Doctor Madan Lal Atri Charitable Trust Vs CIT Exmp. (ITAT Agra)
The purpose of grant of registration is to ensure that the assessee is primarily into charitable activities as defined undersection 2(15) of the Act and for those purposes, Commissioner exemption should make enquiries only. The Commissioner exemption should not use this opportunity to extend its authority beyond Income Tax Act i.e in the sphere of the other authorities under different laws or sitting in judgment against permission/ approval given under different laws, as a super Cop . As in our opinion it is for the other authorities to examine whether the assessee is subjected to provision of law and is required to comply the relevant provision of law. The Authorities created under various ACTS should function within their respective domain and should not encroach or interfere in other areas, this is necessary for smooth functioning of various organs of state. Though Section 12AA of Act has been widely worded “any other law” however the same has been given restricted or narrowed by the other words used in the section namely “ as are material for the purpose of achieving its objects ”. Therefore before embarking upon any enquiry by the Commissioner exemption, it is sine qua non(essential) to inform the assessee as to which are the various laws under which the assessee should have the approval/permission before seeking the registration.
The Commissioner Exemption should keep in mind that various approvals/permission cannot be sought from the assessee or in other words it is not possible for the assessee to even apply and seek approval/permission at the stage of registration of the trust under section 12AA, as those approvals/permission can only be granted after the setting up or commencement of the charitable activities.
During the course of hearing, we enquired from the assessee whether the assessee is permission/ approval under National Building Code 2005, Fire and Life Safety Certificate, Save Drinking Water and Sanitary Conditions Certificate etc. to this the Ld. AR had submitted that all these have been taken care of by the Central Board Of Secondary Education while granting the provisional affliction and thereafter at the time of renewal. This submission of the assessee, on verification from the condition mentioned in the provisional/renewal of affiliation with central board of secondary education were found to be correct.
We find that the assessee was having necessary approval/affiliation from the respective authorities as required by the Commissioner exemption. These permission/ approval now produced by the necessary may not be necessary for the purposes of considering registration, as the same had already been filled with Board at the time of affilliation. Nonetheless now these permission / approval are available, there is no point of denying the registration on the pretext of alleged deficiency.
In the light of the above we are of the considered opinion that the assessee is entitled to registration under section 12AA of the Income Tax Act 1961. Accordingly, we direct the Respondent to grant registration to the assessee from the date of its application.
FULL TEXT OF THE ORDER OF ITAT AGRA
The present appeal was filed by the assessee feeling aggrieved by the order passed by the CIT exemption, rejecting the application for registration under section 12 AA of the income tax act 1961 on the following grounds :-
1. That the learned Commissioner of Income-tax (Exemption), [hereinafter referred to as the ‘CIT(E)’], Lucknow has been arbitrary and unjust in denying the registration U/S 12AA of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) to the appellant charitable Trust.
2. That the learned CIT(E), Lucknow has erred both in law and on facts in rejecting application for seeking registration U/S 1 2AA of the Act filed by the appellant charitable Trust, solely on the basis of her wrongly drawn unilateral inferences and unwarranted observations, which are contrary to the facts of appellant’s case and even to the material/evidences placed on records.
3. That while arbitrarily rejecting the application for seeking registration U/S 12AA of the Act filed by the applicant, the learned CIT(E), Lucknow has completely brushed aside and disregarded that in the light of material/evidences placed on records it was beyond doubt evident that from last number of years, the appellant charitable Trust was genuinely conducting the charitable activities strictly in accordance with its objects and it had duly complied with all the necessary requirements of any other law, which were material for the purpose of achieving its objects and therefore appellant charitable Trust deserves for grant of registration U/S 12AA of the Act.
4. That in any view of the facts and circumstances of the case of the appellant charitable Trust it is entitled for grant of registration U/S 1 2AA of the Act, which be kindly granted.
5. That the order U/S 1 2AA(1 )(b) (ii) of the Act dated 22nd December, 2020 is against the law and facts of the case of the appellant charitable Trust.
6. The appellant seeks permission to modify and/or add any other ground/grounds of appeal as the circumstances of the case may require or justify.
Brief Facts
1. That the “Assessee Educational Charitable Trust” (hereinafter referred to as ‘Assessee Trust’) was formed on August 1, 2009 with the primary and main objective of rendering “education”. As per trust deed the objects of the assessee were mentioned as under:
i) To render services in the field of education by establishing and operating schools and educational institutions irrespective of any reservation for any caste, creed, race, religion or language.
ii) To establish and run educational institutions to promote nursing, teaching, training and other associated training related to education.
iii) To promote such educational, sports and co-curricular activities as may result in mental and/or physical well being of the students and members of the society in general.
iv) To acquire, construct and maintain hostels/buildings for providing accommodation and fooding to persons teaching, studying or connected with such aforesaid schools and educational institutions.
v) To set up laboratories, purchase and acquire any equipments, books, journals and instruments required for carrying out teaching and research activities in any field such as science, technology, commerce, arts, computers, medical, social, animal husbandry, dairy etc. in such aforesaid schools and educational institutions, to promote educational activities.
