TMI Blog2012 (2) TMI 579X X X X Extracts X X X X X X X X Extracts X X X X ..... ds/2011 - - - Dated:- 9-2-2012 - Shri Abraham P. George, And Shri George Mathan For the Appellant : Shri R. Padmanabhan, CA For the Respondent : Shri K.E.B. Rengarajan, ORDER PER ABRAHAM P. GEORGE, ACCOUNTANT MEMBER : In this appeal filed by the assessee, it assails an order dated 26.11.2010 of Director of Income Tax (Exemptions), Chennai, denying it registration under Section 12AA and approval under Section 80G of Income-tax Act, 1961 (in short 'the Act'). 2. Short facts apropos are that assessee had filed applications on 3.5.2010 for registration under Section 12AA and for approval under Section 80G of the Act. Certain clarifications were required, which were furnished. After verifying the records produced by the assessee, DIT(E) was of the opinion that the Trust had not started any significant activity. Therefore, according to him, genuineness of the activities could not be verified and conditions required for registration under Section 12AA of the Act were not satisfied. He, therefore, rejected both the applications for registration under Section 12AA as well as for approval under Section 80G of the Act. 3. Now before us, learned A.R. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s for approval under Section 80G of the Act. 7. In fact, the co-ordinate Bench of this Tribunal in a decision dated 19.10.2011 to which one of us was a party (M/s M.L. Meyyappan Charitable Trust v. DIT(E) in I.T.A. Nos. 2073 2074/Mds/2010), on a similar fact situation, held as under at paras 7 to 23 of the order:- 7. After cogitating the rival stands, we find that it is very important and subtle issue which needs careful adjudication. There is no denial of the legal position that the DIT(E) has to satisfy himself regarding the charitable nature of the objects, and also to judge the genuineness of the activities of the Trust if these are being carried on in furtherance of its objects or not. For that purpose, he may call for such documents/information from the Trust or institution, as he thinks necessary. In order to satisfy himself about the genuineness of the activities of the Trust (or institution) he may also make such enquiries as he may deem necessary in this regard. He has to satisfy himself about the objects of the Trust or institution and the genuineness of its activities and only thereafter he has to take his decision either to grant or refuse registration. In suc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... another Coordinate Bench has taken a similar view. Para 5 of this order is relevant and is being extracted herein below in toto: After hearing both sides, we are of the considered opinion that in so far as the main objects of the trust are concerned, these are definitely charitable in nature. The ld. CIT has even not disputed that fact. As far as alleged activity of collecting fees from the parents of the students and thereafter donating the same to run a school which was in distress, cannot be treated as an uncharitable activity. The ld. CIT has stretched the truthful submissions put forth on behalf of the trust too far to conclude that the trust was not pursuing charitable activities. The legal position with regard to the detrimant factors which are relevant at the stage of granting or refusing registration u/s 12AA is by and large settled that at this stage only the objects of the trust are to be looked into and not the application of funds. The ld. CIT has not doubted the objects of the trust and only on the basis of application of the funds of the trust he has come to the conclusion that the activities carried on by the trust are not genuinely charitable. We differ fro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Bench, in which one of us [Hon'ble AM] was a party while deciding the case of M/s Rehoboth Educational Charitable Trust vs ITO in I.T.A.Nos.2037 2038/Mds/2010, vide order dated 9.6.2011. Paragraph 5 of this order is relevant and is being extracted herein below: We have perused the orders and heard the rival contentions. Ld. CIT had refused granting registration to the assessee-Trust under Section 12AA of the Act and approval sought under Section 80G of the Act, holding that an application earlier filed by the assessee was rejected and the new application filed by the assessee did not rectify the deficiencies mentioned in the earlier order refusing the registration. No doubt, an assessee has to establish its genuineness and a CIT vide sub-section (1) of Section 12AA is empowered to call for documents and information from Trust so as to prove the genuineness of its activities. Nevertheless, we find that assessee s applications were rejected for a sole reason that it could not establish with documentary evidence its charitable activities. There is no finding by the CIT that objects of the assessee-Trust were noncharitable in nature. We are, therefore, of the opinion that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n record to show that the fund or income of the trust was utilized for personal purposes of a settler or trustee or any other private person. In respect of his observation regarding non utilization of fund for any purpose, in our considered opinion, this is a matter which is to be looked into by the Assessing Officer at the time of making assessment and if the Assessing Officer finds that any amount less than 85% of the income of the trust has been applied for charitable purposes, then the Assessing Officer has to assess the same as per law and for that purpose registration u/s 