Case Law Details

Case Name : Shri Swaminarayan Mandir Vs Director of Income-tax (Exemption) (ITAT Ahemdabad)
Appeal Number : ITA. No. 2684/Ahd/2013
Date of Judgement/Order : 10/04/2017
Related Assessment Year :
Courts : All ITAT (3285) ITAT Ahmedabad (265)

 A perusal of sub-section (1) Section 12AA would indicate that Principal Commissioner or Commissioner on receipt of application for registration of trust or institution made under clause (a) or clause (aa) of the sub-section 1 of section 12 A shall call for such documents or information from the trust or institution as he thinks necessary in order to satisfy himself about the genuineness of the activity of the trust. In other words, the ld. Commissioner is required to conduct an inquiry for satisfying himself about the genuineness of the trust. In the present case, the assessee was not having any trust deed. So it is quite difficult for the ld. Commissioner to arrive at a firm conclusion about the objects of the trust. In case the trust deed is being written after application for grant of registration, then that deed can never be seen through by the ld. Commissioner for satisfying himself. In any case, we have to set aside the proceedings to the file of the ld. Commissioner for satisfying himself about the objects of the trust. Before us also, copy of the trust-deed with the Charity Commissioner has not been placed on record. The assessee is yet to receive a registration certificate from the Charity Commissioner. In this background, we deem it appropriate to dismiss this application at this stage being premature with a liberty to the assessee to file fresh application before the ld. Commissioner for grant of registration as and when it fulfils necessary requirements. In case the assessee has applied afresh for grant of registration, that application will be decided on merit in accordance with law without getting influenced with dismissal of the present appeal.

O R D E R

PER RAJPAL YADAV, JUDICIAL MEMBER:

Present appeal is directed at the instance of the assessee against order of the ld. Director of Income-tax (Exemptions), Ahmedabad dated 16.9.2013.

2. Sole grievance of the assessee is that the ld.DIT(Exemption) has erred in not granting registration under section 12AA of the Income Tax Act, 1961.

3. Brief facts of the case are that the assessee has filed an application in form No.10A under Rule 11 AA of the Act on 30.3.2013 for granting registration under section 12A of the Act. In order to give logical end to the proceedings, a letter dated 18.6.2013 was issued to the assessee for furnishing the following documents:

“(i) Copy of PAN Card of Trustees with details of Circle/ Ward where they are filing Return of Income.

(ii) Copy of Bank Account since inception of Trust or last three years.

(iii) Certified Copy of Trust deed /M.O.A, if it is not in English then certified English translation also

(iv) Please give details of premises of Trust whether premises owned by the Trust or Rented.

(v) Please submit List of main objects of the Trust.

(vi) Please give details as to how the Trust generates funds for achieving the object of Trust,

(vii) Please submit evidences that the corpus amount has been transferred to the Trust/ Institution,

(viii) Please specify that the Trust is in receipt of amounts mentioned in first proviso to section 2 (15) of the IT. Act.

(ix) Please submit documentary evidences of actual charitable activities carried out by the Trust from the date of inception of Trust till date.

(x) Please specify the clause in Trust deed regarding revocability or irrevocability,

(xi) Copy of Certificate of Undertaking

(xii) Copy of Certificate u/s. 1.3(1) (c) of the I.T. Act

(xiii) Declaration u/s. 11(5) of the I.T. Act

(xiv) Please specify the clause in the Trust deed which says that beneficiaries would be without discrimination on the basis of caste, creed, religion or sex.”

4. It appears that the assessee-trust was not having a trust deed. It was pointed out to the ld. DIT (Exemption) that trust came into existence on 29.5.1952 and it had applied for registration certificate with the Charity Commissioner on 24.10.1952, but it failed to submit copy of any trust deed. In-spite of repeated opportunity given to the assessee- trust, it could not comply with the requirement called for by the ld. DIT (Exemption). Ultimately, application for grant of registration was rejected by the ld. DIT. The relevant part of the order reads as under:

“6. The applicant’s submission is considered but not accepted. From the submission dated 29/08/2013 it is clear that the trust discriminates between men and women as it has two separate temples, one for men and other for women. Therefore, registration u/s 12 AA cannot be given to the trust.

7. Further, as per I.T. Rules in form 10A clause 5(1) says that certified copy of the instrument under which the trust was created/established together with the copy thereof must be enclosed with the application for registration, evidencing the creation of the trust or establishment of the trust. There must be written instrument by way of which the trust or institution is created/ established from which its objects can be seen. In the absence of the deed or document it cannot be known what were the objects of the trust originally. Whether, the objects have since changed. If the trust changes its objects in future again it would not be verifiable. In the absence of deed, it cannot be known as to what will happen to assets upon its dissolution. The trust is already differentiating between men and women as stated above. In view of these facts the application filed inform No. 10 A for registration u/s. 12 AA is rejected.”

