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2016 (2) TMI 563 - ITAT BANGALORE

2016 (2) TMI 563 - ITAT BANGALORE - TMI - Registration u/s 12A and approval u/s 80G denied - Held that:- Once the objects of the trust are found to be charitable, the CIT has no option but to grant registration. The issues such as violation of provisions of sec.13 and the exemption u/s 11 and 12 can be examined by the AO after the return of income is filed. It is only after the activities of the trust are commenced the genuineness of the objects can be examined during the course of assessment pr .....

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ance of the ld.CIT(Exemptions) appears to be that the son of the settler is constructing a building in the name of the entity in which he was interested as a shareholder or director and not in the name of the trust proposed to be used for the purpose of the appellant-trust. This, does not, in any way militate against the charitable character of the objects of the appellant-trust. It is not the case of the ld.CIT(Exemptions) that the funds of the appellant-trust were used for the construction of .....

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IT(Exemptions) to grant the approval u/s 80G. - Decided in favour of assessee. - ITA Nos.1256 & 1257/Bang/2015 - Dated:- 13-1-2016 - SHRI VIJAYPAL RAO, JUDICIAL MEMBER and SHRI INTURI RAMA RAO, ACCOUNTANT MEMBER For The Appellant by : Shri Padamchand Khincha, CA For The Revenue by : Smt Neera Malhotra, CIT ORDER PER SHRI INTURI RAMA RAO, AM : These are the appeals filed by the appellant-trust directed against the orders of learned CIT, (Exemptions), Bangalore [ld.CIT(Exemptions) for short] dated .....

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l its forms both in the urban and rural areas. b) To impart training, teaching and to run medical, dental, nursing, ayurvedic, medical colleges, to cater to the needs of the economically weaker sections, of the society and minority community. c) To establish,maintain or acquire library or libraries, laboratory, laboratory and/or other research institutions for the benefit of the student community. d) To acquire establish and run professional colleges in medicine, enggg. law, agriculture, compute .....

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of the aforesaid medical/educational purposes. h) To negotiate and enter into any agreements with the central and state Government Universities, Municipalities or any other public or private authority which may seem conducive or beneficial to any of the objects of the Trust or be intended to enhance, improve or render more efficiency any property, right, privilege, work or activity of the Trust. i) To purchase, take on lease or in exchange or otherwise acquire any immovable or movable property, .....

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the all or any of the property funds, assets, rights and privileges of the trust. l) To open and operate current, saving or over draft or fixed deposit accounts with any bank or banks. m) To carry on any activities which may seem beneficial or conducive to any of the objects of the trust and either alone or in conjunction with others or as factors trustees, or agents and upon such terms as the governing body may deem fit. n) To enter into and carry out arrangements for joint working or for amalg .....

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cations, professional subjects research work, intellectual and other useful pursuits and to take disciplinary action amounts to the suspension or dismissal in respect of the employees of the institutions of the trust. q) To establish maintain and run boarding houses and residential institution for the students and those connected with the institutions. r) To bring out, encourage and develop the incentive and research faculties o the pupils and teachers and to afford opportunities for research wo .....

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cept donations, grants, presents, aid, assistance from the general public, government companies, rusts, societies, associations, firms, institutions in the form of funds properties, movable or immovable services etc to aid further and achieve the objects o the trust. v) To charge and collect moderate tuition fees as well as any other fees and also recoup themselves for the outlay and expenses, incurred in the upkeep and maintenance of institutions established or about to be established under thi .....

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nformity with Section 2(15), 11,12,13 and See 80G of the Income Tax 1961. 3. Thus, the appellant-trust was formed with the main object of imparting education in medical and related areas. The appellant trust made an application in form no.10A dated 30-12-2014 to the ld. CIT(Exemptions) for registration of the Trust u/s 12A of the Act, 1961 and for approval u/s 80G of the IT Act, 1961 in form No.10G vide application dated 20-02-2015 for grant of approval u/s 80G of the IT Act, 1961. The ld. CIT(E .....

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bana Infra Pvt. Ltd., but not in the name of the trust. Therefore, the ld.CIT(Exemptions) inferred that it is only a business venture and further held that it was a case of violation of sec.13(2)(g) of the Act. The ld.CIT(Exemptions) observed that in the absence of relevant details, it was not possible to verify the genuineness of the objects and the activities of the trust. The ld.CIT(Exemptions) drawing support from the decision of the Hon ble Karnataka High Court in the case of Ganjam Nagappa .....

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the objects commercial. It is open to the appellant-society to run the activities of the trust either in the own premises or rented premises. So long as the objects of the appellant-trust are charitable in nature, the registration u/s 12A and recognition u/s 80G cannot be denied. The issue of violation of provisions of sec.13 can be examined only during the course of the assessment proceedings and similarly he submitted that the genuineness of the activities of the trust can be tested only after .....

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(E) (155 ITR 466) 6. On the other hand, learned CIT, DR relied on the orders of the CIT(Exemptions) . 7. We have heard the rival submissions and perused the material on record. In the present appeal, the only issue to be adjudicated is whether the CIT(Exemptions) is justified in denying the registration u/s 12A of the Act and approval u/s 80G of the IT Act, 1961. The ld. CIT(Exemptions) denied the registration only on the ground that the proposed activities of the appellant-trust are commercial. .....

