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Nanak Chand Jain Charitable Trust Versus CIT (E) , Chandigarh

2018 (2) TMI 874 - ITAT DELHI

Eligibility to registration of the trust u/s 12AA - denial of claim stating that the trust is formed merely for complying the CSR requirements of the settler - proof of charitable activity - Held that:- A profit making Company can grant certain donation to the charitable trust, how can the activities of the trust become not charitable with this act. The fact that the CSR expenditure are not allowable expenditure under section 37 of the Act is relevant only for the taxability of the company incur .....

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1 r.w.s 13 which falls in the domain of the AO. Once the CIT has not doubted about the genuineness of the activities of the assessee nor doubted its charitable object, his powers under section 12AA end. We direct the CIT to grant the registration u/s 12AA and also the approval u/s 80G(5)(vi) - Decided in favour of assessee. - I.T.A .No. 6527/DEL/2016 And I.T.A .No. 6528/DEL/2016 - Dated:- 9-2-2018 - SHRI N. K. SAINI, ACCOUNTANT MEMBER AND MS SUCHITRA KAMBLE, JUDICIAL MEMBER For The Appellant : S .....

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ns stated which is supported by the affidavit. The reasons given by the assessee for not filing the appeal in time appears to be genuine. Therefore, the delay of 21 days for filing appeal is condoned. 3. The grounds of appeal are as under:- ITA No. 6527/Del/2016 1. That the order of Commissioner of Income Tax (Exemptions), Chandigarh is against law and facts. 2. That on the facts and circumstances of the case of the Appellant, the order of the Commissioner of Income Tax (Exemptions) is not justi .....

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of Income Tax (Exemptions) is not justified in denying registration of the trust u/s 12AA of the Act stating that the trust is formed merely for complying the CSR requirements of the settler company ignoring the fact that the Appellant is engaged in carrying out the charitable activity as per the object of the trust. 4. The assessee is a trust, registered vide Deed dated 27/03/15. The trust was started by the settler M/s. Veer Overseas Ltd. a limited company who in order to carry out its duties .....

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sub section (1) or (2) of Section 469 of the Companies Act 2013 shall also be perused. An application for grant of registration u/s 12AA was filed before the CIT (exemption) Chandigarh, as on 28/03/2016. An order rejecting the application for grant of registration under Section 12AA was passed on 27/09/2016. The registration under Section 12AA was rejected on the ground that the assessee trust has been formed by the settler M/s Veer Overseas Ltd. for the purpose of carrying out its CSR activitie .....

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enable to public charity (iv) that no activity in sync with the requirements of the Companies Act has taken place in the trust so far (v) that the activities so far further show that the trust has relinquished its function, as the primary implementation agency and undertaking its own programmes to impact targeted beneficiaries, by transferring its funds to other societies (vi) it also militates against the legal principle that social enterprises cannot be a direct recipient of money from a corpo .....

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ity (CSR) and for that the trust is formed by the assessee company and Income Tax Act also recognize the said Section of the Companies Act. The Ld. AR submits that the objects of the trust are public charity only. Therefore, the Commissioner should have allowed the registration u/s 12AA and application u/s 80G(5)(vi) of the Income Tax Act. The Ld. AR submitted once the CIT has not doubted about the genuineness of the activities of the assessee nor doubted its charitable object, his/her powers un .....

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8 TTJ (Chd) (UO) 1; v. Reliable Educational Alliance Society v. CIT' [2009] 126 TTJ 407 (Delhi); and vi Dream Land Educational Trust vs. CIT , (2007) 109 TTJ (Asr) 850. The Ld. AR further submitted that on the issue of donation given to other charitable societies and other activities are the matter to be taken into consideration by the Assessing Officer in assessment proceedings while granting exemption u/s 11 of the Act and not that by Commissioner in capacity of Section 12AA of the Act. Th .....

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andha Singh Education Trust vs. CIT (2011) 138 TTJ 1 (Chd) viii. Reliable Educational Alliance Society vs. CIT (2009) 126 TTJ 407 (Del) ix. Dream Land Educational Trust vs. CIT (2007) 109 TTJ 850 (Asr) 8. The Ld. DR submits that the Commissioner of Income Tax (Exemptions) rightly rejected the application of the assessee company as the object of the trust were not charitable in nature. The Ld. DR relied upon the Kerala High Court decision in case of Self Employer Service Society Vs. CIT(A) 247 IT .....

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denied. Vide notifications dated 27/02/2014 the ministry of Corporate affairs in the rules framed for the purpose of CSR has implicitly provided for forming the dedicated trust under sub rule 2 to rule 4. It has been stated as under: (2) The board of a company may decide to undertake it is CSR activities provide by the CSR committee, through the registered trust or a registered society or a company established by the company or its holding or subsidiary or associate under section 8 of the Act or .....

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on, promoting gender equality etc. are also provided. These activities are in the nature of public charity. Further, the CSR Activities itself are in the nature of public charitable activities. As regards the reasons (iv) given by the CIT (exemption), no activities in sync with the requirement of the Companies Act has taken place in the trust so far. For the purpose of granting registration under Section 12AA only two factors are to be seen by the CIT (E) which are the objects of the trust being .....

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e considered as application of income for the purpose of exemption under Section 11 of the Income Tax Act, 1961. At the time of granting the registration under Section 12AA of the Income Tax Act, 1961, the CIT (exemption) need not go beyond two parameters that the object being charitable in nature and activities being genuine. All other activities are the matters to be taken care of by the Assessing Officer at the time of assessment for granted exemption under section 11 of the Act. Reasons (vi) .....

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