PCIT is not empowered to Impose conditions to be Complied with by Assessee, for granting Registration u/s 12AB: ITAT [Read Order]

The Income Tax Appellate Tribunal (ITAT), Mumbai held that Principal Commissioner of Income Tax (PCIT) not empowered to impose conditions to be complied by assessee, for granting registration under Section 12AB of the Income Tax Act,1961.

Both the assessees’ M/s. Lady Tata Memorial Trust & M/s. Lady Meherbai D. Tata Education Trust being a charitable trust sought to grant the registration under section 12A of the Income Tax Act, 1961 for Assessment Year 2022-23 to 2026-27 after complying with the necessary formalities. However, the PCIT granted the registration under section 12AB of the Act which is now under challenge before the Division Bench of ITAT. The granting of registration by the PCIT, was subject to certain conditions imposed by him.

The Bench consisting of Kuldip Singh, Judicial Member and Om Prakash Kant, Accountant Member relied on the judgment in Bai Hirabai Jamshetji Tata Navsari Charitable Institution vs. CIT(E) and observed that “When we examine the questions raised by the assessees’ according registration under section 12A by the PCIT subject to certain conditions in the light of the provisions contained in the scheme of the Income Tax Act, 1961, registration under section 12A cannot be subjected to any condition as there is an “inbuilt mechanism” to be complied with by the assessee after getting the registration under section 12AA of the Act. Furthermore, compliance of the conditions by the assessees’ is to be examined by the Assessing Officer (AO) during the assessment proceedings.”

“The role of the PCIT while according registration under section 12A is only to make himself satisfied about the genuineness of the activities to be carried out by the assessee trust and the compliance of such requirement of any other law for the time being in force by the trust or institution material to achieve its object and then to accord the registration. So we are of the considered view that conditions imposed by the PCIT while according registration under section 12A of the Act are not sustainable in the eyes of law” the Tribunal added.

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