12AA cannot be denied to the assessee. In view of the above discussion, in our considered opinion, the order of the ld. CIT(A) is not sustainable. We further observe that the assessee trust is not filed before us copy of trust deed, activity report and accounts of the trust. In the absence of complete material before us, we have no option but to restore the matter back to the file of the ld. CIT for adjudicating afresh in light of the discussion made hereinbefore after allowing proper opportunity of hearing to the assessee as per law. 13. From the above finding, it becomes manifest that although the CI ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the norms specified in section 12AA. In this view of the matter, we direct DIT(E) to grant registration under section 12AA and approval under section 80G of the Act to the assessee-Trust. 15. The Co-ordinate Bench has clearly held that the decision of Hon'ble Madras High Court rendered in the case of New Life in Christ Evangelistic Association vs CIT Another, (supra), in which it has been held that at the stage of grant of registration u/s 12A of the Act, the only enquiry which can possibly be made would be whether the Society has actually made an application in time and whether the accounts of the Society are maintained in the manner as suggested by this section. Beyond that the scope of enquiry would not go. The Bench has further held that even though decision of Hon'ble Madras High Court was rendered u/s 12A when procedural section 12AA was not available in the statute book yet the ratio decidendi of Hon'ble Madras High Court(supra) would equally apply even after insertion of section 12AA because it is only a procedural section. 16. Another decision rendered by the Co-ordinate Bench is in the case of Madurayelerukkum Virudhunagar Hindu Nadargal Maruthuvam ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e plethora of similar decisions which have been taken by Co-ordinate Benches not only in Chennai but throughout the country. 19. Now the question arises as to whether there is any decision available on this issue of any High Court which may have been rendered after the incorporation of the provision of section 12AA on the statute book. The answer to this question is YES. There is one decision of Hon'ble Karnataka High Court rendered in the case of Director of income Tax(Exemptions) vs Meenakshi Amma Endowment Trust, (2011) 50 DTR (Kar) 243, which is directly on this issue. We may mention that a decision of Hon'ble Jurisdictional High Court is also available which applies, mutatis mutandis, even after incorporation of procedural provision of section 12AA and the Coordinate Benches have followed the same as discussed above. The Hon'ble Karnataka High Court, while deciding the above case has very succinctly examined this issue in the following words: The trust was formed on 23rd Jan., 2008, and within a period of nine months they had filed an application under s. 12A for issuance of the registration claiming exemption. The fact that the corpus of the trust is nothi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Court, the Trust was formed on 23.1.2008 and it sought registration u/s 12A of the Act on 31.10.2008 i.e after 8 months approximately, but the DIT(E) refused to grant registration on the ground that the assessee had not yet commenced any activities. The Hon'ble High Court, after discussing various angles of the issue, has finally decided that in such a situation the objects of the Trust have to be taken into consideration by the authority and activities of the Trust have to be considered if such registration is sought long after formation of the Trust or after the expiry of the earlier registration. 21. The above decision squarely applies to the facts of the given case. In this case, the Trust was constituted by a Trust-deed on 27.11.2009 and it filed application in Form 10A on 8.2.2010, for registration u/s 12AA. The application for registration in the given case was filed only after around two months whereas in the decision rendered by the Hon'ble Karnataka High Court, application for registration was filed after eight months of formation of the Trust. In that case also the registration was refused because the assessee had not started its charitable activities althoug ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rporated in section 12AA vide which if after granting registration it is found by the ld. CIT that the activities of the Trust are not carried out in furtherance of its charitable objects, he can cancel the registration granted to the Trust. So, when these provisions are read in conjunction, and a harmonious interpretation is given to them, we find that the view taken by the Coordinate Benches in numerous successive cases, some of which we have mentioned herein above, is very logical, and the same we are bound to follow. 23. Accordingly, we cannot sustain the order of ld. DIT(E) in refusing to grant registration and consequent refusal to grant approval u/s 80G of the Act. No fruitful purpose will be served by restoring the issue to the file of ld. DIT(E). Consequently, we set aside the finding of the DIT(E) and direct him to grant registration u/s 12AA and also to grant approval u/s 80G to the assessee-Trust. 8. We, therefore, have no hesitation to quash the order of ld. DIT(E) and direct him to grant the registration and approval sought by the assessee. 9. In the result, appeal filed by the assessee stands allowed. The order was pronounced in the Court on 9th February ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
