Shree Alibag Kutchi Visa Oswal Jain Sangh vs. Commissioner Of Income-Tax - (Income Tax Appellate Tribunal) (26 Jul 2021)

The issues of assessment cannot be considered at the time of grant of registration

MANU/IP/0121/2021

Direct Taxation

Present is an appeal filed by the assessee against the order of the Learned Commissioner of Income Tax (Exemption), ['the CIT (Exemption)]') under Section 12AA(1)(b)(ii) of the Income Tax Act, 1961 (IT Act) denying the grant of registration under Section 12AA of the Act.

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 under Section 12AA of the Act. 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.

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 under Section 12AA of the Act.

The learned CIT (Exemption) had denied the grant of registration under Section 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 learned 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. 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.

From the perusal of the impugned order, it is clear that the learned 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, present Tribunal is of opinion that, the grounds on which the ld. CIT (Exemption) had rejected the grant of registration are untenable in law. Accordingly, the learned CIT (Exemption) is directed to grant the registration under Section 12AA of the Act. The appeal filed by the assessee stands allowed.

Tags : REGISTRATION DENIAL LEGALITY