The Amritsar bench of Income Tax Appellate Tribunal (ITAT) has recently held that registration under Section 12A(1)(ac)(iii) Income Tax Act, 1961 should not be denied if remuneration paid to trust’s full time workers is not contravening Section 13(1)(c) Income Tax Act.
The Assessee Kalumal Shorimal Nathumal Rangwala Pvt. is a charitable trust. The Assessee made an application for registration under Section 12A(1)(ac)(iii) before the Commissioner of Income Tax (Exemptions) [CIT(E)].
The Commissioner of Income Tax (Exemptions) rejected the application applied for registration on the basis that one of the trust members is withdrawing salary Rs.12,60,000 as allowance which contravening the Section 13(1)(c) of the Income Tax Act and also the main object of the trust works to member which is not the general public at large this is a benefit of the family and future generation.
Aggrieved by the order, the assessee filed an appeal before the tribunal .
Ajay Jain, counsel for the assessee submitted that Assessee trust is formed for general public utility. Assessment order under Section 143(3) for the assessment year 1992-93 dated 30.03.1997 where the object of the trust was accepted, and the assessee was allowed to deduction under Section 11 and 12 Income Tax Act .
Further counsel argued that the trustee is a full time service holder of the trust for running his livelihood withdrawing the salary Rs.12,60,000 from the trust which is not contravening any of section 13 of Income Tax Act.
The Counsel for the revenue supported the contentions of the lower authorities.
Thus relied upon the decision of the Supreme Court in the case of CIT vs. Radhasoami Satsang and CIT vs. Smt. Kasturbai Walchand Trust , the tribunal held that The assessee had not violated Section 13 of the Income Tax Act by paying off the remuneration to the trustee for his full-time work for the trust.
Therefore the two member bench of M. L. Meena, (Accountant Member) and Anikesh Banerjee, (Judicial Member) allowed the appeal filed by the assessee.
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