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2008 (11) TMI 422 - AT - Income TaxCharitable or religious trust - Rejection of application for registration u/s 12A - violation of the provisions of Trust Deed - trust was a Public Charitable Trust nor the activities carried out by it came within the purview of the religious and charitable nature as provided under section 2(15) - expenditure incurred for the purpose of the acquisition of agricultural land. HELD THAT:- A reading of the provisions of sub-clauses (a) and (b) of section 12AA makes it clear that the CIT has to satisfy himself about the genuineness of the activities of the trust or institution and also about the objects of the trust or the institution. In order to satisfy himself about the genuineness of the activities of the trust, he can call for such documents or information from the trust as he thinks necessary and he is also empowered to make such enquiries as he may deem necessary in this behalf - The objects of the trust can be had from the bye laws or the deed of the trust as the case may be and as held in the case of Red Rose School [2007 (2) TMI 575 - ALLAHABAD HIGH COURT] unless the objects of the Trust apparently make out that they are not in consonance with the public policy or that they are not the objects of any charitable purpose, registration cannot be refused on this ground. Genuineness of the activities of the Trust - HELD THAT:- If it is found that the activities are not genuine and they are not being carried out in accordance with the objects of the Trust, the registration can be refused on this ground also. However as held by Hon’ble Allahabad High Court in the case of Red Rose School, mere presumptions and surmises that income derived by the Trust is being misused or that there is some apprehension that the same would not be used in the proper manner and for the purposes relating to any objects, the registration applied for under section 12A cannot be rejected. The procedure for registration laid down in section 12AA thus requires the Commissioner to satisfy himself about the genuineness of the activities and the charitable nature of objects of the Trust and as such, the scope of his powers is limited in this regard to make such enquiries as he may deem fit to satisfy himself in respect of these two aspects - in the present case, the enquiries made by the ld. CIT as well the adverse observations recorded by him were neither relevant nor sufficient to doubt or dispute the charitable nature of the objects of the assessee’s trust or even the genuineness of its activities. For instance, his allegation about the unverifiable nature of source of funds contributed by the settlor as well as the investment made by the said settlor in the properties which were mortgaged for securing a bank guarantee in favour of the Trust had no relation whatsoever with the charitable nature of the objects of the assessee-trust or genuineness of its activities. Moreover the said allegation was based merely on suspicion and surmises and there was no evidence to support and substantiate the same - there was no violation of the provisions of the Trust Deed on this count as rightly pointed out by the ld. counsel for the assessee from the relevant portion of the trust deed. Whether the expenditure incurred for the purpose of the acquisition of agricultural land was not for the object of the Trust was totally misconceived ? - Agricultural land was acquired by the assessee-trust for the purpose of construction of its college premises was not denied - Once it was established that the educational institution was set up by the assessee-trust for imparting education which by itself was a charitable activity, it was not required for the assessee-trust to provide for any concession in fees or other charges and the absence of such provision, in our opinion, would not make its activity of imparting education as non-charitable as alleged by the ld. CIT. On perusal of the trust deed clearly shows that the assessee-trust was established for the purpose of setting-up and running an institution in order to impart education which by itself was an activity of charitable nature within the meaning given in section 2(15) - the genuineness of its activity was also duly established. Thus, the conditions for getting registration under section 12A thus were duly satisfied by the assessee-trust and in our opinion, it was entitled to get such registration. Appeal of the assessee is allowed.
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