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TMI Blog2006 (3) TMI 190X X X X Extracts X X X X X X X X Extracts X X X X ..... nt Trust was duly registered under section 12A(a) of the Income-tax Act, 1961, very much before the amended procedure for registration as per section 12AA came into force. 3. The Learned Commissioner of Income-tax (Appeals) has erred in law as well as on facts by not properly appreciating that the procedure for registration under section 12AA of the Income-tax Act, 1961, came into force from 1-4-1997 and, therefore, such procedure is applicable only in respect of registration under section 12A(a) granted after 1-4-1997 and the same is therefore, not applicable in case of the Appellant Trust already registered under section 12A(a) long before as evidenced by the Certificate of Registration No.64/H-19/174 - 75/CIT-V dated 13-8- 1976. 4. The Learned Commissioner of Income-tax (Appeals) has also erred in law as well as on the facts by observing that the Appellant has made claim for exemption under section 10(22) and hence not filed Form No. 10A for registration under section 12AA of the Income-tax Act, 1961, though in fact the Appellant Trust has duly filed on 29-6-1973, Form No. 10A for registration under section 12A(a) as required at that time and such fact has been duly noted in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed. Before us the claim of the assessee regarding exemption under section 10(22) is not pressed. Therefore, the same is dismissed. 4. Now coming to the eligibility of assessee-trust regarding exemption under section 11 of the Act, the claim of assessee regarding exemption under section 11 was rejected by Assessing Officer on the ground that assessee-trust is nothing but a device to avoid tax. He held that trust does not exist for charity and no charitable activities have been carried during the year and it did not pursue any of the object for which it was created. Therefore, he held that the expenditure incurred on donation of Rs. 4,00,777 were not deductible. Thus, the claim of exemption under section 11 was denied. An appeal was filed before the CIT(A). It was pleaded that according to clauses (5) and (6) of trust deed dated 24-6-1957, the assessee trust had applied its income towards charitable purposes. It was pleaded that registration was granted to appellant trust under section 12A of the Income-tax Act, 1961, and therefore, Assessing Officer could not go into the objects of the trust. Exemption was allowed to the assessee for earlier years and similar exemption should be a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cation of money of the trust during a particular period. Regarding the principle of res judicata it would be applied in this particular case if it is held by the department that a donation made to a particular institution has been held to be for a charitable purposes in an earlier year then it would not be justified to hold donation to the same institution otherwise in a subsequent year in the absence of any other material that being not the exact position here; the principle of res judicata would not apply. The ratio of the decisions relied by the Ld. Counsel would also not help appellants case because the facts and circumstances are different. Further I am inclined to agree with the contention of the Ld. Counsel that the case of Hon'ble Supreme Court in the case of McDowell Co. would not apply in the facts and circumstances of this case. I also agree with the Ld. Counsel that in view of the decision of the Jurisdictional High Court of Gujarat in the case of K.T Doctor v. CIT 124 ITR 501, lifting a veil to ascertain the reality of the business etc. would not apply in the case of a trust. In my opinion exemption under sections 11 and 12 could only be disallowed to a trust if the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the income has made an application for registration of the trust or institution in the prescribed form and in the prescribed manner to the Chief Commissioner or Commissioner before 1-7-1973, or before the expiry of a period of one year from the date of the creation of the trust or the establishment of the institution, whichever is later and such trust or institution is registered under section 12AA: Provided that where an application for registration of the trust or institution is made after the expiry of the period aforesaid, the provisions of sections 11 and 12 shall apply in relation to the income of such trust or institution,- (i) from the date of the creation of the trust Or the establishment of the institution if the Chief Commissioner or Commissioner is, for reasons to be recorded in writing, satisfied that the person in receipt of the income was prevented from making the application before the expiry of the period aforesaid for sufficient reasons; (ii) from the 1st day of the financial year in which the application is made, if the Chief Commissioner or Commissioner is not so satisfied; (b) where the total income of the trust or institution as computed under this A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... und that assessee did not obtain registration under section 12AA of the Act. 8. The ld. DR relied on the orders of Assessing Officer and the CIT(A). 9. We have carefully considered the rival submissions in the light of material placed before us. It is the contention of assessee that claim of assessee regarding exemption under section 11 has only been rejected by CIT(A) on the basis that assessee trust does not have registration as per section 12AA of the Act. However, we find that in the order, ld. CIT(A) has held that though it was beyond the province of Assessing Officer to reject claim of exemption under section 11 by looking into objects of association and holding the same as non-charitable in nature but the Assessing Officer could very well examine in a particular period as to whether the expenditure incurred is as per the objectives of the trust or the charitable purposes etc., and thus the Assessing Officer will be fully justified in examining application of money of the trust during a particular period. For the application of principle of res judicata he has held that it would be applied only if it is held by the department that donation made to a particular institution ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... himself about the genuineness of the activities of the trust and powers have been vested to conduct such enquiries as may be deemed necessary in this behalf. Power conferred on the Chief Commissioner and the Commissioner in this regard includes grant or refusal of registration for which an order has to be passed in writing which order will be sent to the applicant. The provisions of section 12AA are explained by way of departmental Circular No. 762 dated 182-1988, the relevant portion of which is reproduced below:- "Registration of charitable and religious trusts,- 19.1 Under the existing provisions of the Income-tax Act, exemption from income tax, in respect of the income of a charitable or religious trust or institution is available only if the conditions specified in that section are satisfied. One of these conditions is that the person in receipt of the income shall make an application for registration of the trust or institution in the prescribed form and in the prescribed manner to the Chief Commissioner or the Commissioner of Income-tax within the specified time. However, there was no provision in the Income-tax Act, for processing of such an application and granting or r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... made in this respect. This having not been done, the trust already having the registration cannot be held not entitled to exemption under section 11 on the ground that they should get themselves re-registered under section 12AA of the Act. In this view of the situation, we find that exemption under section 11 cannot be denied to the assessee merely on the ground that it was not registered under section 12AA of the Act as there is no such requirement put by the statute on the trusts which were registered with the department as per section 12A of the Act. Thus we hold that for grant of exemption to assessee-trust under section II, there was no requirement put by the statute for getting registration by the assessee-trust under section 12AA of the Act particularly when assessee was already registered under section 12A of the Act. 10. Before parting, we may mention that ld. CIT(A) in his order has held that in view of decisions of Hon'ble Gujarat High Court in the case of K.T. Doctor the principles of lifting of veil to ascertain the reality of the business etc., is not applicable in the case of a trust. This finding of CIT(A) has been given without considering the latter decision of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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