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TMI Blog2021 (1) TMI 467X X X X Extracts X X X X X X X X Extracts X X X X ..... t society had invested surplus funds of the trust in the form of FDs and applicability of the proviso to section 2(15) of the Act, it is settled proposition that the issue of grant of registration u/s 12AA of the Act and the examination of exemption u/s 11 of the Act are two different and distinct procedures prescribed under the Act. The issues of exemption u/s 11 of the Act cannot be examined at the stage of grant of registration u/s 12AA of the Act because the stage of examination of issues u/s 11 of the Act would arise only after grant of registration u/s 12AA of the Act. In Goa Industrial Development Corp. vs. CIT [ 2020 (2) TMI 366 - BOMBAY HIGH COURT] wherein the Hon ble Jurisdictional High Court held that the mere introduction proviso to section 2(15) of the Act by itself would not render the activities of the assessee trust as non-genuine activities, so as to, entitle Commissioner of Income Tax (Exemption) to cancel and deny the registration u/s 12AA. We find from the impugned order except for stating that the activities are not genuine because of the applicability of the proviso to section 2(15) of the Act and the investments in the FDs out of the income there i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... satisfied with the genuineness of activities of the trust and, accordingly, he denied the grant of registration u/s 12AA of the Act vide order dated 05.10.2020. 4. Being aggrieved by the above decision of the ld. Commissioner of Income Tax (Exemption), the appellant is before us in the present appeal. 5. Before us, when the matter was called none appeared on behalf of the assessee. On the other hand, ld. CIT-DR placed heavily reliance on the impugned order. 6. We heard the ld. CIT-DR and perused the material on record. The solitary issue in the present appeal relates to the grant of registration u/s 12AA of the Act. On perusal of the objects of the appellant society, it is clear that the appellant society was formed with the mixed objects of the religious and non-religious activities. The appellant society had been formed in the year 1943 and it was stated that the appellant society had been enjoying the registration u/s 12A of the Act since 1977-78. These facts have not been disputed by the ld. CIT-DR. The appellant society sought the renewal of the registration u/s 12AA of the Act for whatever reasons by filing Form 10A on 04.03.2020. On perusal of the Form 10A, ld. Com ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... had denied the registration primarily on the ground that the object of the trust prima-facie appears to be religious in nature and there was no dissolution clause in the instrument creating the trust. The tenability of the reasoning of the ld. Commissioner of Income Tax (Exemptions) requires to be adjudged on touchstone of the law laid down in the decision of the Hon ble Supreme Court in the case of Fazlul Rabbi Pradhan vs. State of West Bengal, AIR 1965 SC 1722 held that the words trust for charitable purposes would include even trust for advancement of religious. The Hon ble Supreme Court s decision was relied upon in the case of CIT vs. Barkate Saifiyah Society, 213 ITR 492 (Guj.) where it was held that the words trust for charitable purposes would include even trust for advancement of religious. The words trust for charitable purposes would also include even trust for advancement of religious in the following decisions :- (i) CIT vs. Jaipur Charitable Trust , 81 ITR 1; (ii) Zenith Tin Works Charitable Trust vs. CIT, 102 ITR 119; (iii) CIT vs. Ahmedabad Rana Caste Association, 88 ITR 354; and, (iv) CIT vs. Chandra Charitable Trust, 294 ITR 86. 7. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eipt of income from letting out Event Hall and Bhaktniwas it cannot be said that the activities of the appellant society are not genuine. Because, there is no bar under the law to earn income for the purpose of attaining the main objects of the trust. As regards the applicability of the proviso to section 2(15) of the Act, it is settled proposition of law that what needs to be examined is the dominate and primary purpose of the assessee is a object of the public utility not involving carrying on any activity of the profit within the meaning of section 2(15) of the Act. Even in the activity of carrying on of profit if the entire income from such activity was utilized for various certain charitable purpose for which the appellant society was established it would fully satisfy the conditions laid down u/s 2(15) of the Act in the light of the judgement of the Hon ble Supreme Court in the case of Surat Art Silk Cloth Manufacturers Association, 121 ITR 1. As regards to the reasoning of the ld. Commissioner of Income Tax (Exemption) that the appellant society had invested surplus funds of the trust in the form of FDs and applicability of the proviso to section 2(15) of the Act, it is set ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Social and Educational Trust (supra). 10. In the present case as observed by us supra that the exercise undertaken by the ld. Commissioner of Income Tax, Exemption, Pune by calling for the evidence in support of the expenditure is beyond scope of his powers vested with him u/s 12AA of the Act and furthermore the proof of the expenditure is an item of assessment. The grant of registration and the assessment of income the trust are two different distinct procedure prescribed under the Act. In this regard, reliance can be placed on catena of the decisions :- (i) Fifth Generation Education Society vs. CIT, 185 ITR 634; (ii) Shantagauri Ramniklal Trust vs. CIT, 239 ITR 528; (iii) M. Visvesvaraya Industrial Research And Development Centre vs. ITAT, 251 ITR 852; (iv) New Life in Christ Evangelistic Association vs. CIT, 246 ITR 532; (v) N.N. Desai Charitable Trust vs. CIT, 246 ITR 452; and, (vi) CIT vs. Vijay Vargiya Vani Charitable Trust, 369 ITR 360. 11. From the perusal of the impugned order, it is crystal clear that the ld. Commissioner of Income Tax, Exemption, Pune had lost sight distinction between the process of registration and the exemptio ..... X X X X Extracts X X X X X X X X Extracts X X X X
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