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Carmel Haven Versus The Commissioner of Income Tax–I, Pune

Denial of registration under section 12AA - charitable activity - Held that:- In view of finding of the Commissioner that the objects of present trust are charitable i.e. relief of the poor and further the genuineness of activities having been accepted that the assessee was running old age home, then on other surmises that the assessee has claimed exemption under sections 11 and 12 of the Act without the trust being registered under section 12A of the Act, does not stand. Further, the assessee w .....

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as the grant of registration under section 12AA of the Act. The assessee having moved an application for registration, which was found to be in order and where the objects of the trust are charitable and activities of the trust are genuine, for the reason that surplus has been generated by the said trust does not merit its rejection. Further, we find no merit in the order of Commissioner in denying registration under section 12AA of the Act on the ground that there was delay in filing of initial .....

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lour of religious activity, the registration under section 12AA of the Act cannot be denied, where the assessee is engaged in both charitable and religious activities - Decided in favour of assessee. - ITA No.1482/PN/2014 - Dated:- 27-4-2016 - MS. SUSHMA CHOWLA, JM AND SHRI PRADIP KUMAR KEDIA, AM For The Appellant : S/Shri Sitesh Sharma and Girish B. Gundecha For The Respondent : Shri S.K. Rastogi, CIT ORDER PER SUSHMA CHOWLA, JM: This appeal filed by the assessee is against the order of CIT-I, .....

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and on facts in rejecting and dismissing the application of the Appellant Trust on account of religious expenses, Chapel expenses, delay in filing initial application for registration under section 12A of the Income-tax Act, 1961 and tax payable by the Appellant. Ground No.3: The Ld. CIT(I) erred on the facts and circumstances of the case and in law, the order under section 12-AA of the Income Tax Ac t, 1961 passed by the Ld. CIT(I) is erroneous, bad in law and void authorities below initio and .....

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. The assessee filed an application in form No.10A requesting to grant of registration under section 12A of the Act. The said application for registration under section 12AA(1) of the Act was filed on 12.11.2013. The Commissioner noted that the said application was filed much after creation of the Trust on 20.10.2010 and its registration under the BPT Act, 1950 on 01.04.2011. From the records available in the office, the Commissioner further noted that the earlier application was made for simila .....

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ddition, there were issues relating to Chapel expenses as not mandated by the trust deed. Though, the predecessor Commissioner had refused to grant registration under section 12A of the Act, but he permitted the assessee to make fresh application in form No.10A, if he so desires. The Commissioner noted that the present application in form No.10A was made for availing the said opportunity. During the course of proceedings, the Commissioner asked the assessee to furnish the details of charitable a .....

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Chapel expenses. The Commissioner noted that in order to grant registration under section 12A of the Act to a Trust or Institution, the Commissioner has to be satisfied about the objects of such Trust or Institution as well as about the genuineness of the activities. The Commissioner at page 3 has reproduced the objects of the Trust for ready reference. Vide para 3.1, the Commissioner noted that the objects of the Trust were basically of three categories i.e. (1) education; (b) health and (c) r .....

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ies vis-à-vis the objects for which it was found. It was admitted by the assessee that the Trust had not carried out any activity of the nature of education and medical relief, but only claimed to have started an old age home, which falls under the category of relief of the poor. The Commissioner observed that the assessee had furnished sketchy details in this regard though the assessee was aware that his earlier application was viewed adversely for similar reasons. Hence, it was requeste .....

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was of the view that the account extracts of religious expenses, Chapel expenses and other details filed do not support the cause of the assessee. Where the assessee had failed to furnish any bills of expenditure on charitable activities, the Commissioner was of the view that running of old age home perse, could not be charitable activity, unless it was demonstrated and established for the relief of the poor. He was of the view that running of old age home was also a commercial activity these da .....

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not met with, the application was rejected. 5. Another issue raised by the Commissioner was that where the trust was created vide Trust Deed executed on 20.10.2010 and registration was granted under the BPT Act on 01.04.2011, the assessee trust should have applied for registration under section 12A of the Act within one year of creation. The application was made belatedly on 31.10.2012 which was rejected vide order passed on 30.04.2013 and where the assessee had surpluses for assessment years 20 .....

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nature of total exemption from tax under sections 11 and 12 of the Act. Accordingly, the Commissioner rejected the application of assessee for grant of registration under section 12A of the Act. 6. The assessee is in appeal against the order of Commissioner. 7. The learned Authorized Representative for the assessee pointed out that the form No.10A for grant of registration under section 12A of the Act was filed on 31.10.2012 which is placed at pages 13 and 14 of the Paper Book. As per para 2.3, .....

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he registration under section 12A of the Act. He stressed that predominantly, if the primary object was charitable, then other activities are also to be allowed. The Commissioner while granting the registration has to look into what are the objects of the trust and whether the same are genuine. He further stressed that the trust was not catering to a particular community and our attention was drawn to the copy of trust deed, placed at page 36 of the Paper Book in this regard. The learned Authori .....

