Is Trust’s Registration u/s 12A a Prerequisite for Grant of Approval u/s 80(G)(5)(iv)(B)?: ITAT remits Matter [Read Order]

The Ahmedabad bench of Income Tax Appellate Tribunal (ITAT) has recently rejected an application of an assessee for approval under Section 80G (5)(iv)(B) of the Income Tax Act, 1961 since the order of the CIT(E) rejecting registration under Section 12A(1)(ac)(vi) of the Act, 1961 was set aside and fresh opportunity of being heard was granted to explain the fulfillment of conditions stipulated under the said section.  

The assessee, Nisa Foundation, is a trust and had filed an application in Form 10AB for registration of the trust u/s.12A(1)(ac)(vi)(B) of the Income Tax Act, 1961  which was rejected by the CIT(E).

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Further,an application was also filed by the assessee for approval of the trust u/s 80G of the Income Tax Act, 1961 which was also rejected for the reason that a valid registration certificate u/s.12A of the Act was a mandatory condition for according approval u/s.80G of the Act,1961. Aggrieved by the aforesaid order of the CIT(E), the assessee preferred the present appeals before the Income Tax Appellate Tribunal, Ahmedabad.

Read more:Registration of Trust u/s 12AA Once Done, Continues Unless Withdrawn by Specific Order: ITAT Sets Aside Denial of Sec 11

Tushar Hemani, appearing for the assessee, submitted that the CIT(E) rejected the application for registration u/s.12A of the Act for the reason that certain corroborative evidence as called for were not submitted by the assessee.

He explained that the assessee had already filed a letter dated 15.05.2024 enclosing the income tax returns for the Assessment Years (A.Y.)2021-22, 2022-23 & 2023-24 which satisfied the queries raised by the CIT(E). He further submitted that all the necessary details and documents essential for grant of approval u/s12A of the Act were duly furnished by the assessee and, therefore, the CIT(E) was not justified in rejecting the application for registration u/s.12A of the Act.

Abhay Thakur, appearing for the Department, on the other hand strongly supported the order of the CIT(E). It was his submission that the details and documents as specifically called for by the CIT(E) was not filed by the assessee. Further that mere filing the copy of the income tax return did not satisfy the requirement of filing the evidence that the assessee had not claimed any exemption u/s.10(23C) or Section 11 or Section 12 of the Act, 1961 for any of the previous years on or before the date of application. 

Read more:Failure to Confirm Authenticity of Activities and Compliance with Relevant Laws: ITAT Remands matter to Consider Registration of Trust u/s 12 AA of Income Tax Act

The bench comprising Suchitra Kamble, Judicial Member & Shri Narendra Prasad Sinha, Accountant Member observed that a specific query was raised by the CIT(E) vide Show Cause Notice dated 08.07.2024 after the relevant documents were submitted by the assessee. It was further observed that neither any compliance  was made nor any submission regarding the satisfaction of stipulated conditions was made by the assessee in respect of the said notice.

The bench stated that CIT(E) also did not take any pains to verify the income tax returns for A.Y.s 2021-22, 2022-23 & 2023-24, already brought on record earlier by the assessee, to find out whether the assessee had claimed any deduction under Section 10(23) or Section 11 or Section 12 of the Income Tax Act, 1961 in these years.

Read more:Appeal for Registration u/s 12A withdrawn after Filing a Fresh Application: ITAT dismisses Appeal

Thus, the assessee was allowed another opportunity of being heard to explain the fulfillment of conditions as stipulated under Section 12A(1)(ac)(vi)-Item B of the Act. The assessee was also directed to make compliance before the CIT(E) and to submit the documents and details as required by him.

In view of the above order, the bench also set aside the order for rejection of approval under Section 80G(5)(iv)(B) for the reason that registration under Section 12A  was a prerequisite condition for grant of approval. The CIT(E) was directed to re-adjudicate the issue of approval under Section 80G after deciding the matter regarding registration under Section  12A of the Act, 1961.

Hence, the appeals were allowed for statistical purposes.

To Read the full text of the Order CLICK HERE

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