Registration of Charitable Trust u/s 12 of Income Tax Act: ITAT grants Opportunity to Prove Genuineness of Its Charitable Activity [Read Order]

In a recent case, the Pune bench of Income Tax Appellate Tribunal (ITAT) set aside the order of CIT(E) and remanded the matter back to specifically examine the genuineness of the charitable activities performed by the trust as per his satisfaction. The court observed that CIT(E) cancelled the provisional registration granted to the assessee trust and also rejected the registration of the said applicant trust under section 12AB of the Income Tax Act, 1961.

Our Lady of Hope Church, the appellant is a trust registered under Maharashtra Public Trust Act, 1950 and the benefits of the trust are provided to all irrespective of caste, creed or religion.  In fact, the beneficiaries of the activities of the trust for the past 20 years are the people from Koli (fisher community) non-Christian and Christian community in Ghormal District of Maharashtra.  It was further contended for the trust that the applicant trust is governed by Canon law under which the Archbishop of Mumbai is appointed by his Excellency Pope Francis of Rome and the said Archbishop of Mumbai appoints the trustees to look-after the day to day affairs and activities of all the Roman Catholic Churches within the jurisdiction of Mumbai and Thane.

It was alleged that the CIT(E) had merely referred to some of the clauses of the trust deed without going into the merits of the entire trust deed as a whole.  In totality and without examining the actual state of affairs of the assessee trust and without giving a finding whether charitable activities were carried out for the public at large or not the registration was denied and the provisional registration was cancelled. 

The CIT(E) cancelled the provisional registration granted to the assessee trust and also rejected the registration of the said applicant trust under section 12AB. The CIT(E) provided several reasons for rejecting the registration and cancellation of the provisional registration of the trust. The CIT(E) stated that as per the object clause of the trust, it is only for the benefit of the Christian community i.e. Roman Catholics, and not for the entire society at large. The CIT(E) further stated that the Archbishop of Mumbai has been given enormous power for taking essential decisions about the functioning of the applicant trust which therefore suggests that it is for the benefit of one particular community of the society.

A two member bench comprising of Partha Sarathi Chaudhury (Judicial Member) and Dr. Dipak P. Ripote (Accountant Member) observed that the CIT(E) must come up with a speaking order as to the activities performed by the applicant trust and given those activities whether they are genuine or not, meaning thereby he must conduct adequate examination and verification of facts and form his opinion accordingly and at the same time, he must mention regarding the applicant trust whether it is also abiding with the existing laws in force, these areas are not at all discussed and adjudicated in the order of CIT(E).

The court held that in terms of section 12AA, the CIT(E) must be satisfied with the genuineness of the activities performed by the applicant trust and to see whether the applicable laws for the time being in force are followed by such applicant trust while discharging their charitable activities.

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