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cord. The issue arising before us is with regard to grant of registration under section 12AA of the Act. Under the provisions of section 12A of the Act, it is provided that for allowing the exemption under sections 11 and 12 of the Act, the first condition is to be registered under section 12AA of the Act. In the pre -amended provisions, it was provided that an application for registration of the Trust or Institution is to be made within stipulated period and in case, it is not so filed within s .....

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it is provided that a person in receipt of income has to make an application for registration of the trust or institution on or after first day of June, 2007 in the prescribed form in a manner to the Principal Commissioner or Commissioner and such trust or institution is to be registered under section 12AA of the Act. On receipt of an application for registration of a trust or institution made under clause A or clause AA of section 12(1) of the Act, the Principal Commissioner or Commissioner sh .....

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refusing to register the trust or institution. The copy of such order is to be sent to the applicant and no order under sub-clause (ii) shall be passed unless the applicant has been given a reasonable opportunity of being heard. Under clause (2), it is provided that every order granting or refusing registration under clause (b) of sub-section (1) shall be passed before the expiry of six months from the end of the month in which the application was received under clause (a). The power of cancella .....

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it is apparent that the Commissioner is to decide an application for registration of a trust or institution and the requirement of the Act is that he has to be satisfied about the objects of trust or institution and genuineness of its activities. 10. Now, coming to the facts of the present case, the assessee trust was set up vide Trust Deed dated 20.10.2010. The objects of the trust are reproduced by the Commissioner at page 3 of its order and they were in three fields of education, health and r .....

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e home with senior citizens. The question to be addressed is whether the activities carried on by the assessee can be said to be charitable. Section 2(15) of the Act defines the charitable purposes to include education, medical relief and relief of the poor and other objects as charitable. Where the assessee is running an old age home and the same falls within category of relief of the poor, then it can be said that the objects of the trust are charitable in nature. Once the charitable activity .....

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ent case, the Commissioner noted that the trust had come into existence on 20.10.2010 and was registered under the Bombay Public Trust Act, 1950 on 01.04.2011, then the application filed by the assessee on 12.11.2013 was much after creation of the trust. In this regard, on verification of records, it was noted that earlier, the assessee had made an application for registration in form No.10A, which was rejected by the predecessor Commissioner on 30.04.2013, copy of the said order is placed at pa .....

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could not be considered for such a privilege, more so when the same was in the nature of total exemption from tax under sections 11 and 12 of the Act. The Commissioner concluded by saying that irrespective of the merit or otherwise of the other submissions made by the applicant with reference to the queries raised during the course of present proceedings, the request for grant of registration under section 12A of the Act could not be entertained unless and until the applicant correctly works out .....

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are applicable. The assessee in view of this order of Commissioner, filed another application which we have referred to dated 12.11.2013. In the second round of proceedings for grant of registration under section 12AA of the Act, the Commissioner has passed an order with reference to the activities carried on by the assessee and thereafter notes that the assessee has failed to furnish the bills of expenditure on charitable activities and also it had surpluses for assessment years 2011-12 and 201 .....

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t complied with law, then the application could not be considered for such privilege vis-à-vis the nature of total exemption from tax under sections 11 and 12 of the Act. We find no merit in the order passed by the Commissioner while granting registration under section 12AA of the Act. The limited power available with the Commissioner is to see whether the objects of the trust are charitable and the activities carried on by the trust are genuine. Admittedly, most of the trusts apply for t .....

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Court further held as under:- Learned counsel for the appellant relies upon a Division Bench judgment of Gujarat High Court reported as Director of Income Tax(Exemption) Vs. Panna Lalbhai Foundation (2013) 35 taxmann.com 104, to contend that the registration cannot be declined only because the Trust has not commenced its activities. Relying upon a Division Bench judgment of this Court in Commissioner of Income Tax-II, Chandigarh Vs. M/s Surya Educational & Charitable Trust (2013) 355 ITR 28 .....

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isting activities or the activities, which are to be taken in hand in future. If an assessee does not satisfy the test of genuineness of activities at any subsequent stage, the registration itself can be cancelled in terms of sub-section (3) of Section 12AA of the Act. Therefore, the genuineness of the activities of the appellant cannot be pre-judged only for the reason that the activities have not been undertaken. 12. In view of finding of the Commissioner that the objects of present trust are .....

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assessee is carrying on its charitable activities. The assessment proceedings or determination of income in the hands of assessee stands on a different footing and for that, provisions of the Act are there. Merely because the assessee had filed its return of income and claimed certain exemptions will not jeopardize the case of assessee as far as the grant of registration under section 12AA of the Act. The assessee having moved an application for registration, which was found to be in order and w .....

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