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TMI Blog2023 (9) TMI 1607X X X X Extracts X X X X X X X X Extracts X X X X ..... ty Policy) Rules, 2014 specifically provides that Board shall ensure that the CSR activities are undertaken by the company itself or through a Registered Public Trust or Society established by the company either singly or along with any other company; (ii) That the objects and purpose for carrying on CSR activities under schedule VII read with section 135 of the Companies Act and for Public Charitable purposes are similar and analogous to each other and there is no adverse findings with regard to same in the impugned order of refusing registration/granting approval. 2. That neither the company have claimed such contributions made to the impugned Trust as Business expenditure nor even otherwise was eligible for deduction in respect of such contribution/s for CSR activities/Public Charitable purposes and the impugned Trust have submitted its duly audited Financial Statement for the year ended 31.03.2021 and 31.03.2022 and also details of such expenditure incurred upto 31.12.2022, duly supported by Bills/vouchers/supporting documents evidencing amount spent/incurred for such specified CSR activities / Public Charitable purposes and no illegality/defects have been raised/pointed ou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rting documents evidence amounts spent/incurred and no defects, whatsoever have been raised/pointed out in the impugned order denying registration/approval u/s 80G of the Income Tax Act. 3. That the assessee Trust craves to add, modify, delete any ground/s of Appeal during the course of Appeal proceedings." 4. The appellant assessee has filed an application in Form No. 10B on 30.09.2022 under sub clause (iii) of section (ac) of sub-section 12A of the Income Tax Act, 1961 for seeking registration u/s 12AB of the Act for the trust claimed to be created on 26.02.2020 by M/s Puri Oil Mills Ltd., a Company incorporated under the Companies Act, 1956, having its registered office at 302 Jyoti Sikhar Building, 8 Distt. Centre, Janak Puri, New Delhi and its factory situated at Gandhi Road, Moga, through Mrs. Indu Puri, Chairperson of the Company. The trust was created to carry on and execute the CSR activities of M/s Puri Oil Mills Ltd. as per Schedule VII of the Companies Act, 2013. The ld. CIT(E), Chandigarh has stated that the provision of the Act necessitates examination of two basic conditions of grant of registration u/s 12AB that the objects of the society in satisfaction of the C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CSR activities of M/s Puri Oil Mills Ltd., defined under Schedule VII read with section 135 of the Companies Act, 2013 and public and charitable purposes and income shall be applied for the same and accumulated in India wholly for CSR Activities, public & charitable purposes. 6.2 It is pertinent to mention here the trust deed of the applicant trust was declared on 26.02.2020 by M/s Puri Oil Mills Ltd., a Company incorporated under the Companies Act, 1956, having its registered office at 302 Jyoti Sikhar Building, 8 Distt Centre, Janak Pun New Delhi and its factory situated at Gandhi Road, Moga, through Mrs. Indu Puri, Chairperson of the Company. As per the information available on the portal of Ministry of Corporate Affairs, Gol, the trustees of the applicant trust viz. Smt Indu Puri, Smt. Shalini Puri and Sh Vivek Puri are the Directors of the company M/s Puri Oil Mills Ltd. This makes the M/s Puri Oil Mills Ltd. closely linked to the applicant trust. 6.3 From the above it is clear that the objects narrated regarding other charitable activities being claimed are ostensible addendum to the main activity which is proposed to conduct CSR activities of M/s Puri Oil Mills Ltd. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ny in its normal course of business. 8.4 The amount spent by a Company on CSR activities cannot be claimed as business expenditure. The Finance Act, 2014 provides that any expenditure incurred by an assessee on the activities relating to Corporate Social Responsibility referred to in section 135 of the Companies Act, 2013 shall not be deemed to be an expenditure incurred by the assessee for the purposes of the business or profession. 8.5 The companies have been mandated to spend 2% of the Net Profit on social causes through projects or programs relating to activities specified in Schedule VII of the Companies Act, 2013. It is also to be borne in mind that the corporates, as a group, had waged a sustained campaign at the time of inclusion of CSR provisions in the enactment of 2013 to elicit two concessions from the government i.e. allow tax exemption on expenditure incurred as a part of CSR and also allow them a leeway to have a control over the way their contributions are spent by the Government. 8.6 Even in the case of captive trusts it has been mandated that functions envisaged to be covered by CSR shall be undertaken by the primary implementation agency and undertaking its ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the application filed by the applicant for registration u/s 12AB of the Act is hereby rejected, which rejection and consequent lack of registration will apply from this F.Y. 2022-23 onwards and also supersede any registration granted u/s 12AB or 12AA of the Act by any authority at any earlier time. 6. The Ld. AR submitted that the worthy CIT (Exemptions), was unjustified in rejecting the grant/approval of Registration of Trust u/s 12AB of the Income Tax Act, with the objects for carrying on CSR activities and for Public Charitable purposes, that he failed to consider and appreciate, the merits on facts in right perspective that CSR provisions for Public Charitable objects/purposes u/s 135 of the Companies Act, read with Rule 4 of the Companies (Corporate Social Responsibility Policy) Rules, 2014 specifically provides that Board shall ensure that the CSR activities are undertaken by the company itself or through a Registered Public Trust or Society established by the company either singly or along with any other company and that the objects and purpose for carrying on CSR activities under schedule VII read with section 135 of the Companies Act and for Public Charitable purposes are ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Act, and discussion about the manner of activities being carried out by the company and whenever contributions made to the impugned Trust were claimed as Business expenditure or even otherwise was not eligible for deduction in respect of such contribution/s for CSR activities/Public Charitable purposes in spite of the facts that the Trust claimed to have submitted its duly audited Financial Statement for the year ended 31.03.2021 and 31.03.2022 and also details of such expenditure incurred upto 31.12.2022, duly supported by Bills/vouchers/supporting documents evidencing amount spent/incurred for such specified CSR activities / Public Charitable purposes. 9. It is seen that in the present cases the impugned orders of the the CIT (Exemptions) are non-speaking and without discussion in refusal to grant Registration u/s 12AB and approval u/s 80G of the Income Tax Act because, he has not addressed the objectives and activities of the Trust, in respect of the appellant, being ongoing entity for three financial years. Further, the CIT(E) order of rejection of the applications in arbitrary manner for the reason that he has not addressed the submission of appellant that the composition o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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