed and set-aside. The two substantial questions of law formulated in the present Tax Appeal are answered in favour of the Revenue and against the assessee. X X X X Extracts X X X X X X X X Extracts X X X X ..... the records that the trust has not been able to obtain registration u/s.12A of the I.T. Act. Since, the Trust has not fulfilled all the conditions laid down under section 80G(5) of the Income Tax Act and Rule 11AA(2)(i) of Income Tax Rules, 1962, the application for issue of certificate u/s.80G of the I.T. Act, 1961 is therefore rejected." 5. The assessee, being dissatisfied with the order passed by the Commissioner of Income Tax, preferred an appeal before the Income Tax Appellate Tribunal, Surat Bench, Surat. The Appellate Tribunal allowed the appeal preferred by the assessee holding that the assessee is entitled for approval under Section 80G of the Act. The Commissioner of Income Tax, Valsad, was accordingly directed by the Appellate Tribunal to pass an appropriate order granting approval to the assessee - Trust under Section 80G of the Act. The order passed by the Appellate Tribunal is as follows : "4. As per the Trust Deed the objects of the Trust are charitable in nature. The Trust was registered with the Assistant Charity Commissioner, vide registration no.E-2584 dated 08.08.2011. It has applied for registration u/s.12A(a) of the IT Act. The Commissioner of Income ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gainfully achieve the desirement devotion towards the country xiii) To do welfare works for the people. xiv) To provide aids to the disables. xv) To provide help monetary for free, scholarship, prize, food, cloths, educational tools, books to the student, pupil, who pursuit of learning at educational institution. The above mentioned intentions has been constituted without parity of casteism." 6. Therefore, it was contended that the assessee Trust is engaged in the imparting education to all religions, hence, it is solely exist for the purpose of education and human wellbeing, therefore, CIT, Valsad was not justified in not issuing certification u/s.80G of the Act. 7. Per Contra, the Ld. Senior Departmental Representative (Sr.DR) relied on the orders of the CIT-II. 8. We have considered the facts and circumstances and perused the available material on record. It is seen that the main object of the Trust is to promote Education, to infuse inspiration, wishful though conception, piousness to religion into mass, to do welfare work in the society without any bar of any caste, community, colour or religion. We may also observe that the CIT, Valsad has denied the approv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le and education as provided u/s.2(15) of the Act. Therefore, we are of the considered opinion that the assessee is entitled for approval u/s.80G of the Act. Accordingly, the order of the CIT, Valsad set aside with the direction to pass appropriate order granting approval u/s.80G to the assessee Trust." 6. The Revenue, being dissatisfied with the order passed by the Appellate Tribunal, has come up with the present Tax Appeal. 7. Ms.Mauna Bhatt, the learned senior standing counsel appearing for the Revenue, vehemently submitted that the Appellate Tribunal committed a serious error in passing the impugned order. According to Ms.Bhatt, the Appellate Tribunal misdirected itself by looking into Section 2(15) of the Act. Ms.Bhatt submitted that the decision of the Supreme Court in the case of M/s.Queen's Educational Society v. CIT (supra), on which strong reliance has been placed by the Tribunal, has nothing to do with the matter on hand. According to Ms.Bhatt, the Commissioner rejected the application preferred by the assessee - Trust on the short ground that the same was not accompanied by a copy of the registration granted under Section 12A of the Act. Ms.Bhatt invited the att ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... directly, for the purposes of such business; and (c) the institution or fund issues to the person making the donation a certificate to the effect that it maintains separate books of account in respect of such business and that the donations received by it will not be used, directly or indirectly, for the purposes of such business; (ii) the instrument under which the institution or fund is constituted does not, or the rules governing the institution or fund do not, contain any provision for the transfer or application at any time of the whole or any part of the income or assets of the institution or fund for any purpose other than a charitable purpose; (iii) the institution or fund is not expressed to be for the benefit of any particular religious community or caste; (iv) the institution or fund maintains regular accounts of its receipts and expenditure; (v) the institution or fund is either constituted as a public charitable trust or is registered under the Societies Registration Act, 1860, or under any law corresponding to that Act in force in any part of India or under section 25 of the Companies Act, 1956 (1 of 1956), or is a University established by law, or is a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... prevented from making the application before the expiry of the period aforesaid for sufficient reasons; (ii) from the first day of the financial year in which the application is made, if the Principal Commissioner or Commissioner is not so satisfied; Provided further that the provisions of this clause shall not apply in relation to any application made on or after the 1st day of June, 2007; (aa) the person in receipt of the income has made an application for registration of the trust or institution on or after the 1st day of June, 2007 in the prescribed form and manner to the Principal Commissioner or Commissioner and such trust or institution is registered under section 12AA; (ab) the person in receipt of the income has made an application for registration of the trust or institution, in a case where a trust or an institution has been granted registration under section 12AA or has obtained registration at any time under section 12A [as it stood before its amendment by the Finance (No.2) Act, 1996 (33 of 1996)], and, subsequently, it has adopted or undertaken modifications of the objects which do not conform to the conditions of registration, in the prescribed form and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sub-clause (ii) shall be passed unless the applicant has been given a reasonable opportunity of being heard. (1A) All applications, pending before the Principal Chief Commissioner or Chief Commissioner on which no order has been passed under clause (b) of sub-section (1) before the 1st day of June, 1999, shall stand transferred on that day to the Principal Commissioner or Commissioner and the Principal Commissioner or Commissioner may proceed with