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TMI Blog2022 (3) TMI 920X X X X Extracts X X X X X X X X Extracts X X X X ..... the application of registration. But after the application made u/s 12AA of the Act, no such irregularities were found out by the revenue authority. Different financial statements are filed with the paper book and the trust invested in fixed assets for running the institutions. The Income Tax assessments of the assessee were made by the revenue in different years. The copies of the orders are annexed in Paper Book-5 of assessee in page no 1-236. It is very clear from the assessment orders that the existence, activity genuinity are not in question. Application filed by the assessee Trust for grant of registration under Sec. 12AA of the IT Act is restored to the file of the CIT(E) for fresh adjudication - Appeal of the assessee is allowed under statistical purpose. - ITA No.: 2182/Chny/2018 - - - Dated:- 16-3-2022 - Shri G. Manjunatha, Accountant Member And Shri. Anikesh Banerjee, Judicial Member For the Appellant : Shri.S. Sendamarai Kannan, Advocate For the Respondent : Shri. S. Palani Kumar, CIT ORDER PER ANIKESH BANERJEE, JUDICIAL MEMBER: The present appeal was filed by the assessee before us against the order of the Ld. Commissioner of Incom ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Trust, building approval, electricity connection, property tax assessment, TN State Board School recognition were obtained in the name of the Trust and bank accounts which are operational till date were also opened in the name of the Trust. On getting appointed as the Managing Trustee/Secretary of the Trust in 2011, Shri A M Sekar approached a Chartered Accountant to file income tax returns for the School/Trust. Under his advice, income tax returns admitting income over expenditure of primary school run by the Trust were filed by Smt Rani w/o Shri A.M. Sekar and the income over expenditure of High School and Higher Secondary School run by the Trust were admitted in the hands of Shri Sekar. 3. Bank accounts of the Trust were frozen in 2015 because of difference of opinion between the trustees, and therefore it was necessitated to deposit all the funds of the school (Trust) in the name of the secretary Shri Sekar in his SB accounts and taken back for expenses in order to run the school without any interruption. Only after the survey in 2017, the Managing Trustee came to know that the Income tax return has to be filed separately for the Trust and a separate application U/s 12A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the above it is clear that, during the course of assessment the documents and evidence produced by the assessee to support its claim of receipts and expenditures such as salary, building construction, vehicle maintenance, school books and instruments etc incurred for the trust has been verified. However, the assessee trust has not yet received the approval u/s 12A of the Act, and hence its claim of its income being exempt cannot be accepted. As per the Second Proviso to Section 12A(a), the provision Of Subsection (a) regarding retrospective Registration/exemption are not applicable w.e.f 01.06.2007. Hence, the assessee's stand that its income is exempt is not accepted .... [Page 20 -21 - Para 18 20-PB-5] 8. It is further submitted that the returns filed by Shri Sekar and Smt Rant are non est in the eyes of the law, as, the Trust and the trustees are different entities in the eyes of law and the trustees are holding the trust property only in a fiduciary capacity and therefore by no stretch of imagination, the income of the Trust can belong to the individual trustees. 9. It is submitted that there is no definition for `genuineness' in the Income tax Act(Act)a H ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... first to the school (Trust) and then got back the same. 13.Account copies are enclosed to prove this fact. 14. The same explanation was given before the AOs who made the assessments in the case of Shri Sekar and the Trust. Both the AOs have accepted this submission and they have not made any adverse comments in the respective assessment orders. Therefore this reason also cannot be one of the reasons to treat the activities of the Trust as not genuine. 15. The Ld CIT(DR) has also tried to persuade the Bench to show that all the receipts of the Trust were not disclosed to the Department and there was a suppression of receipt of ₹ 6.94 crores. 16. It is submitted that the survey party has not calculated the receipts of the school (Trust) correctly at the time of the survey. This was pointed out by the Auditor before the CIT(E). According to the Auditor, while the survey party has calculated the total receipts at ₹ 16,06,51,297 for FYs 20] 2-13 to 2016-17, the Trust has actually returned ₹ 24,37,73,644 for these five years. There is no discussion and finding about the discrepancy of this sum of ₹ 8,31,22,347 in the assessment proceedings of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ncome is exempt is not accepted. As a result, the excess of income over expenditure as per income and expenditure statement amounting to ₹ 1,42,879/- for the assessment year 2013-14 is brought to Tax. 8. During the hearing the Ld counsel of the assessee relied on following judgments: 8.1. CIT vs A.S. Kupparaju Brothers Charitable Foundation Trust (Kar) in ITA No. 1089/2006: 12. From the aforesaid statement of law, it is clear that once the authors of the trust transfers the title of the property to the trustees and create a trust, they have no right to meddle with the property even if they have created partition deed, rectification 'deed and offered the property as security to the bank to raise funds. As pointed out by the Apex Court in the aforesaid judgment, they are of no consequence and is no more than a scrap of paper. All those transactions are void ab initio and in no way-affects the right of the trust. In all (his, the trust is showing it as a trust property. It is treated as a trust property and it is not the case of any one of she trustees, that any one of the trustees has sold the property to any one. On the contrary, ii is not in dispute that a s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ucation, which is a charitable purpose. In that view of the matter, we do not see any merit in this appeal. The substantial question of law framed in tis appeal is answered in favour of the assessee and against the revenue. Accordingly, the Appeal is dismissed. 8.2. Sree Anjaneya Medical Trust vs CIT [2016] 382 ITR 399 (ker) IT: While granting registration to a trust, authorities is empowered to examine only genuineness of trust and its activities; during assessment only eligibility in terms of section 10,11 and 12 is to be verified as to whether or not what was professed was indeed in Deed of trust. 8.3. CIT(Exemptions) vs Shri Sai Darbar Charitable Trut (Dharmashala) 395 ITR 567 (P H): 8. Sections 13 comes into play at the time of granting exemption under Section 11 of the Act and not at the time of granting registration under Section 12A of the Act. The only two requirements as stated hereinabove while granting registration under Section 12A of the Act, are with respect to the charitable nature of the objects of the assessee and genuineness of the activities. Since we observe that no adverse remarks have been made by the Commissioner of Income Tax (Exemptions) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aforesaid view. 14. In that view, the questions of Saw are answered accordingly. The matter is remitted to the Commissioner of the Income-tax to decide the petitioner's application for exemption afresh, in accordance with law keeping the scope of inquiry limited to the provisions under section 12AA of the Act- In view of the above, the is allowed. No order as to costs. 9. We have deliberated at length on the issue under consideration in the backdrop of the observations of the CIT(E). We find that the provisions of Sec. 12AA which contemplates the procedure for registration, reads as under: The [Principal Commissioner or] Commissioner, on receipt of an application for registration of a society or institution made under clause : (a) [or clause (aa) of sub-section (1)] of section 12A shall:- (a) Call for such documents or information from the society or institution as he thinks necessary in order to satisfy himself about the genuineness of activities of the society or institution and may also such inquiries as he may deem necessary in this behalf; and (b) After satisfying himself about the objects of the society or institution and the genuineness of its activities, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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