TMI Blog2007 (6) TMI 507X X X X Extracts X X X X X X X X Extracts X X X X ..... various reasons given by the ld. CIT for rejection of the Registration under section 12AA. It was the submission of the ld. AR that in regard to para 2 of the order of the ld. CIT, the ld. CIT had held that the assessee had not supplied audit report in form 10B alongwith the annexure thereto even though the same had been called for vide his office letter dated 1-5-2005. Ld. AR drew attention to page 6 of the paperbook, which was the copy of the letter mentioned by the ld. CIT. It was the submission that the ld. CIT was wrong in stating that he had called for the audit report in form 10B along with annexure thereto whereas in fact what has been asked for was only a statement of income and expenditure account and balance sheet for the last three years or since inception of the Trust, if not given already. It was his submission that the Trust had come into existence only on 17-8-2006 and the letter was issued on 1-5-2007 when the audit of the assessee's accounts was under process. It was his submission that even the time for filing of return had not expired but still the assessee has placed income expenditure account and balance sheet since its inception. It was thus his submissio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... drew attention to para 8 of his reply to the ld. Commissioner wherein it was specifically mentioned that the original trust deed was being produced for verification. It was thus his submission that the original trust deed though not enclosed along with the form 10A the same had been produced before the ld. Commissioner for verification and the ld. CIT was not right in law in rejecting the photocopy of the trust deed. It was his submission that the original document could not be enclosed along with the application as the same was required for production before other authorities also. In reply the ld. DR vehemently supported the order of the ld. CIT. 6. We have considered the submissions. The copy of the trust deed was found at pages 11 to 17 of the paperbook. This also noticed from the letter addressed to the CIT in reply to his letter dated 1-5-2007 that the assessee had produced the original trust deed for verification. It is further noticed that this being the first year of the assessee's functioning obviously the original document would be required for production before other authorities and consequently the assessee was prevented by sufficient cause in not submitting the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sions of section 12AA(1) further specify that if the ld. CIT is satisfied about the objects of the trust and the genuineness of its activities he shall pass an order in written registering the trust and if he is not so satisfied pass an order in writing refusing to register the trust. Here a proviso has also been provided that no order refusing to reject the trust was to be passed unless the applicant has been given reasonable opportunity of being heard.In the present case it is noticed that the ld. CIT had not given the assessee an opportunity to substantiate the allegation that the trust deed does not contain any clause as to what treatment would be given to its net assets/income in case of any dissolution of the Trust. This is evident from the copy of the letter of the ld. CIT dated 1-5-2007 addressed to the assessee. Further the fact that the assessee trust is registered with the sub-registrar as a charitable trust and also due to the fact that the trust is an irrevocable trust, in the event of the failure of the trust the net assets/income would obviously be taken over by the Charity Commissioner.In these circumstances the rejection of the registration of the trust by the ld. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to an institution then there is no requirement of it to file its returns or pay any taxes. If one is to do charity on from one's own sources one does not need the permission under the Income-tax Act because it is his own personal funds that he is using to do charity. It is because an institution is created and the institution acts as intermediary for collecting the funds from various charitably inclined persons and transmits the same for the benefit of the needy, to protect such intermediary institutions, the provisions of sections 11, 12 and 13 are made available under the Act. Just as it is said little drops of water, little grains of sand made the mighty ocean and the pleasant land, it is the charitable institutions which collect those drops of water and the little grains of sand which are the contributions from the charitably inclined persons and make it available to the needy. The charity that can be done by an individual out of his own funds are limited to ones capacity but the effect of doing charity as a group would be much more larger and fruitful to the charitable intention. It is for this purpose the Income-tax Act recognizes charitable trusts and institutions. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessment year was 30 per cent and if that is also considered, obviously the depreciation itself would have been more than ₹ 70,000. If the assessee had thought to do business obviously after investing so much of money he would never have given the ambulance for free or for nominal amounts of ₹ 100 to ₹ 150 especially when today even the minimum charge of a taxi is more than ₹ 100.In these circumstances, we are of the view that the ld. CIT was wrong in holding that the assessee was not a charitable institution. 12. In regard to paragraphs 7 and 8 of the ld. CIT it was the submission that the ld. CIT had questioned the application of the donation received by the assessee holding that the same was by diversion of the general funds of trust. It was the submission that there was no diversion of the funds of the trust in the purchase of the ambulance or medical equipment or the mobile phone. It was the submission that these were in-fact the application of the income of the trust. It was the submission that the purchase of the Ambulance and the medical equipment was as per the objects of the trust and the mobile phone was for the access to the ambulance servi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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