9911796707
TMI Blog2023 (3) TMI 429X X X X Extracts X X X X X X X X Extracts X X X X ..... Educational Institutions, Schools and colleges in India for promotion and advancement of education, Training and learning in all disciplines/ faculty including Arts, Science, Commerce, Humanities, Culture, Technology, Vocational, Special Education including information and Bio-Technology and advancement of any other object of general public utility as provided in Section 2(15) of the Income tax Act, 1961. 3. That the Learned Commissioner of Income tax (Exemptions) erred in rejecting the application u/s 12AA on the ground that the appellant Trust has created an arrangement whereby it is not only laundering its income but also diverting the same in the hands of Trustee/ Members and the Applicant trust is not established for the purpose of charity and is not limited to its objectives. 4. That the Learned Commissioner of Income tax (Exemptions) erred in rejecting the application u/s 12AA on the ground that the appellant Trust is being misused as an instrument in the hands of trustee/ member and involved in activities which are not genuine by any definition. 5. That the Learned CIT(Exemptions) has not considered completely the information/ evidence brought on record in correct pe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itant rent. As the trust has paid a huge rent, it becomes clear that these persons are diverting funds of the trust to a partnership firm which is nothing but an entity controlled by trustee/members of the appellant trust. Thus, the ld. CIT(E) has alleged that applicant trust has created an arrangement whereby it is not only laundering its income but also diverting the same in the hands of the trustee/members. Thus, the CIT(E) held that the applicant trust is not established for the purpose of charity as its activity are not limited to its objectives, rather it is misused as an instrument in the hands of trustee/members and involved of activities which are not genuine by any definition. Accordingly, he rejected the application of the applicant trust for registration u/s 12AA of the Act. 4. The Ld. Counsel for the appellant Trust submitted before us that the Ld. CIT(Exemptions) has not appreciated the documentary evidence brought on record in right perspectives while denying the registration u/s 12AA of the Income Tax Act, 1961. He argued that the Ld. CIT(Exemption) never held that the Trust was not a charitable Trust as defined u/s 2(15) of the Act, while denying the registration ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tax Act, 1961. However, the Ld. Commissioner of Income tax (Exemptions), Chandigarh The purpose of provisions of section 12AA is to enable registration only of such trust or institution whose objects and activities are genuine. Since the section 12AA pertains to the registration of the Trust and not to assess of what a trust has actually done and the term activities in the provision includes proposed activities. That is to say, the registering authority 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 only requirement for granting the registration is that the object of the society should be charitable in nature and its activities were genuine. The Hon'ble Supreme Court in the case of M/s Anand Social and Educational Trust v/s CIT in Civil Appeal No.5437-5438/ 2012 vide order dated 19.02.2020 has laid down the basic principles for allowability of basic registration. 2. It would not be out of place to mention here that your Honour would appreciate the fact that on 20th March, 2020, the Hon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... u/s 11 of the Act are fulfilled or not. These aspects certainly can be looked into at the stage of assessment. In any case of the matter, even after grant of registration u/s 12AA, if in future, it is found that the activities of the trust are in genuine and the trust is deviating from the objects based on which registration was granted, the authority concerned can proceed to cancel the registration. Also reliance is placed on the judgment of the Hon'ble jurisdictional Bench in the case of M/s Shri Swami Shankarnath Parvat Charitable and Welfare Trust V/s CIT(E), Chandigarh vide order dated 21.09.2021 passed in ITA No.602/Asr/2018. The issue in the said judgment is squarely covered to the case of the assessee trust. In view of all these facts, it is prayed that the Ld. PCIT (Central) may be directed to allow registration to the assessee Trust." 5. The ld. DR stands by the ld. CIT(E)'s order. 6. Heard the rival contentions and perused the material on record. Admittedly, the department has not disputed the fact that the Trust was a charitable Trust as defined u/s 2(15) of the Act, as the Ld. CIT(Exemption) never objected to the charitable nature of objectives and genuinenes ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ally carried on by the Trust are not genuine being not in accordance with the objects of the Trust. Similarly, the situation would be different where the trust has before applying for registration found to have undertaken activities contrary to the objects of the Trust." 23. Similarly in CIT vs. Surya Education Charitable Trust in ITA No. 701/2010 the Hon'ble Jurisdictional High Court in paragraph 11 had held as under: "Section 11 of the Act contemplates that the income as specified therein shall not be included in the total income of the previous year of the person in receipt of the income derived from the property held under the Trust wholly for charitable or religious purposes, whereas Section 12 of the Act, deals with the contributions received by the Trust or an Institution, established for charitable and religious purposes, receiving contribution, shall not be an income in terms of Section 11 of the Act. The benefit of Sections 11 and 12 of the Act, are available only if such Trust or Institution is registered under Section 12AA of the Act. 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(2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... activities are genuine. It cannot be concluded on the basis that the assessee has not filed its income tax returns in earlier years that the activities of the assessee are not genuine. It has been further recorded that Section 13 of the Act 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 12AA of the Act. No adverse remarks have been recorded by the CIT (E) with regard to the objects contained in the memorandum of the assessee-trust to come to the conclusion that its activities are not genuine. Thus, it has been rightly directed by the Tribunal to the CIT (E) to grant registration under Section 12AA of the Act. The relevant observations recorded by the Tribunal read thus:- "We have heard the learned representatives of both the parties, perused the findings of the authorities below and considered the material available on record. The first reason on the basis of which the Commissioner of Income Tax (Exemptions) has refused to grant registration to the assessee is that the assessee has not been filing its income-tax returns in the earlier years. We do not find that it is a good reason to reject ..... X X X X Extracts X X X X X X X X Extracts X X X X
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