Section 12AA of Income-Tax Act, 1961 deals with Procedure for Registration of a Charitable Trust or institution
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Income Tax : Thus, for a trust registered u/s 12AA of the Act to avail the benefit of exemption u/s 11 shall inter-alia file its return of inco...
Once the registration u/s 12AA granted to trust and the activities of the trust are genuine and as per object of the trust, CIT or any other authority empowered in this behalf cannot cancel registration on ground of involvement of trust in any activity other than charitable purpose.
In the case of Pune District Security Guards Board vs CIT, ITAT Pune held that welfare bodies formed under Maharashtra Private Security Guards (Regulation of Employment and Welfare) Act, 1981 were eligible for registration under section 12AA even though they charge fee for their services.
CIT was entrusted with powers under section 12 AA to look into the activities of the trust to satisfy himself regarding the charitable nature of activities. Under Section 12A, the provisions of Sections 11 & 12 shall not apply in relation to the income of any trust
Punjab & Haryana High Court held In the case of CIT vs. Sri Guru Gorakh Nath Charitable Educational Society that power of the Commissioner to look into the objects of the Society and the genuineness of the same cannot be doubted when the basis is of non-supply of information.
1. Whether the Tribunal was right in negating the assessee’s claim for accumulation of unspent income? 2. Whether repayment of borrowed funds utilised for construction of commercial complex augmenting income of trust and amounts to application of income for charitable purpose eligible for exemption under section 11?
The assessee was not satisfied as the assessing officer did not allow the depreciation which was subsequently claimed during the course of assessment proceedings. The assessee in Cross Objection has challenged the order of the learned CIT (Appeals) in upholding the disallowance of claim of Rs.2, 57, 90,420/- made by the trust in respect of excess utilization made in the earlier years.
Section 12AA, which lays down the procedure for registration, does not speak anywhere that the CIT, while considering the application for registration, shall also see that the income derived by the trust or the institution is either not being spent for charitable purpose or such institution is earning profit.
While granting the exemption or renewal of exemption under section 80G(5) of the Act, the role of CIT is limited to look into the nature of activities being carried on by the institution or fund and the violation if any, of the provisions of section 13 of the Act and its various sub‑sections are to be looked into by the Assessing Officer while deciding the issue
At the time of registration under Section 12AA of the Income Tax Act, which is necessary for claiming exemption under Section 11 and 12 of the Act, the Commissioner of Income Tax is not required to look into the activities, where such activities have not or are in the process of its initiation.
Hon’ble Chennai ITAT has in the case of SAE India v/s DIT(E) has held that if the objects and activities of the trust are genuine than registration cannot be cancelled merely because receipts are exceeding threshold limit as provided under second proviso to section 2(15) of the Act.
