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M/s Prabhat (A House of Hope for Special Children) Versus CIT (Exemptions) , Chandigarh, And Vice-Versa

Registration under section 12AA denied - Held that:- In the present case, we observe that the registration under section 12AA of the Act has been denied to the assessee only on some extraneous grounds, which have no bearing on granting of registration. Nowhere in his order the CIT(Exemption) has made any adverse remarks as to the objects of the trust being not charitable or the activities of the Trust being not genuine. We have perused the aims and objects of the Trust as laid down in its Trust .....

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T(Exemption) are with regard to which he cannot do while considering the approval for section 80G. These are the matters to be consider by the Assessing Officer at the time of granting exemption under section 11 of the Act. In view of the above, we directed the CIT(E) to grant assessee the approval under section 80G of the Act. - ITA No. 687/Chd/2015 And ITA No. 688/Chd/2015 - Dated:- 9-2-2016 - SHRI H.L.KARWA, VICE PRESIDENT AND MS. RANO JAIN, ACCOUNTANT MEMBER For The Appellant : S/Sh.B.M. Mon .....

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section 12AA of the Act. The CIT(Exemption) denied assessee the registration under section 12AA of the Act on the ground that on perusal of income & expenditure account for the year ended 31.3.2014, the gross receipts of the assessee were 27,163/- out of which an expenditure of ₹ 22,189/- were incurred, which were general in nature. No major expenditure was incurred by the assessee society on account of charity. The learned Commissioner of Income Tax was of the view that most of the e .....

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rded & Mentally ill individuals' which is undoubtedly 'charitable', are duly fulfilled and as such the registration as claimed should have been allowed particularly when the activities are also genuine. 2. That the learned CIT (Exemptions) erred in holding that the no major expenses have been incurred by the applicant society on account of charity without appreciating the fact that expenses incurred on advertisement and printing and stationery are incurred towards organizing exhi .....

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st proving beyond doubt the existence, objects and activities of the appellant-trust. 4. For these and other reasons, that may be urged at the time of hearing, the appellant prays for relief. 4. Before us, the Ld. Counsel for the assessee submitted that the CIT(Exemption) has not drawn any adverse inference against the objects of the trust or that on the genuineness of activities carried on by the trust. The only reason given by the CIT(Exemption) in his order is that the assessee has not incurr .....

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of the Hon'ble Punjab & Haryana High Court in the case of CIT Vs. Shri Guru Gorakhnath Charitable Educational Society (2015), 233 Taxman 189 (P&H). 6. We have heard the learned representatives of both the parties, perused the findings of the authorities below and considered the material available on record. The undisputed fact is that the registration under section 12AA of the Act was refused to the assessee by the CIT(Exemption)by writing a few lines in para 4 of his order which re .....

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count of charity. The most of the expenses debited to income & expenditure account are not covered within the meaning of Section 2(15) of the Income Tax Act. Section 2(15) of the Income-tax reads as under: "charitable purpose" includes relief of the poor, education, medical relief, preservation of environment including watersheds, forests and wildlife and preservation of monuments or places or objects of artistic or historic interest and the advancement of any other object of gener .....

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. The objection of the CIT(Exemption) is that the assessee has not spent any major amount for charitable purpose. In this regard, we also observe that the assessee society was started only on 22nd March, 2013 and during the intervening period, it has received only ₹ 26,300/- as donation. Though this amount has not been expanded for charitable purposes, the expenditure incurred out of this are all expenses necessary to run the society. With this miniscule amount received as donations, what .....

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nd the same was rejected on 26.11.2010. The application for registration is required to be made within one year of the creation of the Trust and there is no requirement that the Trust or the institution should have started all its envisaged activities in the first year itself. Under Section 12AA of the Act satisfaction regarding the genuineness of the activities of the Trust is to be seen and the stage for application of income is yet to arrive i.e. when such Trust or Institution files its retur .....

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of the CIT(Exemption) while granting or refusing registration under section 12AA of the Act. The two things which the CIT(Exemption) has to look after receiving an application for registration under section 12AA of the Act are whether the objects of the Trust are charitable in nature and whether the activities carried on by the assessee are genuine. This has been provided in the section 12AA of the Act itself. As per section 12AA of the Act, the commissioner has to satisfy himself about the obj .....

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the income of Trust or its application is under the jurisdiction of the Assessing Officer while granting exemption under section 11 of the Act on year to year basis, in the assessment proceedings. 10. The reliance placed by the learned counsel of the assessee on the judgement of Punjab & Haryana High Court in the case of Surya Educational and Charitable Trust (supra) is not out of place, where the High Court held on under: Therefore, the object of s. 12AA of the Act, is to examine the genui .....

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ection 12AA of the Act has been denied to the assessee only on some extraneous grounds, which have no bearing on granting of registration. Nowhere in his order the CIT(Exemption) has made any adverse remarks as to the objects of the trust being not charitable or the activities of the Trust being not genuine. We have perused the aims and objects of the Trust as laid down in its Trust deed, filed in the Paper Book, which are as follows: Aims & Objectives of the Society I. To work for the welfa .....

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individuals & initiate their treatment/rehabilitation process. V. To guide & assist the families of Mentally Retarded Individuals in obtaining Legal Guardian Certificates through the concerned local level Committees. VI. VI. To guide & assist the families caretakers of Mentally Retarded & Mentally ill Individuals in obtaining the Disability Certificate of Mentally Retardation/Mental illness from the competent Medical Authorities. VII. To work for inclusion of Mental illness in Na .....

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trust are charitable in nature and no adverse remarks as to the genuineness of any of these activities have been made by the CIT(E). 13. The judgment in the case of Guru Gorakhnath (supra) relied on by the learned D.R. is not applicable to the present case, as in that case there were ample evidences to show that the assessee society was not carrying out any genuine charitable activity. 14. In view of the above, we hold that the objects of the trust are charitable in nature and activities are ge .....

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approval only as per the provisions of section 80G of the Act, which he has not done in this case. The jurisdiction of CIT, while granting approval under section 80G of the Act has been summarized in a recent order of Chandigarh Bench of ITAT in the case of Shri Krishna Kirpa Gaushala Samiti, Pehowa at page 9, which reads as under: 9. On perusal of the above rules, it is quite clear that while granting the approval under section 80G, the only provision as per these rules is that the rejection ca .....

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