such applications under that sub-section from the stage at which they were on that day. (2) Every order granting or refusing registration under clause (b) of sub-section (1) shall be passed before the expiry of six months from the end of the month in which the application was received under clause (a) or clause (aa) or clause (ab) of sub-section (1) of section 12A. (3) Where a trust or an institution has been granted registration under clause (b) of sub-section (1) or has obtained registration at any time under section 12A as it stood before its amendment by the Finance (No. 2) Act, 1996 (33 of 1996) and subsequently the Principal Commissioner or Commissioner is satisfied that the activities of such trust or institution are not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ies of such institution or fund. (4) Where the Commissioner is satisfied that all the conditions laid down in clauses (i) to (v) of sub-section (5) of section 80G are fulfilled by the institution or fund, he shall record such satisfaction in writing and grant approval to the institution or fund specifying the assessment year or years for which the approval is valid. (5) Where the Commissioner is satisfied that one or more of the conditions laid down in clauses (i) to (v) of sub-section (5) of section 80G are not fulfilled, he shall reject the application for approval, after recording the reasons for such rejection in writing : Provided that no order of rejection of an application shall be passed without giving the institution or fund an opportunity of being heard. (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 period of six months, any time taken by the applicant in not complying with the directions of the Commissioner under sub-rule (3) shall be excluded." 14. A r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an Income Tax Officer independently about the eligibility of the donations made by him for deduction. It was in order to keep a check on an inquiry into such details which may not be possible for every donor to harness and make good a claim which otherwise he is legitimately entitled to make, and also to relieve the Income Tax Officer to hold such enquiry in respect of the donations made to such institution at different levels and to avoid possibility of different conclusions reached by different officers in relation to donations made to the same fund or institution, to simplify the procedure, the provision was made for recognising, what was, a prevailing practice by making a statutory provision in that regard. It is also to be noticed that whether the income of an institution or fund would ultimately be liable to inclusion in its total income at the close of assessment year or not cannot be determined at the time of making of donation. The eligibility of the donation for deduction has to be considered with reference to the point of time at which donation is made and not with respect of the time in future depending on assessment of the donee. That is where the use of the verb in f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the substantive provision, that is to say, entitlement of the donor to claim deduction depends on the eligibility of the donee to claim exemption of its income on the date when donation is made. Examining from this angle, we find that for applicability of Sections 11 and 12, what is required is that such trust must have moved an application for registration under Section 12A and registered for that purpose. Once a trust is registered under Section 12A, its income from property, which includes donations whether covered under Section 11(1)(d) or under Section 12 such donations are deemed to be income from property, is not to be included in its total income under Section 11 or Section 12. (see N.N.Desai Charitable Trust v. Commissioner of Income Tax, (2000)246 ITR 452 (Gujarat)) 16. The inquiry for the purpose of grant of approval under Section 80G relates to, whether the trust is registered under Section 12A, whether it is a trust wholly for charitable purpose or religious purpose and whether the income received by it is liable to be considered under Section 11. 17. In the case on hand, indisputably, the assessee has not produced any certificate of registration under Section 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -clause (i). (3) Form No. 10A shall be verified by the person who is authorised to verify the return of income under section 140, as applicable to the assessee. (4) The Principal Director General of Income-tax (Systems) or the Director General of Income-tax (Systems), as the case may be, shall specify the data structure, standards and procedure of furnishing and verification of Form 10A and be responsible for formulating and implementing appropriate security, archival and retrieval policies in relation to the said form so furnished." 19. We take notice of the fact that even for the purpose of registration of charitable or religious trust, the application has to be accompanied by self-certified copy of the order granting registration under Section 12A or Section 12AA, as the case may be. At the same time, even if there is an order rejecting the application for grant of registration under Section 12A or Section 12AA, the same has to be annexed along with the application under Section 17A. 20. The Appellate Tribunal, instead of addressing itself on the aforesaid issue, straightway looked into Section 2(15) of the Act. Section 2(15) of the Act merely defines the term 'cha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... On the other hand, Section 10(23C) of the Act are the provisions of the Act in substitution of the earlier provisions of Section 10(22) of the Act as to which income shall not be included in computing the total income of any person. Therefore, the provisions of Sections 11, 12 or Section 10(23C) of the Act, deal with the income of a Trust or of the Institution and the circumstances as to when such income is to be excluded for computing the total income, but the basis of such benefit is the registration under Section 12AA of the Act. Unless a Trust or Institution is registered under Section 12AA of the Act, such Trust or Institution shall not be entitled to exclude from its total income, deductions or contributions or from other sources. Therefore, the principles laid down for excluding the income from consideration under Section 10(22) now 10(23)(C) or Sections 11 and 12 are not applicable while considering the application for registration under Section 12AA of the Act. The application for registration is required to be made within one year of the creation of the Trust. Section 12AA of the Act, requires satisfaction in respect of the genuineness of the activities of the Trust, w ..... X X X X Extracts X X X X X X X X Extracts X X X X
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