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TMI Blog2025 (4) TMI 1252X X X X Extracts X X X X X X X X Extracts X X X X ..... or maintenance or education for themselves to be self- reliant, independent and employed, including social security measure and other government schemes. 3. To promote health and generate awareness regarding various relevant health related issues affecting urban settlements and direct underprivileged and their dependents to specific public health intervention programs that they can benefit from. 4. To undertake publications in forms of reports, papers, books, monographs and journals, magazines, newspapers, periodicals, thesis, researches, writings. discoveries, documents, news and information. On various media including social and online as well as electronic media. 5. To work with global consultants, sector associations, professional societies and NGOs/civil society groups as well as experts from national and international agencies associated with research and development, training, skill development, assessment, certification, affiliation, course accreditation or other required specializations in the Sector. 6. To liaise and collaborate with various associations or otherwise by suitable means (memorandum of understanding, collaboration agreements, partnering arrangements ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eal with the money or funds of the company and to subscribe for purchase, sell, hold, acquire, endorse and negotiate every way shares and securities of every description on the money market. 17. To alienate by way of sale, charge, mortgage, hypothecation, pledge, exchange, hiring out, gift or otherwise with or without security, the properties or funds of the company or any portion thereof including the marking or giving subscription(s), contribution(s) or assistance or there wise to charitable institution(s), educational, benevolent, social welfare or other institutional bodies, person(s) as from time to time may deem necessary. 18. To take financial assistance, take guarantee from any public charitable institutions, trusts, societies and other such organizations as the Board of Directors may deem it beneficial and in the interest of the company for furtherance of the objects of the Company and the doing of all such other lawful things as considered necessary for the furtherance of the above objects. Provided that the company shall not support with its funds, or endeavor to impose on, or procure to be observed by its members or others, any regulation or restriction which, as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rdinate Bench of this Tribunal in case of Gem & Jwellery Export Promotion Council reported in 68 ITD 95, wherein it is submitted that an organisation carrying out with exhibition and promotional activities outside India and money is spent outside India but nevertheless the 'charitable purpose' is served in India. He also placed reliance on the following decision in support of his arguments:- "1. CIT V/s. Dawoodi Bohara Jamat [2014] 43 Taxmann.com 243 (SC): 364 ITR 31 (SC) 2. Shri Sachay Mataji Mandir Vikas Trust v/s. CIT(E) [2024] 165 Taxmann.com 306 (Rajkot-Trib.) 3. National Real Estate Development Council V/s. CIT (E) ITA/487/Ahd./2024" 3.3. On the contrary the Ld.DR submitted that the object in clause 12 clearly states that, it would provide support and carry out such developmental activities to other organisations in India and outside India in the social sector. The Ld.DR submitted that, sub clause 3A of section 11requires that, the activities must be carried out in India. As clause 12 of the assessee is clearly in contravention to the primary requirement u/s.11, the claim of exemption by the assessee is rightly denied. He placed reliance on the decision of Hon'ble Amri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not started any activity may apply for provisional registration and where the activity is commenced then direct application for five-year registration is permissible. 4.1. In the present facts of the case, the assessee, was incorporated on 28/07/2021 and filed its application under section 10A subsequently. Thus, the assessee falls under the new regime of registration process, seeking registration/approval from 01.04.2021 to 30.09.2023, w.e.f. 01.04.2021 under section 12AB of the Act. The key features of registration under the amended scheme from 01.04.2021 to 30.09.2023 under section 12AB are as under: (i) Concept of provisional registration introduced for charity institutions is applicable to all applying for the first time, irrespective of whether they are new or existing institutions. (ii) Concept of perpetuity of registration stands withdrawn under the new scheme and provisional registration is valid for a maximum period of 3 years. The provisional registration is subsequently required to be regularized into five years regular registration within six months of commencement of activities or at least 6 months before the expiry of the provisional registration period. (iii ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... evailing prior to 01.04.2021, under section 12AB(1)(b)(i). That is, the Ld.PCIT/CIT shall call for such documents or information or make such inquiries as he thinks necessary in order to satisfy himself about genuineness of the activities of the trust or institution and the compliances of other laws. The relevant provisions are as under: (1) The Principal Commissioner or Commissioner, on receipt of an application made under clause (ac) of sub-section (1) of section 12A, shall,- a) where the application is made under sub-clause (i) of the said clause, pass an order in writing