Prem Prakash Mandal Sewa Trust Vs ITO (ITAT Raipur)
In a ruling addressing the eligibility for tax exemption for a charitable trust, the Income Tax Appellate Tribunal (ITAT), Raipur bench, has allowed appeals filed by Prem Prakash Mandal Sewa Trust for Assessment Years 2008-09 and 2011-12. The tribunal’s decision centred on the interpretation and application of Section 11 of the Income Tax Act, 1961, concerning income from property held for charitable or religious purposes, and the crucial requirement of registration under Section 12A/12AA of the Act.
The case arose after the Assessing Officer (AO) denied the trust’s claim for exemption under Section 11 for the aforementioned assessment years. The primary reason for the denial was the absence of registration under Section 12A for the relevant periods. The assessee trust, engaged in social and religious activities, had filed its returns declaring a ‘Nil’ income, but these were subsequently reopened under Section 147 of the Act, dealing with income escaping assessment.
During the reassessment proceedings, the AO noted that while the trust was registered with the local Sub-Registrar, it lacked the necessary registration under Section 12A of the Income Tax Act. Consequently, receipts, including corpus and building funds, were treated as income taxable at the hands of an Association of Persons (AOP). For Assessment Year 2008-09, specifically, building fund receipts amounting to Rs. 3,21,351 were added to the trust’s income. The assessee’s initial appeals to the Commissioner of Income Tax (Appeals) [CIT(A)] were unsuccessful, with the CIT(A) upholding the AO’s decision to deny the exemption due to the lack of Section 12A registration.
