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TMI Blog2025 (3) TMI 22X X X X Extracts X X X X X X X X Extracts X X X X ..... he findings of the Ld. CIT (E), Jaipur while holding registration application untenable in the absence of registration under the RPT Act, 1959. Violation of Foreign Contribution Regulation Act, 2010 (FCRA) - Considering the provisions of relevant statute we restore the matter back to the file of the Ld. CIT (E), Jaipur and simultaneously directed the assessee trust to incorporate the relevant amendment in the trust deed mentioning that prior to receiving any foreign remittance whatever may be the form or nomenclature, prior approval will be taken from the Ministry of Home Affairs, Govt. of India and produce the same for verification (In original) before the Ld. CIT (E), Jaipur. On this issue ground raised by the assessee is allowed for statistical purposes. Question on genuineness of activities of the assessee trust -as submitted that other than purchase of land for hostel building construction, no other activity was carried out - Its beyond our understanding what else a newly established society/trust can furnish in response to the letter of Ld. CIT (E), Jaipur. Rather, observations on genuineness of the trust observations, made by the Ld. CIT (E), Jaipur are either wrong or se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as on the facts of the case in denying registration sought u/s. 12AA of the Act on the ground that the appellant failed to satisfy about the genuineness of the activity and that did not fulfil the conditions under the provision. Such finding is contrary to the provisions of law and facts on record hence, the Id. CIT (Exemption) Jaipur kindly be directed to grant registration as prayed for. 5. The appellant prays your honour indulgences to add, amend or alter of or any of the grounds of the appeal on or before the date of hearing. 2. The brief facts of the case are that the assessee trust applied in Form No. 10AB of the Act vide dated: 30.09.2023. After considering the replies of the assessee in response to the notices issued by the office of the Ld. CIT (E), Jaipur, application of the assessee was dismissed on following grounds: A). Not registered under the Rajasthan Public Trust Act, 1959 (RPT); B). Violation of Foreign Contribution Regulation Act, 2010 (FCRA) and C). Genuineness of Activities. In addition to the above, provisional registration granted earlier u/s. 12A(1)(ac)(vi) of the Act vide dated: 03.08.2022 is also cancelled. The assessee being aggrieved with the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rejecting such application and also cancelling its registration; (II) In a case referred to in sub-clause (iv) or in item (B) of sub-clause (vi) of sub-section (1) of section 12A, rejecting such application, after affording a reasonable opportunity of being heard. 4. The relevant provisions reproduced (supra) in bold and underlined, is an attempt by us to analyze the provision in proper perspective of Law in the light of Judicial Pronouncement of Hon'ble Apex Court, specifically the citations being relied upon by the Ld. CIT (E), Jaipur, i.e. [2012] 20 taxmann.com 46 (A.P.) Aurora Educational Society vs. CCIT, relevant paras are reproduced as under: "10. The scope and amplitude of section 10(23C) (vi) of the Income-tax Act, the provisos there under and the rules and forms applicable thereto, which were the subject-matter of examination in New Noble Educational Society vs. Chief CIT [2011] 334 ITR 303/201 Taxman 33/ 12 taxmann.com 267(AP) and in R. R. M. Educational Society vs. Chief CIT [2011] 339 ITR 323 (AP) can, conveniently, be summarized as under: 1. As section 20A of the A. P. Education Act prohibits individuals from establishing educational institutions, it is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he trust, society etc. This reasoning is reinforced by the recent insertion of another proviso of section 10(23C) with effect from 1-4- 2021. [Para 76]" 7. Again referring our considered opinion as discussed (supra) vide para 5, this citation relied upon by the Ld. CIT (E), Jaipur is again w.r.t. an educational institution and our findings (supra) again confirmed. It is also observed that in both the citations discussed (supra) also discussed and relied upon the judicial precedents applicable to educational institutions only. None of the precedents discussed in the case of Aurora Educational Society vs. CCIT and New Noble Educational Society vs. CCIT matches with character of the assessee under consideration, which is being further fortified with the language of the Income Tax Act, 1961 itself as mentioned (supra). Plain reading of section 12AB(1)(b)(ii) (B) of the Act speaks in a way that compliance of requirement of any other law is required if compliance under the Act is material for achieving its objects. 8. There is no law which is required to be complied with for achieving the objects of the assessee trust. Section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... denied on this ground. In the result relevant ground raised by the assessee is allowed. 10. Another Objection in this appeal is violation of Violation of Foreign Contribution Regulation Act, 2010 (FCRA). We have gone through the Copy of trust deed filed by the assessee vide page 14-30 of the paper book and observed clause 5(25) of the aims and objects of the trust deed, wherein it is provided "To collect and receive donations, contributions, subscriptions, bequest, grant-in-aid, other aid assistance in cash or in kind from the Central/State Govt., Semi-Govt. authorities, public undertaking banks, financial institutions, boards, public and private institutions, enterprises, individuals, trusts, firms, companies, corporations, societies, AOP, National or International agencies, foreign Govt., foreign institutions, foreign trusts in India or abroad." 