Meaning of genuineness of trust activities – they should not be bogus, artificial or camouflaged and whether in accordance with objects – ITAT
ABCAUS Case Law Citation:
ABCAUS 3323 (2020) (06) ITAT
Important case law relied upon by the parties:
Baburam Education Society (2018) 96 taxmann.com 606
The assessee filed application for registration under section 12AA and approval under section 80G of the Income Tax Act, 1961 (the Act).
The assessee claimed to have worked in the field of improving the health and educational outcomes of the children, young people including mothers through programs like deworming, early childhood care, diarrhea and pneumonia management etc.
The assessee carried research and provided technical assistance/ consultancy to various government department engaged in the field of health and malnutrition-related problems.
However, the application for registration under section 12AA was rejected by the CIT (Exemption) mainly on the ground that no evidence of actual activities were submitted by the assessee and, therefore, genuineness of the activities of the assessee could not be established.
The assessee had initially filed application for registration under section 12AA of the act which had been dismissed. Referring to the earlier application, the CIT(
E) mentioned that there was no change in the circumstances. Consequently, the approval sought under section 80G was also rejected.
The assessee trust filed an appeal before the Tribunal and submitted that the earlier registration application was withdrawn by the assessee itself and therefore its dismissal was not having any impact on the second application for registration.
Further, it was submitted that in view of the decision of the Hon’ble High Court for granting registration only the charitable nature of object has to be seen.
The Revenue submitted that the assessee had not filed any evidence of its association with Government of India or State Governments for carrying out or conducting its activities claimed in its objects.
It was also submitted that another organization which is a USA based organization, was registered on the same address as that of the assessee.
The Tribunal stated that for registration u/s 12AA of the Act, the assessee must fulfill the twin conditions. Firstly, the objects of the society/trust should be charitable in nature and secondly, the activities of the society/trust should be genuine.
The Tribunal noted the decision of the Hon’ble Allahabad High Court in which it was held that where the trust has not commenced the charitable activities, in such circumstances the only object of the trust should be seen for grant of registration under section 12A of the act.
The Tribunal further observed that in the instant case the assessee had already received donations for undertaking technical assistant to government of India for but no evidence of such activities were furnished before the CIT(E) and therefore the decision relied upon by the assessee was distinguishable.
The Tribunal opined that the reference by the CIT(E) of earlier rejection of the registration was misplaced because said rejection or dismissal of registration was in view of the withdrawal of the application by the assessee and therefore there was no decision on merit either on the object or the genuineness of the activity of the assessee.
The Tribunal found that the CIT(E ) had not disputed the charitable nature of the activity of the assessee but the registration had been rejected mainly due to non-genuineness of the activity of the assessee concluded on the basis of non-submission of evidence by the assessee.
The Tribunal opined that it was imperative to examine the genuineness of the activities of the assessee duly supported with the evidences.
The Tribunal stated that the genuineness of the activities would mean that the activities are not bogus or artificial or camouflaged by some means and whether the activities are in accordance with the object of the institution.
Accordingly, the Tribunal restored the matter of registration under section 12AA of the Act back to the CIT(E) for examining the genuineness of the activities.
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