Amendment of section 12AA.
7. In section 12AA of the Income-tax Act, with effect from the 1st day of September, 2019,––
(I) in sub-section (1),––
(i) for clause (a), the following clause shall be substituted, namely:––
“(a) call for such documents or information from the trust or institution as he thinks necessary in order to satisfy himself about,––
(i) the genuineness of activities of the trust or institution; and
(ii) 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 achieving its objects, and may also make such inquiries as he may deem necessary in this behalf; and”;
(ii) in clause (b), after the words “genuineness of its activities”, the words, brackets, figures and letter “as required under sub-clause (i) of clause (a) and compliance of the requirements under sub-clause (ii) of the said clause” shall be inserted;
(II) in sub-section (4), for the portion beginning with the words “the activities of the trust or the institution” and ending with the words “cancel the registration of such trust or institution”, the following shall be substituted, namely:––
“(a) the activities of the trust or the institution are being carried out in a manner that the provisions of sections 11 and 12 do not apply to exclude either whole or any part of the income of such trust or institution due to operation of sub-section (1) of section 13; or
(b) the trust or institution has not complied with the requirement of any other law, as referred to in sub-clause (ii) of clause (a) of sub-section (1), and the order, direction or decree, by whatever name called, holding that such non-compliance has occurred, has either not been disputed or has attained finality,
then, the Principal Commissioner or the Commissioner may, by an order in writing, cancel the registration of such trust or institution”.
Notes on Clauses:
Clause 7 of the Bill seeks to amend section 12AA of the Incometax Act relating to procedure for registration.
Sub-clause (a) of sub-section (1) of the said section, inter alia, provides that while considering the application of a trust or institution, the Principal Commissioner or Commissioner may call for documents or information necessary in order to satisfy himself about the genuineness of its activities.
It is proposed to substitute the said sub-clause so as to provide that besides the genuineness of its activities, the Principal Commissioner or Commissioner shall also satisfy himself about compliance to the requirements of any other law which is material for the purpose of achieving its objects.
Sub-clause (b) of sub-section (1) of the said section, inter alia, provides that after satisfying himself about the objects of the trust or institution and the genuineness of its activities the Principal Commissioner or Commissioner shall pass an order registering or refusing to register the said trust or institution.
It is proposed to amend the said sub-clause so as to provide that the Principal Commissioner or Commissioner, besides satisfying himself about the objects of the trust or institution and the genuineness of its activities, shall also satisfy himself about the compliance to the requirements of any other law which is material for the purpose of achieving its objects.
Sub-section (4) of the said section, inter alia, provides for cancellation of registration if it is noticed that the activities of the exempted entity are being carried out in a manner that either whole or any part of its income would cease to be exempt.
It is proposed to amend the said sub-section so as to provide that besides the existing ground of cancellation, the trust or institution has not complied with the provisions of any other law that it was required to comply with due to the reason that the same was material for the purpose of achieving its objects and the order, direction or decree, by whatever name called, holding that such non-compliance has occurred, has either not been disputed or attained finality, shall be an additional ground on which the registration may be cancelled.
These amendments will take effect from 1st September, 2019.
