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2021 (8) TMI 1157 - AT - Income TaxExemption u/s 11 - Registration u/s 12AA denied - Assessment of trust - manipulative treatment of funds - genuineness of the activities carried out by the Appellant Society - contradictory treatment of the same amount in one year as Unsecured Loan and another year as Donation and that this is against the Accounting Principle - HELD THAT:- CIT exemption while denying the registration to the assessee had wrongly mentioned that as the assessee has shifted from the regime of 10(23C) to 12AA, the same is not permissible in the law and therefore the CIT exemption has denied the registration. Further CIT exemption mentioned above the acceptance of loan by the assessee in the previous year and thereafter the assessee in the financial year 2015-16 had claimed that the loan received by were in the nature of donation. Reasoning given by the CIT exemption cannot be countenanced as the same is contrary to the law laid down in Beant College of Engineering & Technology[2019 (5) TMI 631 - PUNJAB AND HARYANA HIGH COURT] Therefore this ground of rejection is not sustainable and therefore we reject the same. Acceptance of loan and thereafter in the financial year 2015-16, alleging it to be the donation - Merely on the basis of receipt of loan, and subsequent conversion of loan into donation, Assessee would not be disentitled for the registration under section 12AA of the income tax Act. The correct stage to examination of funds/utilisation of the amount/corpus by the assessee, would be at the time of assessment. Disallowance can be made if any, on examination at the assessment stage it is found that the assessee is not entitled to the exemption under section 11 of the Act and the amount received was chargeable to income of the assessee - at the stage of registration, the CIT exemption cannot deny the registration merely on the basis of the receipt of loan amount. No other reason was given by the CIT exemption for rejecting the application for registration. For that purpose we may rely upon decision in the matter of Ananda Social & Educational Trust [2020 (2) TMI 1293 - SUPREME COURT] - assessee is entitled to registration under section 12AA - Decided in favour of assessee.
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