The Income Tax Appellate Tribunal (ITAT) Pune has ruled that just because, the taxes were not paid on the donations/voluntary contributions received, an application under section 12AA of the Act cannot be rejected.
The assessee, Shree LakadipoolVitthal Mandir, had made an online application in Form No.10A for approval of the Trust/ Institution u/s.12AA of the Act on 02.03.2020 under the category of Religious cum Charitable trust/institution and had also collected voluntary contributions and donations. The Commissioner of Income Tax(CIT)(Exemption) was of the opinion that all these voluntary contributions form a part of the corpus funds of the trust and hence, as an income of the assessee, the said income was liable to pay tax as per law. Since the requisite taxes were not paid by the assessee, the CIT(Exemption) opined that the requirement of section 12AA of the Act i.e. satisfaction of the Commissioner about objects of the Trust and the genuineness of the activities of the trust could not be determined and hence, the said application for registration u/s.12AA of the Act of the assessee was rejected.
Judicial Member ParthaSarathi Chaudhury and Accountant Member Inturi Ram Rao relied on judgments like Anand Social and Educational Trust Vs. CIT, 272 Taxman 7 (SC) And CIT Vs. ManekjiMota Charitable Trust (2019) 267 TAXMAN 0016 (Bombay) and allowed the appeal holding, “Considering the aforesaid judicial pronouncements, facts, and circumstances, in this case, we are of the considered view that this is not a fit case for rejection of application for registration u/s.12AA of the Act on the reasons mentioned in the order of the Ld. CIT(Exemption). There is no finding on facts that the activities carried out by the assessee are not genuine. Further, the Ld. CIT(Exemption) has not mentioned in his finding that the objects of the trust were not in order or that the application made for registration was also not in accordance with the law. In absence of these findings, just because, the taxes were not paid on the donations/voluntary contributions received cannot be the ground for rejection of application u/s.12AA of the Act. These things can be examined by the Department and scrutinized at the assessment stage. When all the requirements of registration u/s.12AA of the Act have been satisfied by the assessee trust, registration therein should be granted. In view thereof, we set aside the order of the Ld. CIT(Exemption) and direct the Department to grant registration u/s. 12AA of the Act to the assessee trust.”
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