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2015 (11) TMI 299 - ITAT DELHI

2015 (11) TMI 299 - ITAT DELHI - TMI - Registration u/s 12AA denied - whether aims and objectives of the Trust are charitable in nature? - Held that:- Respondent society which was admittedly running a Polytehnic College and the activities were interwoven for furthering the projects and activities pertaining to education, registration should be granted to the respondent society with the rider that the same could always be cancelled if it came to the notice of the CIT that the society was not carr .....

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d.Commissioner of Income Tax, Ghaziabad, passed u/s 12AA of the Income Tax Act 1961 (the Act) dated 30.9.2014, wherein an application made by the Assessee Trust for registration u/s 12AA of the Act in Form No.10A read with Rule 17A was rejected. 2. Facts in brief:- The assessee is a Trust and was established on 22.10.2013. The main objects of the Trust are brought out in para 1 of the Ld.CIT(A), Ghaziabad order which reads as follows: the main objectives of the Trust are to provide health educat .....

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the Trust cannot be verified. He also stated that the evidence brought on record to show the capacity of the lenders who have advanced loans to the assessee trust, are not sufficient. Hence he rejected the application for grant of registration u/s 12AA of the Act, by concluding that the registration cannot be granted to the Trust at this stage. 3. Aggrieved the assessee is in appeal before us on the following grounds. 1. Whether the learned CIT, Ghaziabad was justified to reject the application .....

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, Ghaziabad was justified to reject the application for registration U/S 12A of the applicant assessee Trust for which proper opportunity of being heard was not given. 4. Whether the learned CIT, Ghaziabad was justified to reject the application for registration U/S 12A of the applicant assessee Trust for which no specific show cause notice stating the reasons was given to the applicant assessee Trust. 5. Whether the order dated 30.09.2014 of CIT, Ghaziabad was justified which was sent through S .....

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ceived on 13.03.2014 by CIT, Ghaziabad. 6. Whether the order dated 30.09.2014 was barred by limitation in view of provisions of sub section 2 of section 12AA of the Income Tax Act 1961. 7. That the appellant seeks leave to add, amend, delete or alter any ground or grounds of appeal petition at the time of hearing of appeal, if deemed necessary, in the interest of justice and equity. 4. We have heard Shri Amit Goel, the Ld.Counsel for the assessee and Ms.Surekha Verma, Ld.CIT, D.R. on behalf of t .....

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the Ld.CIT(A) for refusing the registration is that, the second limb i.e. genuineness of the activities of the Trust, could not be verified, for the reason that the assessee has not taken steps in pursuance of its aims and objects, except for acquiring land is not legally tenable. This ground taken by the Ld.CIT for refusal of registration is not correct for the reason that: (i) The assessee had commenced activities by acquiring land. It was also pointed out that the State Government had exempt .....

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.2014 the Hon ble Allahabad High Court held that : The CIT, Varanasi rejected the application for registration u/s 12AA of the Act and consequently for the grant of approval u/s 80G(5)(vi) of the Act on the ground that the assessee had not filed material in relation to the activities of the Trust since its inception. In view of the Commissioner, merely expressing an intention to conduct a charitable activity, was not sufficient to grant registration until the commencement of charitable activitie .....

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AA of the Act, after having due regard to the preponderance of judicial opinion of all the High Courts including of this Court and has held as follows: The preponderance of the judicial opinion of all the High Courts including this Court is that at the time of registration u/s 12AA of the Act, which is necessary for claiming exemption u/s 11 and 12 of the Act, the CIT is not required to look into the activities, where such activities have not or are in the process of its initiation. Where a trus .....

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such preliminary stage should be restricted to genuineness of the objects and not the activities unless such activities have commenced. The Trust or society cannot claim exemption, unless it is registered u/s 12AA of the Act and thus at that such initial stage the test of genuineness of the activity cannot be a ground on which the registration may be refused. This aspect of the view of the Tribunal is hence consistent with a judgement of the Division Bench of this Court and would not require th .....

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d the application of the assessee trust for grant of registration u/s 12A of the Act by holding that in absence of any genuine charitable activity, the genuineness of the charitable activities cannot be held to be established. At the same time, we observe that as per ratio of the decision of Hon ble Jurisdictional High Court of Delhi in DIT vs. Foundation of Ophthalmic & Optometry Research Education Centre, registration u/s 12A is not dependent on commencement of charitable activity. The reg .....

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he DIT(E) rejected the application of the assessee for registration u/s 12A of the Act on wrong premise and unjustified grounds. At the cost of repetition, we note that while the DIT(#) has not raised any doubt or objection about the charitable objects of the assessee trust, registration u/s 12A cannot be denied on the ground that the genuineness of the charitable activities cannot be held to be established in absence of any genuine charitable activity. Accordingly, sole ground of the assessee t .....

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nt of such institution. The procedure for registration of the trust or institution is prescribed under section 12AA. In terms of clause (a) of section 12AA, the Commissioner is to satisfy himself about the genuineness of the activities of the trust on such inquiries as he may deem necessary. Subsection (1A) and (2) of section 12AA are procedural in nature, whereas subsection (3) of section 12AA empowers the Commissioner to cancel the registration of the trust or institution, if he is satisfied t .....

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established for charitable and religious purposes, receiving contribution, shall not be an income in terms of section 11. The benefit of sections 11 and 12 is available only if such trust or institution is registered under section 12AA. [Para 9] On the other hand, the provisions of section 10(23C) are the provisions of the Act in substitution of the earlier provisions of section 10(22) as to which income shall not be included in computing the total income of any person. Therefore, the provisions .....

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ding the income from consideration under section 10(22) now 10(23)(C) or sections 11 and 12 are not applicable while considering the application for registration under section 12AA. The application for registration is required to be made within one year of the creation of the trust. Section 12AA requires satisfaction in respect of the genuineness of the activities of the trust, which includes the activities which the trust is undertaking at present and also which it may contemplate to undertake. .....

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