5. The ld. counsel for the assessee at the very outset submitted that the assessee has formulated a trust-deed. It has applied for registration with Charity Commissioner. Copy of such application has been placed on page no.63 of the paper book. The application for registration with Charity Commissioner is stated to be still pending. The ld. counsel for the assessee prayed for some more time for filing registered copy of the trust-deed in order to demonstrate genuineness of the trust.

6. With the assistance of the ld. representatives, we have gone through the record carefully. Section 12AA provides for mechanism for grant of registration under section 12AA of the Income Tax Act. The relevant part of the section reads as under:

Section 12 AA

12AA. (1) The [Principal Commissioner or] Commissioner, on receipt of an application for registration of a trust or institution made under clause (a) [or clause (aa) of sub-section (1)] of section 12 A, shall—

(a) call for such documents or information from the trust or institution as he thinks necessary in order to satisfy himself about the genuineness of activities of the trust or institution and may also make such inquiries as he may deem necessary in this behalf; and

(b) after satisfying himself about the objects of the trust or institution and the genuineness of its activities, he—

(i) shall pass an order in writing registering the trust or institution;

(ii) shall, if he is not so satisfied, pass an order in writing refusing to register the trust or institution, and a copy of such order shall be sent to the applicant :

Provided that no order under sub-clause (ii) shall be passed unless the applicant has been given a reasonable opportunity of being heard.

[(1A) All applications, pending before the [Principal Chief Commissioner or] Chief Commissioner on which no order has been passed under clause (b) of sub-section (1) before the 1st day of June, 1999, shall stand transferred on that day to the [Principal Commissioner or] Commissioner and the [Principal Commissioner or] Commissioner may proceed with such applications under that subsection from the stage at which they were on that day.]

(2) 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) 4[or clause (aa) of sub-section (1)] of section 12 A.]

[(3) Where a trust or an institution has been granted registration under clause (b) of sub-section (1) [or has obtained registration at any time under section 12 A [as it stood before its amendment by the Finance (No. 2) Act, 1996 (33 of 1996)]] and subsequently the [Principal Commissioner or] Commissioner is satisfied that the activities of such trust or institution are not genuine or are not being carried out in accordance with the objects of the trust or institution, as the case may be, he shall pass an order in writing cancelling the registration of such trust or institution:

Provided that no order under this sub-section shall be passed unless such trust or institution has been given a reasonable opportunity of being heard.]

[(4) Without prejudice to the provisions of sub-section (3), where a trust or an institution has been granted registration under clause (b) of sub-section (1) or has obtained registration at any time under section 12 A [as it stood before its amendment by the Finance (No. 2) Act, 1996 (33 of 1996)] and subsequently it is noticed that the activities of the trust or the institution are being carried out in a manner that the provisions of sections 11 and 12 do not apply to exclude either whole or any part of the income of such trust or institution due to operation of sub-section (1) of section 13, then, the Principal Commissioner or the Commissioner may by an order in writing cancel the registration of such trust or institution:

Provided that the registration shall not be cancelled under this subsection, if the trust or institution proves that there was a reasonable cause for the activities to be carried out in the said manner.]

7. A perusal of sub-section (1) would indicate that Principal Commissioner or Commissioner on receipt of application for registration of trust or institution made under clause (a) or clause (aa) of the sub-section 1 of section 12 A shall call for such documents or information from the trust or institution as he thinks necessary in order to satisfy himself about the genuineness of the activity of the trust. In other words, the ld. Commissioner is required to conduct an inquiry for satisfying himself about the genuineness of the trust. In the present case, the assessee was not having any trust deed. So it is quite difficult for the ld. Commissioner to arrive at a firm conclusion about the objects of the trust. In case the trust deed is being written after application for grant of registration, then that deed can never be seen through by the ld. Commissioner for satisfying himself. In any case, we have to set aside the proceedings to the file of the ld. Commissioner for satisfying himself about the objects of the trust. Before us also, copy of the trust-deed with the Charity Commissioner has not been placed on record. The assessee is yet to receive a registration certificate from the Charity Commissioner. In this background, we deem it appropriate to dismiss this application at this stage being premature with a liberty to the assessee to file fresh application before the ld. Commissioner for grant of registration as and when it fulfils necessary requirements. In case the assessee has applied afresh for grant of registration, that application will be decided on merit in accordance with law without getting influenced with dismissal of the present appeal.

The observations made by us will not impair or injure the case of the AO and will not cause any prejudice to the defence/ explanation of the assessee.

8. In the result, appeal of the assessee is dismissed.

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Category : Income Tax (24348)
Type : Judiciary (9485)
Tags : ITAT Judgments (3914) Section 12AA (71) Trust (72) Trust Deed (8)

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