To bring out, encourage and develop the inventive and research faculties of the pupils and teachers and to afford opportunity for research work in fields like science, technology, commerce, arts, computers, medical, social, animal husbandry, dairy and industrial undertakings etc.
vii) To grant stipend, scholarships, awards or any other assistance or otherwise to deserving students or scholars, to further the course of study and/or research.
i) To train and equip the pupils, so as to be self supporting in honorable and decent way of life, so as to develop into good, healthy and progressive citizens of good conduct and a habit to observe the rule of law and self restraint.
vi) To promote and carry out all other activities of charitable purpose including spread of education, medical relief, relief of poor and advancement of any other object of general public utility as the law may regard as public charitable objects or purposes.
vii) To borrow, raise loan from any person, bank or financial institution in such manner as the Trustees shall think proper or convenient for the furtherance of objects of the Trust and for this purpose the Trustees may secure repayment of these loans in any manner as may be decided from time to time.
viii) The Trust shall be entitled and be at liberty to accept gifts, donations, voluntary contributions in money or otherwise from any person, firm or institutions or Government and to collect subscription, donation or aid from State Government, Central Government to augment the Trust Fund towards the corpus or otherwise and to use such money for the objects of the Trust but the Trust shall return the gifts of immovable properties received for carrying out specific object, back to the donors or their legal heirs, if the Trust does not carry out the object for which the gift of immovable property was made even when such transfer of immovable property was made by an irrevocable gift deed.
ix) To do all necessary acts for and incidental or conducive for the attainment of above objectives of the trust and to give donations to institutions having similar objects.
2. On the basis of the above objects, it was submitted that the cursory glance of the objects of the assessee, shows that the assessee is a charitable trust registered for the purpose of charity as defined under section 2 (15) of the income tax act 1961 .
3. It is the case of the assessee that with a view to fulfilment the objects of establishment “ imparing education “ the assessee trust i running a school under the name of ‘The Aryans’ School’ which is a CBSE affiliated school for Senior Secondary School Certificate Examination. It was also the case of the assessee that the assessee was following the guidelines as laid down in the Right to Education Act 2009.
4. The AR for the assessee had submitted that ‘Assessee Trust’ has been maintaining Audited books of accounts and voluntarily filing its return of income well within the stipulated time.
5. That as upto F.Y.2018-19, the annual aggregate receipts did not exceed the prescribed amount of Rs.1 crore vide rule 2BC of Income Tax Rules therefore till A.Y.201 9-20 it had claimed exemption U/S 1 0(23C)(iiiad) of the Act, which looking to the facts, nature and charitable objects of the ‘Assessee Trust’ was always allowed by the Income Tax Department and accordingly declared income of the ‘Assessee Trust’ has always been accepted.
6. That as the management of the ‘Assessee Trust’ noticed that in future there is likelihood of the annual receipts of ‘Assessee Trust’ may exceed the amount of Rs.1 crore prescribed vide Rule 2BC of Income Tax Rules and for other reasons also it was decided to seek registration under section 1 2AA(1 )(b) of the Act.
7. That accordingly the ‘Assessee Trust’ had filed application vide Form 10A under the relevant provisions of Rule 17A of the Income Tax Rules, 1962 to seek registration under clause (aa) of sub section (1) of section 12A of the Act dated 30.03.2020 before the Ld. CIT(Exemptions), Lucknow (hereinafter referred to as ‘the Ld. CIT(E)’) alongwith the required details, informations and documents/material.
8. However despite filing the details as sought by the CIT exemption during the proceedings before her for granted registration, the registration was declined to the assessee by the impugned order 22 December 2020. Feeling aggrieved by the order passed by CIT exemption the assessee is in appeal before us on the ground mentioned herein above.
Submissions Of The Assessee
9. Ld. for the assessee had submitted that the Ld. CIT(E) issued an online questionnaire dated 30.07.2020 for the ‘Assessee Trust’ containing 26 questions, reply to which was sought by August 18th, 2020, a copy of which is being attached at pages 4 to 6 of this paper compilation
10. Ld. for the assessee had submitted that the ‘Assessee Trust’ furnished reply dated, August 16th, 2020 vide e‑proceedings Response Ack. No. 16082013385047 and August 17th, 2020 vide e-proceedings Response Ack. No. 17082013385050, copies of which are being attached to this synopsis along with the copies of the entire paper submission filed online before the Ld CIT(E) and before the designated due date of August 18th, 2020. On a bare perusal of such online paper submission, one can easily conclude that the “assessee charitable trust” had furnished reply to all the 26 queries raised by the Ld CIT(E) along with the relevant paper evidence, material information and material records.
11. Ld. for the assessee had submitted that the Ld. CIT(E), rejected the application made by the ‘Assessee Trust’ in Form 10A, by passing an order under section 12AA(1)(b)(ii) of the Act dated 22.12.2020, on the basis of reasons which on an apparent basis are contrary to the case and facts of the ‘Assessee Trust’. The Ld CIT(E) refused to register the ‘Assessee Trust’ under clause (aa) of sub section (1) of section 12A of the Act on the basis of unilaterally ill found and non-existent reasons and without even giving a reasonable opportunity of being heard to the ‘Assessee Trust’ before such refusal.
12. The first contention of the Ld.AR for the assessee was that T at the time of granting of registration under clause(b) of sub section(1) of section 12AA of the Act, the Ld CIT(E) has to only look into the following:
