Partha Sarathi Chaudhury ORDER
Inturi Rama Rao, Member (A)
1. This is an appeal filed by the assessee against the order of the Learned Commissioner of Income Tax (Exemption), Pune ['the CIT (Exemption)]' for short) u/s. 12AA(1)(b)(ii) of the Income Tax Act, 1961 ('the Act') dated 30.09.2020 denying the grant of registration u/s. 12AA of the Act.
2. The appellant raised the following grounds of appeal:-
"1. On the facts and in the circumstances of the case the Ld. CIT(E) has erred in holding that registration u/s. 12AA cannot be granted unless tax is paid on the income assessed at the time of 12AA proceedings.
2. On the facts and in the circumstances of the case the Ld. CIT(E) has erred in making incorrect assessment of income of the Trust without following the law and established judicial precedents.
3. On the facts and in the circumstances of the case the Ld. CIT(E) has erred in exceeding the jurisdiction bestowed upon the Ld. CIT(E) in as much as the Ld. CIT(E) has sought details of sources of income of the Trust whereas the Ld. CIT(E) is to merely look into the application of such income.
4. On the facts and in the circumstances of the case the Ld. CIT(E) has erred in holding that the activities are not genuine in nature and thereby refusing to grant registration u/s. 12AA."
3. When the matter had come up for hearing, none appeared on behalf of the appellant despite due service of notice. Therefore, we proceed to dispose of the appeal ex-parte after hearing the ld. DR.
4. Briefly, the facts of the case are as under:-
The appellant is a trust formed in the year 1988 with the objects of religious-cum-charitable and was duly registered with the Bombay Public Trust Act, 1950. The appellant trust filed an application in Form No. 10A for grant of registration u/s. 12AA of the Act on 27.12.2019. On receipt of the said application, the CIT (Exemption) called upon the appellant to file certain information/clarification/details through ITBA Portal so as to satisfy himself about the genuineness of the activities of the trust. The appellant had complied with the said questionnaire by filing the necessary information/details etc.
5. On consideration of the information/details filed before the CIT (Exemption), the CIT (Exemption) was of the opinion that the voluntarily corpus donations received during the financial years 2017-18 and 2018-19 was not offered to tax and paid the taxes thereon. On this ground, he had denied the grant of registration u/s. 12AA of the Act.
6. Being aggrieved, the appellant is before us in the present appeal.
7. We heard the ld. DR and perused the material on record. The issue in the present appeal relates to the grant of registration u/s. 12AA of the Act. On mere perusal of the impugned order, it is clear that the ld. CIT (Exemption) had denied the grant of registration u/s. 12AA of the Act solely on the ground that the voluntarily contributions/donations received and credited to the corpus accounts during the financial years 2017-18 and 2018-19 were not offered to tax and paid the taxes thereon. Undoubtedly, this issue falls under the realm of "assessment". Now, it is trite law that the grant of registration and exemption are two separate and independent proceedings. The question of exemption cannot be considered at the time of grant of registration. The ld. CIT (Exemption) can only look into two aspects i.e. whether or not (i) the objects of the trust are charitable in nature and (ii) the genuineness of the activities of the trust in the light of law laid down by the Hon'ble Apex Court in the case of Ananda Social and Educational Trust vs. CIT, MANU/SC/0229/2020 : 272 Taxman 7. It is also equally settled position of law that the grant of registration and assessment are two separate and distinct procedures prescribed under the Income Tax Act. The issues of assessment cannot be considered at the time of grant of registration as held by the following decisions:-
(i) Fifth Generation Education Society vs. CIT, MANU/UP/0244/1990 : 185 ITR 634;
(ii) Shantagauri Ramniklal Trust vs. CIT, MANU/GJ/0102/1998 : 239 ITR 528;
(iii) M. Visvesvaraya Industrial Research And Development Centre vs. ITAT, MANU/MH/0504/2001 : 251 ITR 852;
(iv) New Life in Christ Evangelistic Association vs. CIT, MANU/TN/0568/1998 : 246 ITR 532;
(v) N.N. Desai Charitable Trust vs. CIT, MANU/GJ/0064/1999 : 246 ITR 452; and,
(vi) CIT vs. Vijay Vargiya Vani Charitable Trust, MANU/RH/0795/2014 : 369 ITR 360.
8. To the same effect, the decisions of the Hon'ble M.P. High Court in the case of CIT vs. D.P.R. Charitable Trust, MANU/MP/0889/2011 : 61 DTR 410 (MP) and CIT vs. Divine Shiksha Samiti, MANU/MP/1171/2020 : 428 ITR 552 (MP) and the decision of the Hon'ble Jurisdictional High Court in the case of CIT vs. Manekji Mota Charitable Trust, MANU/MH/3204/2019 : 267 taxman 16 and even recently the Hon'ble Madras High Court in the case of Thanthi Trust vs. DIT (Exemptions) in Tax Case (Appeal) No. 822 of 2018 dated 29th October, 2020 after referring to the above judicial precedents recognized distinction between the claim for grant of registration u/s. 12AA of the Act and the claim for exemption u/s. 11 of the Act and, accordingly, held that the item of exemption cannot be subject matter of examination at the time of grant of registration.
9. From the perusal of the impugned order, it is clear that the ld. CIT (Exemption) had denied the grant of registration by taking into consideration that the corpus donations collected during the financial years 2017-18 and 2018-19 had escaped assessment to tax which clearly falls under the realm of the "assessment". In view of the settled position of law discussed above, we are of the considered opinion that the grounds on which the ld. CIT (Exemption) had rejected the grant of registration are untenable in law. Accordingly, we direct the ld. CIT (Exemption) to grant the registration u/s. 12AA of the Act.
10. In the result, the appeal filed by the assessee stands allowed. Order pronounced on this 26th day of July, 2021.
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