For registration u/s 12AA only objects and genuineness of activities are relevant considerations. Failure to prove genuineness of donation or loan can not lead to negative inference. High Court approves ITAT view
ABCAUS Case Law Citation:
ABCAUS 2016 (2017) (08) HC
The Substantial Question of Law framed for determination:
(1) Whether on the facts and circumstances of the case, the Hon’ble ITAT is justified in law in allowing the appeal of the assessee by holding that failure to prove genuineness of donation or loan can not lead to the inference that the activities of the assessee are not genuine where the genuineness of the activities of the trust could not be examined for want of furnishing of required details by the assessee?
(2) Whether on the facts and circumstances of the case, the Hon’ble ITAT is justified in law in allowing the appeal of the assessee by holding that the objects are religious or charitable in nature where no details of charitable activities had been filed by the assessee as per provisions of Section 2 (15) of the Income Tax Act, 1961.
(3) Whether the ITAT was correct in interpreting section 12-A/12-AA.
Brief Facts of the Case:
In the instant case, the Tribunal had held the objects of the Trust as religious and charitable in nature and that its activities were genuine and therefore, it qualified for registration u/s 12AA of the Income Tax Act, 1961 (‘the Act’). The ITAT remanded the matter of grant of exemption u/s 80G of the Act on the donations received by the Trust to the CIT for readjudication.
Aggrieved, the Revenue was in appeal before the High Court
Observations made by the High Court:
The Hon’ble High Court observed that all the questions framed were interdependent and virtually sought whether the ITAT is justified in holding that the Trust is for religious and charitable purpose and that its activities are genuine so as to extend the benefit of Section 12AA of the Act to it.
The Hon’ble High Court opined that the questions arising in the appeal were actually not substantial questions of law, rather were questions of fact which had been decided by the Tribunal on the basis of material brought on record.
It was noted that the Tribunal from the objects of the Trust contained in its registered deed came to the conclusion that the Trust was for religious and charitable purpose. The activity of school undertaken by the Trust was also of charitable nature. No other activity was pointed out by the CIT which could be held to be against the objects of the Trust or to be not bona fide or genuine.
The Hon’ble High Court opined that the Tribunal had rightly held that the activities of the Trust are genuine as the list of donors and their names and addresses were supplied by the Trust before the CIT.
The Hon’ble High Court pointed out that for the purposes of Section 12AA of the Act only, the objects of the Trust and the genuineness of its activities are relevant considerations. In the instant case, the objects of the Trust were found to be religious and charitable in nature and the activities i.e. constructing a school was also held to be genuine and in consonance with the objects of the Trust.
The High Court held that in view of the findings of fact returned by the Tribunal, no question of law was actually involved to be answered in the appeal. Accordingly, the appeal was dismissed.