11. The assessee submitted before the Ld. CIT (E), Jaipur that it has not taken foreign donations till now and will be taken only after necessary prior approval if needed. The reply of the assessee was not accepted by the Ld. CIT (E), Jaipur on the ground that it is not specifically mentioned in the trust deed that foreign donations wi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h the prior permission of the Central Government; or(iii)the purpose or purposes for which the foreign contribution shall be utilised with the prior permission of the Central Government; or(iv)the source or sources from which the foreign contribution shall be accepted with the prior permission of the Central Government. 12. Considering the provisions of relevant statute mentioned (supra), we restore the matter back to the file of the Ld. CIT (E), Jaipur and simultaneously directed the assessee trust to incorporate the relevant amendment in the trust deed mentioning that prior to receiving any foreign remittance whatever may be the form or nomenclature, prior approval will be taken from the Ministry of Home Affairs, Govt. of India and produce the same for verification (In original) before the Ld. CIT (E), Jaipur. On this issue ground raised by the assessee is allowed for statistical purposes. 13. Third and the last objection in this matter were about the genuineness of activities of the assessee trust. On this issue the Ld. CIT (E), Jaipur objected the registration on the ground that the assessee has not furnished following documents: A). Income and Expenditure Account for the F ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en activities contrary to the objects of the Trust. [Para 12]" [2012] 25 taxmann.com 376 (Del.) DIT vs. Foundation of Ophthalmic & Optometry Research Education Centre Facially the provision of section 12AA would suggest that there are no restrictions of the kind which the revenue is reading into in the instant case. In other words, the statute does not prevent or enjoin the Commissioner from registering a trust based only on its objects, without any activity, in the case of a newly registered Trust. The statute does not prescribe a waiting period, for a trust to qualify itself for registration. [Para 10] If the revenue's contentions are correct then, necessarily, a condition would have to be read into the provision that the Commissioner should be satisfied that the Trust is in fact engaged in charitable activities which would in turn inject considerable deal of subjectivity. If such flexibility is introduced there is possibility that, it would be susceptible to varied interpretation by the different authorities; some would be satisfied with activity of few months, while others may wish to examine the activities of the organization for longer time. [Para 11] For the above ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ty is 'To Promote the Quality and Scope of Education in Rural Area and manage the affairs of Sadhu Singh Rural Public School, Mukand Pur.' Therefore, the contention of the assessee that the corpus got created from such donations as received for the setting up of the school had not been rebutted by producing any material to the contrary on record. Regarding creation of assets, the Tribunal had recorded nothing had been brought on record to show that the assets of the assessee were meant for any purposes other than its aims and objects which included managing the affairs of the school and that as per the balance sheets, the entire expenditure incurred by it had been for the purposes of school only. Further, at the time of considering the grant of registration, only the objects and genuineness of the activities of the assessee were to be got verified. Accordingly, the Tribunal directed the CIT (E) to grant registration to the respondent. The relevant findings recorded by the Tribunal in paras 6 to 8 of the order read thus: - "6. While refusing registration to the assessee society, the Objection raised by the ld. CIT(E) is that the applicant has amassed capital funds to the t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... alance sheets filed by the applicant, the entire expenditure incurred by it, has been for the purposes of the school only. Then, the assets of the applicant have also not been shown to be existing, much less utilized, for any purposes other than that of the school. Further, once again, as to how the question of application of income is germane to the grant of registration, is not evincible from the order." 5. In view of the above, no illegality or perversity could be pointed out by the learned counsel for the appellant-revenue which may warrant interference by this Court. No question of law, much less, the substantial question of law arises in this appeal. Accordingly, finding no merit in the appeal, the same is hereby dismissed." 16. In view of the facts discussed (supra) alongwith decision of the Hon'ble Apex Court in the case of Rural Education and Women Welfare Society Sas Nagar, we are of the opinion that the observations of the Ld. CIT (E), Jaipur are baseless and can't be used against the assessee to refuse registration u/s. 12AA of the Act. In the result, it is found that the observations of the Ld. CIT (E), Jaipur has no legs to stand and the activities of the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X
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