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mptions) is totally erroneous and cannot stand the test of the law laid down by the Hon ble jurisdictional High Court in the cases referred herein below: (i) The Hon ble jurisdictional High Court in the case of Sri Gururaja Seva Samithi had clearly held that the question of verifying the activities of the trust can be considered only after it is registered and carries on activities subsequently. The Hon ble High Court after referring to the its earlier decision in the case of Sanjeevamma Hanuman .....

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ity, thus the question of verifying the genuineness of such activities cannot be considered. The refusal to register the trust on such ground by the DIT(Exptn.) could not be justified. The Tribunal has relied on the Division Bench judgment of this court in the case of Sanjeevamma Hanumanthe Gowda Charitable Trust Vs DIT(Exptn.) 285 ITR 327, wherein it has been held that for arriving at the satisfaction for genuineness of the society or trust, the CIT has to look at the objects of the trust and i .....

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tly allowed the appeal and directed the DIT(Exptn.) to register the society as a religious trust u/s 12A of the Act . (ii) Further in the case of CIT vs. A.S.Kupparaju Bros. Charitable Foundation Trust (supra), the Hon ble High Court held that in deciding the genuineness of the trust, what is to be seen is whether in terms of objects set out in the trust deed, whether the trust is carrying on its activities or not. The relevant paragraph is extracted below: …..The certificate of registrat .....

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colleges are being run and educational institutions are being run as rightly held by the Tribunal, nothing more requires to be established to show that the trust in question is a genuine trust and therefore, the assessee is entitled to the registration under Section 12AA of the Act. As set out above, even if the registration is granted, the exemption from the provisions of the Income Tax Act in particular sections 11 and 12 is not automatic. It is only when the assessee satisfies the requiremen .....

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ch is a charitable purpose. In that view of the matter, we do not see any merit in this appeal. The substantial question of law framed in this appeal is answered in favour of the assessee and against the revenue. Accordingly, the appeal is dismissed. (iii) Again, the Hon ble jurisdictional High Court in the case of Meenakshi Ammal Endowment Trust (supra) held that once the objects of the trust are found to be charitable, registration has to be granted by the CIT and if it is found subsequently t .....

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ut the contribution of ₹ 1,000 by each of the trustees as corpus fund goes to show that the trustees were contributing the funds by themselves in a humble way and were intending to commence charitable activities. It is not even the case of the Revenue that by the time the application of the assessee came to be considered by them, the assessee had collected lots of donations for the activities of the trust. On the other hand, the grievance of the concerned authorities seems to be that there .....

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into consideration by the authority and the objects of the trust could be read from the trust deed itself. In the subsequent returns filed by the trust, if the Revenue comes across that factually the trust has not conducted any charitable activities, it is always open to the authorities concerned to withdraw the registration already granted or cancel the said registration under section 12AA(3) of the Act. 6. A trust could be formed today and within a week registration under section 12A could be .....

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t for which it was formed will have to be examined to be satisfied about its genuineness and the activities of the trust cannot be the criterion, since it is yet to commence its activities. (iv) Again, in the case of Garden City Educational Trust (supra), the Hon ble High Court held that once the objects of the trust are found to be charitable and fulfilled the required procedural requirements, registration u/s 12A has to be granted and the benefit of exemption in terms of sec.11 and 12 is to be .....

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tion is sought to be passed off in the name of education. So long as the trust has education as one of its objects which is one of the enumerated heads which qualify and come within the scope of charitable purpose as enume-rated in clause (15) of section 2, it has to be accepted that the trust is having a charitable purpose as its object and may qualify for claiming exemptions in terms of sections 11 and 12 subject to fulfilling conditions enumerated therein and, if so, grant of registration, so .....

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mmissioner when such question is not before the Commissioner. It is hereby clarified and emphasized that while registration in accordance with the provisions of section 12A of the Act is a condition precedent for claiming the benefits under sections 11 and 12 of the Act, a registration as per section 12A by itself, will not automatically confer the benefits of sections 11 and 12 on a trust, but the trust will get the benefit only on complying with the requirements of sections 11 and 12 of the Ac .....

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the Gowda Charitable Trust Vs DIT(Exeptn.) 285 ITR 327 (Kar.,) Hon ble P&H High Court in the case of CIT Vs Surya Education and Charitable Trust (2013) 355 ITR 280(P&H) and Allahabad High Court in the case of Fifth Generation Education Society Vs CIT 185 ITR 634 (All.HC) held as follows vide para-7 of the judgment. 7. The ratio that can be culled out from the above decisions is that the Commissioner is only entitled to examine whether the objects of the institutions are charitable or not .....

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ations at the time of grant of registration under Section 12AA of the Act. These are the issues to be examined during the assessment proceedings after grant of the registration under section 12AA of the Act. Therefore, we direct the Commissioner of Income Tax, Rohtak, to grant registration to the appellant society within a period of 30 days from the date of receipt of this order. Accordingly, the grounds of appeal filed by the appellant society are allowed in full. 8. Thus the law is fairly well .....

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ects can be examined during the course of assessment proceedings, after the grant of registration by the IT Authorities. Applying the above legal position to the facts of the present case, it is not the case of the ld.CIT(Exemptions) that the objects of the trust are not charitable in nature. The objects of the appellanttrust clearly fall within one of the limbs of charity i.e. education and the appellant-trust had complied with all the procedural requirements and filed the details as called for .....

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