registering the trust or institution for a period of five years; b) where the application is made under sub-clause (ii) or sub-clause (iii) or sub- clause (iv) or sub-clause (v) 66[or item (B) of sub-clause (vi)] of the said clause,- i) call for such documents or information from the trust or institution or make such inquiries as he thinks necessary in order to satisfy himself about- a) the genuineness of activities of the trust or institution; and b) the compliance of such requirements of any other law for the time being in force by the trust or institution as are material for the purpose of achiev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e thinks necessary in order to satisfy himself about the occurrence or otherwise of any specified violation; (ii) pass an order in writing, cancelling the registration of such trust or institution, after affording a reasonable opportunity of being heard, for such previous year and all subsequent previous years, if he is satisfied that one or more specified violations have taken place; (iii) pass an order in writing, refusing to cancel the registration of such trust or institution, if he is not satisfied about the occurrence of one or more specified violations; (iv) forward a copy of the order under clause (ii) or clause (iii), as the case may be, to the Assessing Officer and such trust or institution. Explanation.-For the purposes of this sub-section, the following shall mean "specified violation",- (a) where any income derived from property held under trust, wholly or in part for charitable or religious purposes, has been applied, other than for the objects of the trust or institution; or (b) the trust or institution has income from profits and gains of business which is not incidental to the attainment of its objectives or separate books of account are not maintained ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n for the approval of any trust or institution under the first regime, shall be made to the jurisdictional Principal Commissioner or Commissioner and such Principal Commissioner or Commissioner shall grant approval after examination of the application. Earlier such applications were required to be filed before the prescribed authority. Similarly, provisions of clause (ac) of sub-section (1) of section 12A provide that application for the trusts or institution under the second regime shall be made to the principal Commissioner or Commissioner. The provisional registrations or provisional approval or re-registrations or approvals in certain cases, under these clauses, are granted in an utomated manner and the respective rules have been amended accordingly. It is essential to ensure that non-genuine trusts or institutions do not get exemption provided by these provisions." Thus, we do not agree with the argument advanced by the Ld.AR that since provisional registration is granted to the present assessee before u/s.12AB, final registration cannot be denied. 4.4. In the present facts, the assessee's objects include clause 12, which is not in consonance with the main purpose to grant e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... DIT (E) vs. National Association of Software and Services Companies reported in (2012) 208 Taxman 178 interpreted natural grammatical meaning of the words "to the extent to which such income is applied to such purposes in India" appearing in section 11(1)(a) of the Act. Courts have held that, the words „in India‟ appearing in section 11(1)(a), qualifies only the words 'such purposes', would not only be contrary to the plain grammatical meaning of section but also render the provisions of section 11(1)(c) redundant and otiose. Further the Courts have held that, if it was accepted that income of trust can be applied even outside India so long as the charitable purposes are in India, then there is no need for a trust which tends to promote international welfare in which India is interested and was created on or after 01/04/1952 to apply to the CBDT for a general or special order for exemption. Hon'ble Delhi High Court in case of DIT (E) vs. National Association of Software and Services Companies reported in (2012) 208 Taxman 178 explained that the literal interpretation of the statute was not, probably in consonance with the intent of the statute. Hon'ble Court however agr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Ewing Christian College Society v. CCIT reported in [2009] 318 ITR 160 held that, the objective to serve the church and nation would not mean that the society was not existing solely for educational purposes; therefore, any additional object clauses normally should not affect the charitable status of a trust/institution/NGO. C. Similarly, Hon'ble Andhra Pradesh High Courtin CWT v. Trustees of the Nizam's Religious Endowment Trust reported (1977) 108 ITR 229 relied by the Ld.AR, it was held that, the charitable or religious expenditure incurred in India will not be affected by a provision for activities outside India or even actual expenditures abroad. Exemptions towards activities in India remain intact and in the case of a clause in the trust deed empowering the trust to have activities outside India, there is no impact. And in the case of trust having activities outside India, the exemptions will be denied to the extent of the income applied outside India. 5. Be that as it may, by insertion of sub section 4 & 5 inserted by Finance Act, 2022 widened the scope of violations by including violations specified in explanation therein. This was not the legal position u/s. 12A/12AA pr ..... X X X X Extracts X X X X X X X X Extracts X X X X
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