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2022 (2) TMI 534 - HC - Income TaxExemption u/s 11 - registration u/s 12A withdrawn - entitlement of the donor trust for exemption u/s 11(1) - HELD THAT:- It is settled legal principle that Section 12AA of the Act lays down procedure for registration and does not state that CIT while considering the application for registration shall also see that the income derived by the trust is either not being spent for charitable purpose or such trust is earning profit. The provision requires that the activities of the trust or the institution must be genuine which would mean that they are in consonance with the object of the trust and are not mere camouflage of the proposed objects. Bearing the legal principle in mind, the tribunal once again examined the facts of the case and pointed out that the activities of the assessee have not been doubted in all these years. The activities were duly accepted to be charitable by the revenue and the revenue failed to bring anything on record to controvert the submission made by the assessee. In Sarladevi Sarabhai Trust [1988 (3) TMI 53 - GUJARAT HIGH COURT] as pointed out that when a donor trust which is a charitable trust donates its income to another trust, the provisions of Section 11(1)(a) can be said to have been met by such donor trust and the donor trust can be said to have applied its income for religious and charitable purposes notwithstanding the fact that the donation is subjected to any conditions that the donee trust will treat the donation as towards its corpus and can only utilise the accruing income from the donated corpus for religious and charitable purposes, and that the question whether the gifted income is to be utilised by the donee trust fully for its religious and charitable purposes or whether the donee trust had to keep intact the corpus of the donation and has to utilise only the income therefrom for its religious and charitable purposes, would not make the slightest difference so far as entitlement of the donor trust for exemption under Section 11(1) - Decided against revenue.
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