The Income Tax Appellate Tribunal (ITAT), Chennai, has recently ruled that a trust facilitating financial assistance to the poor, to access housing credit, is not eligible for getting a registration u/s. 12AA of the Income Tax Act.
The order of the ITAT was made in an appeal filed by the appellant against the rejection of his registration application filed u/s 12AA of the Income Tax Act, before the Commissioner of Income Tax (Exemption), Chennai, to get his trust registered.
The grounds taken by the assesse was that the Commissioner of Income Tax (Exemptions), failed to appreciate the activities of the appellant trust to be constituting “relief of the poor” as per the provisions of section 2(15), erringly concluding the main object of the trust to be non- charitable, without appreciating the facts and circumstances involved in the appellant’s case.
However, the same was countered by the CIT(E)by submitting that the said activities of the appellant trustwould not fall under the object of general public utility as the proviso there-under prohibits such activities involving carrying on of trade, commerce or business, unless the same is undertaken in the course of actual carrying out of such advancement of any other object of general public utility , where the aggregate receipts from such activity during the previous year does not exceed 20% of the total receipts.
“The case law before us concerns question of registration wherein the only activity carried out by the assesse is obtaining loans and extending the same to certain strata of people, and the only source of funding for the assesse is borrowings and the donations which are almost negligible. Hence, Considering the facts and circumstances of the case, we see no reason to interfere in the impugned order and the appeal stand dismissed”- the court commented.
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