Case Law Details
Evangelical Missionary Society Vs CIT (Exemptions) (ITAT Cuttack)
Sec. 12A of the Income Tax Act lays down the provisions of Sec,11 & 12 shall not apply in relation to the income of any trust or institution unless the condition stated therein are fulfilled. The first condition for allowing the exemption u/s.11 is that the person who is in receipt of the income must have made application for registration of the trust/institution in the prescribed form as well as in the prescribed manner to the Commissioner and such trust/institution is registered u/s 12AA. Section 12AA empowers the CIT to call for such documents or information from the trust/institution as he thinks necessary in order to satisfy himself about the genuineness of the activities of the trust/institution and for that he has to make such inquiries as he may think necessary. We noted that the assessee, before the CIT, as is apparent from the order passed u/s.12AA, submitted the document that the trust/institution was established on 21.1.1926 and the application for registration u/s.12AA was made on 20.3.2013. Before CIT the assessee submitted constitution as amended on 30.4.2012. The assessee submitted before us the Constitution marked as ‘Recent Revised’. The constitution before us nowhere mentions when it has been revised, whether it is the same which has been filed before the CIT. Objects in the Constitution filed before us appear to be different from the objects as has been incorporated by CIT in his order. In the Constitution submitted before us, we noted that the Constitution does not talk of Indian Income tax act but only recognizes the Australian Income tax Act, 1936, in respect of winding up and amalgamation also, the Assessee society is governed by those provisions. The foremost question before us is whether a society or trust registered outside India can be granted registration u/s.12AA if the trust/institution is not registered in India and is not governed by the Indian Law. In our opinion, the revenue will not be able to satisfy itself about the genuineness of the activities of trust/institution as in that case it will always take shelter of the Act and Rules by which it is governed. Therefore, for getting registration u/s.12AA, the Trust has to be governed by the Indian Income tax Act and the necessary provision must be in the bye-laws. The Constitution, as submitted before us, even does not contain any certificate of registration. Even the name and address of the office bearers are not in existence. If the identity of trust/institution cannot be established, the genuineness of the activities of such trust/institution, in our opinion, cannot be established. The assessee claims that it is created for charitable purposes i.e. advancement of any other objects of general public utility. We noted that in view of the proviso to Sec, 2(15), which was inserted w.e.f. 1.4.2009, the assessee cannot be said to have been engaged in charitable purposes if the assessee is involved in carrying on any activity in the nature of trade, commerce or business or any activity of running any service in relation to any trade, commerce or business. From the income and expenditure account, a copy of which was filed before us, we noted that the assessee has income from sale of literature as well as sale of agricultural product. These income clearly show that the activities of the assessee are in the nature of trade, commerce or business. The words used in proviso to Sec.2(15) are äny activity in the nature of trade, commerce or business”. This denotes that the assessee need not actually be engaged in trade, commerce or business but the activities are such which can be in the nature of trade, commerce or business. The words activity in the nature, in our opinion, has been used by the-legislature as the legislature is fully aware that for carrying out trade, commerce or business there should be a profit motive, A trust or society which is created for charitable purposes does not have profit motive in carrying out its activities. Therefore, wherever the activities are of the nature of trade, commerce or business, it cannot be said that the trust/institution is engaged in charitable purposes. As the assessee has income from sale of literature as well as sale of agricultural product, the aforesaid discussion proves, that the activities of the trust/institution are not genuine. Even the assessee could not prove the genuineness of the trust/institution. We, therefore, do not find any illegality or infirmity in the order of the CIT, as in our opinion, any trust/institution seeking registration u/s.12AA has to be governed by the Indian Income tax Act. We, accordingly, dismiss the appeal filed by the assessee.
FULL TEXT OF THE ITAT JUDGEMENT
This is an appeal filed by the assessee against the order of the CIT(E), Hyderabad u/s.12A(a) of the Income Tax Act, 1961.
2. The facts in brief are that the assessee is a missionary society conducted its operation in the district of Mayurbhanj. It had filed application filed under section 12AA and 80G of the Act for grant of registration, which was rejected. Thereafter, pursuant to the direction of Hon’ble Jurisdictional High Court, the ld CIT (Exemptions) took up the matter for grant of registration and finally rejected the same. Hence, the assessee trust has filed appeal before the Tribunal.
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