Activities of a Trust can’t be suspected merely on Ground that it Received Donation and Grants from other Entities: ITAT [Read Order]

The Income Tax Appellate Tribunal, New Delhi recently ruled that activities of the trust cannot be suspected merely on the ground that it received donation and grants from other entities and the ITAT allowed the appeal of assesse.

The division bench was hearing an appeal filed by the assessee wherein both the department and the first appellate authority had rejected the application for registration under Section 12AA of the Income Tax Act holding that the assessee is not carrying on education activity.

In instant case, the assessee trust is a company engaged in the activities pertaining to teaching of wilderness of skills and leadership for the service of the people and environment. The company filed its application for the registration and recognition under 80G.

The assessee was asked to submit the details regarding and the part was furnished. Further that assessee got a show cause notice stated that its application is to be rejected as it was hit provisions of section 2(15) of the Act. Further the DIT (E) rejected the application of the assessee holding that it does not engaged in the activities of education as there is no class room education carried out by the assessee.

Aggrieved by the order, assessee went appeal before the Tribunal and contended that assessee is constituted u/s 25 of the Companies Act, alone, is sufficient to prove that the activities of the assessee are genuine and charitable in nature and no profit motive embodied therein.

The Tribunal bench comprising of judicial member Shri.H.S Sidhu and Accountant Member Shri.Prasanth Maharishi  observed that it is for the authority granting registration to give prima facie opinion with reasoning that the activities carried on by the assessee is eligible for registration u/s 12A of the Income Tax Act or not. Furthermore, the genuineness of the activity is to be considered while granting registration under section 12A of the Income Tax Act.

The bench said that merely because the assessee received some donation and grants from other entities its activities does not become ingenuine.

The Tribunal directed the CIT (E) to examine the grant and other income received by the trust to verify the genuineness of the activities of the trust.