DIT v. Panna Lalbhai Foundation

SUBSCRIBE FOR FULL CONTENT


The Tax Publishers2013 TaxPub(DT) 2067 (Guj-HC) : (2013) 216 TAXMAN 0148 Income Tax Act, 1961 --Charitable Trust--Registration under section 12A/12AA Activities of trust not commenced--The assessee-trust preferred an application under section 12A for registration of the trust in Form No. 10A. On the basis of report of Inspector, the Director of Income Tax (Exemption) refused the registration applied under section 12A on the ground that trust had not commenced its activities. Tribunal held that the trust was at infant stage and the trust needed to be registered in order to get benefits under the Act. Therefore, it directed Director of Income Tax (Exemption) to grant registration on application under section 12A. Revenue argued that there was nothing emerging on record that the trust started its activities and therefore, the decision of the Tribunal could not be sustained. Held: The powers of Commissioner to satisfy himself about objects and the genuineness of the activities are recognized under law. However, that did not mean that if the activities of the trust had not commenced, the Commissioner had authority to reject its application for registration. However, there was nothing to indicate any material to conclude that the objects of the Trust or the activities of the trust were not genuine. Therefore, the Tribunal had rightly directed the Director of Income Tax (Exemption) to grant registration on application. Income Tax Act, 1961, Section 12AA In the Gujarat High Court Akil Kureshi & Sonia Gokani, J.J. DIT v. Panna Lalbhai Foundation Tax Appeal No. 853 of 2012 2 April, 2013 Appellant by : Mauna M. Bhatt ORDER *Sonia Gokani, J.* Aggrieved by the order of the Income Tax Appellate Tribunal dated 20-7-2012, this Tax Appeal is preferred under section 260A of the Income Tax Act, 1961 (hereinafter referred to as 'the Act'). 2. The brief facts leading to filing of the present Tax Appeal are as follow. 2.1 The applicant-Trust preferred an application under section 12A of the Act for registration of the Trust on 25-1-2012 in Form No.10A. This application had contained certificate of registration by the Deputy Charity Commissioner and copy of the Trust deed with comprehensive list of objects. When the applicant was asked to furnish a detailed note of actual activities of the Trust from its inception, the applicant-Trust submitted a copy of bank statement and also had given details of Trust Deed. A report of inspector was called for, who reported that there is no activity relating to the Trust going on at the premises of the Trust. He was directed to meet one of the staff members working in the organization as Lalbhai Group had many trusts operating and carrying charitable activities. A letter was given by the Inspector dated 29-3-2012 which indicated that the Trust intended to work on educational objects, medical relief and object of advancement of music, art, drama, dance, literature etc. It also expected to receive donation from individuals, companies, business organizations and other trusts. On the basis of this report, the Director of Income Tax (Exemption) refused the registration applied under section 12A by holding that due opportunity was given under proviso to section 12AA(1) to the applicant-Trust and not having been satisfied with the explanation, this registration was rejected. SUBSCRIBE FOR FULL CONTENT

The Tax Publishers2013 TaxPub(DT) 2067 (Guj-HC) : (2013) 216 TAXMAN 0148

Income Tax Act, 1961

--Charitable Trust--Registration under section 12A/12AA Activities of trust not commenced--The assessee-trust preferred an application under section 12A for registration of the trust in Form No. 10A. On the basis of report of Inspector, the Director of Income Tax (Exemption) refused the registration applied under section 12A on the ground that trust had not commenced its activities. Tribunal held that the trust was at infant stage and the trust needed to be registered in order to get benefits under the Act. Therefore, it directed Director of Income Tax (Exemption) to grant registration on application under section 12A. Revenue argued that there was nothing emerging on record that the trust started its activities and therefore, the decision of the Tribunal could not be sustained. Held: The powers of Commissioner to satisfy himself about objects and the genuineness of the activities are recognized under law. However, that did not mean that if the activities of the trust had not commenced, the Commissioner had authority to reject its application for registration. However, there was nothing to indicate any material to conclude that the objects of the Trust or the activities of the trust were not genuine. Therefore, the Tribunal had rightly directed the Director of Income Tax (Exemption) to grant registration on application.

Income Tax Act, 1961, Section 12AA

In the Gujarat High Court

Akil Kureshi & Sonia Gokani, J.J.

DIT v. Panna Lalbhai Foundation

Tax Appeal No. 853 of 2012

2 April, 2013

Appellant by : Mauna M. Bhatt

ORDER

Sonia Gokani, J.

Aggrieved by the order of the Income Tax Appellate Tribunal dated 20-7-2012, this Tax Appeal is preferred under section 260A of the Income Tax Act, 1961 (hereinafter referred to as 'the Act').

2. The brief facts leading to filing of the present Tax Appeal are as follow.

2.1 The applicant-Trust preferred an application under section 12A of the Act for registration of the Trust on 25-1-2012 in Form No.10A. This application had contained certificate of registration by the Deputy Charity Commissioner and copy of the Trust deed with comprehensive list of objects. When the applicant was asked to furnish a detailed note of actual activities of the Trust from its inception, the applicant-Trust submitted a copy of bank statement and also had given details of Trust Deed. A report of inspector was called for, who reported that there is no activity relating to the Trust going on at the premises of the Trust. He was directed to meet one of the staff members working in the organization as Lalbhai Group had many trusts operating and carrying charitable activities. A letter was given by the Inspector dated 29-3-2012 which indicated that the Trust intended to work on educational objects, medical relief and object of advancement of music, art, drama, dance, literature etc. It also expected to receive donation from individuals, companies, business organizations and other trusts. On the basis of this report, the Director of Income Tax (Exemption) refused the registration applied under section 12A by holding that due opportunity was given under proviso to section 12AA(1) to the applicant-Trust and not having been satisfied with the explanation, this registration was rejected.