9911796707
TMI Blog2021 (8) TMI 1218X X X X Extracts X X X X X X X X Extracts X X X X ..... for the assessee submitted that the learned CIT (Exemptions) has also recorded an incorrect and erroneous observation that the assessee did not submit any account for any financial year. It was submitted that vide Annexure-6 to the on-line submissions dated 01/06/2020, the above noted document was duly submitted before the authority and therefore, the impugned order is liable to be quashed and registration be granted to the assessee. Regarding the observation of learned CIT (Exemptions) in respect of withdrawals from the bank, Learned counsel for the assessee submitted that amounts spent by the assessee is towards setting up and creating infrastructure facility which is in the nature of capital expenditure and which is revealed on a bare perusal of the financial statement and in this respect our attention was invited to the copy of bank account placed at pages 49 to 51 of the paper book. Learned counsel for the assessee submitted that the huge withdrawals from bank were not in cash and rather these were paid through banking channels for acquisition of land for achievement of objects of the assessee and in this respect our attention was invited to copy of land ledger account, copy o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nds and made many substantial withdrawal/ transfer, but did not submit any annual accounts for any financial year even though it has been in existence for the F.Y. 2019-20. 6. It is further noted that the applicant has not submitted any document / evidence to the activities mentioned in its note on activity of the society. Hence, only recital of some charitable activity without any documents/evidence cannot be construed as being carried out by the applicant. 7. In view of the above discussion, it is clearly evident that the trust failed to provide information / document to enable the undersigned to form the satisfaction for granting registration under section 12AA of the Income Tax Act 1961. 8. Accordingly, application for registration under section 12AA of Income Tax Act is rejected." 5.1 Vide para 4, the learned CIT (Exemptions) has observed that assessee had received Rs. 2,95,11,000/- and has made substantial withdrawal/transfer during this period. Vide para 10 of its reply, the assessee had submitted as under: "10. The society has not received any donations/corpus fund / member fee/grant. The society has taken a loan of Rs. 2,00,00,000/- to start the activities. This l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... st are genuine and that its activities are in furtherance of the objects of the Trust and has further held that the term 'activities' in the provision includes proposed activities also. The Hon'ble court further held that Commissioner is bound to consider whether the objects of the Trust are genuinely charitable in nature and whether the activities which the Trust proposed to carry on are genuine in the sense that they are in line with the objects of the trust. The relevant findings of Hon'ble Supreme Court are reproduced below: "This appeal has been preferred by the appellant -Director of Income-tax against the impugned judgment and order passed by the Delhi High Court holding that a newly registered Trust is entitled for registration under section 12AA of the Income-tax Act, 1961 (for short, the 'Act') on the basis of its objects, without any activity having been undertaken. Section 12AA of the Act reads as follows : "12AA. Procedure for registration.--(1) The [Principal Commissioner or] Commissioner, on receipt of an application for registration of a trust or institution made under clause (a) or clause (aa) or clause (ab) of subsection (1) of section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (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 it is noticed that the activities of the trust or the institution are being carried out in a manner that the provisions of sections 11 and 12 do not apply to exclude either whole or any part of the income of such trust or institution due to operation of sub-section (1) of section 13, then, the Principal Commissioner or the Commissioner may by an order in writing cancel the registration of such trust or institution: Provided that the registration shall not be cancelled under this sub-section, if the trust or institution proves that there was a reasonable cause for the activities to be carried out in the said manner.] The above section provides for registration of a trust. Such registration can be applied for by a trust which has been in existence for some time and also by a newly registered trust. There is no stipulation that the trust should have already been in existence and should have undertaken any activities before making the application for registration. In brief, section 12AA of the Act empowers the Principal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ities are genuine and therefore, the Commissioner is bound to refuse the registration of such a trust. We have given our anxious consideration to the above submissions made by Ms. Aishwarya Bhati, learned Senior Counsel appearing for the appellant - Director of Income-tax and find that it is not possible to agree with the same. The purpose of section 12AA of the Act is to enable registration only of such trust or institution whose objects and activities are genuine. In other words, the Commissioner is bound to satisfy himself that the object of the Trust are genuine and that its activities are in furtherance of the objects of the Trust, that is equally genuine. Since section 12AA pertains to the registration of the Trust and not to assess of what a trust has actually done, we are of the view that the term 'activities' in the provision includes proposed activities'. That is to say, a Commissioner is bound to consider whether the objects of the Trust are genuinely charitable in nature and whether the activities which the Trust proposed to carry on are genuine in the sense that they are in line with the objects of the trust. In Contrast, the position would be different ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
