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Showing contexts for: charitable trust objects in Aashutosh Charitable Trust Of ... vs Commssioner Of Income Tax ... on 12 January, 2017Matching Fragments
2. The learned CIT(E) has also erred by refusing registration U/s 12AA on irrelevant grounds & without any material on record in respect of genuineness of its activities of appellant trust. That the appellant craves leave to add or amend the grounds of appeal before the appeal is finally heard and disposed off".
2. Briefly the facts of the case are that the assessee filed application for grant of registration under section 12AA of the Income Tax Act. The assessee furnished details called for on the matter. The CIT (Exemption) noted that the Trust Deed evidences a declaration from the Chairman regarding payment of Rs. 11 lacs for the purpose of the trust property evident from the deed. The same, however, has not been reflected in the bank accounts. The aims and objectives of the trust have been narrated in 21 points but main aim apparently is to start educational institution where course in engineering, technical, medical, management etc. will be taught. In addition, there is a proposal to run a hospital also. In order to corroborate the work being done by the trust vis-à-vis the stated objectives, some photographs have been appended wherein medical aid is shown being provided to people. It is mentioned the photographs pertain to June, July and October,2015. On inquiry, assessee submitted that voluntary medical services have been provided to redeem its charitable objectives and that trust is in the process of opening of a school and hospital for downtrodden class. However, the predominant purpose of the trust at present seems purchase of large tracts of land ostensibly with the aim to construct school and hospital premises.
7. The ld. counsel for the assessee relied upon decision of Hon'ble Punjab & Haryana High Court in the case of CIT Vs B.K.K. Memorial Trust 256 CTR 424 in which it was held as under :
The Trust was created on 23.6.2010 and application under Section 12A(1) (aa) of the Act was moved on 19.7.2010 and the same was rejected on 26.11.2010. The application for registration is required to be made within one year of the creation of the Trust and there is no requirement that the Trust or the institution should have started all its envisaged activities in the first year itself. Under Section 12AA of the Act satisfaction regarding the genuineness of the activities of the Trust is to be seen and the stage for application of income is yet to arrive i.e. when such Trust or Institution files its return. Thus the contention that Trust was not set up for charitable purposes and it was utilizing its income not for the said purpose cannot be examined at this stage as only objects of the Trust had to be considered by the Commissioner. The Trust was in nascent stage and was yet to work towards its objects. No substantial question of law arises for determination before High Court and consequently, the appeal was dismissed. ITA No.710 of 2010 -Commissioner of Income Tax--II, Chandigarh Vs. M/s Surya Educational & Charitable decided on 5.10.2011; ITA No.881 of 2010 The Commissioner of Income--tax, Bathinda Vs M/s Baba Deep Singh Educational Society, SCF 23, Bharat Nagar, Bathinda decided on 13.10.2011, followed 7(i) Decision of Hon'ble Punjab & Haryana High Court in the case of CIT Vs Surya Educational & Charitable Trust 355 ITR 280 in which it was held as under :
As per s. 12AA, an application for registration of the trust and institution is required to be made within one year from the date of creation of the trust or the establishment of such institution. The procedure for registration of the trust or institution is prescribed under s. 12AA. In terms of cl. (a) of s. 12AA, the CIT is to satisfy himself about the genuineness of the activities of the Trust on such inquiries as he may deem necessary. Sub-ss. (1A) and (2) of s. 12AA, are procedural in nature, whereas Sub-s. (3) of s. 12AA, empowers the CIT to cancel the registration of the Trust or Institution, if he is satisfied that the activities of such Trust or Institution are not genuine or are not carried out in accordance with the objects of the trust or institution. Therefore, the object of s. 12AA, is to examine the genuineness of the objects of the trust but not the income of the trust for charitable or religious purposes. The stage for application of income is yet to arrive i.e. when such trust or institution files its return.--CIT vs. Devi Educational Institution & Ors. (1984) 43 CTR (Mad) 48 : (1985) 153 ITR 571 and Aditanar Educational Institution Etc. vs. Addl. CIT (1997) 139 CTR (SC) 7 : (1997) 224 ITR 310 (SC)-distinguished.
7(iv) On the other hand, ld. DR relied upon impugned orders and submitted that assessee is not entitled for registration.
8. We have considered rival submissions. The assessee has filed copy of the Trust Deed which clearly revealed that the aims and objectives of the assessee trust are to run and manage educational institution and to run hospitals and dispensaries etc. Therefore, the main aims and objectives of the assessee trust are charitable in nature. Even this fact is not denied by the CIT (Exemption) in the impugned order. The CIT noted that the amount of Rs. 11 lacs have not been reflected in the bank account. However, the bank account of the assessee clearly show that the amount mentioned in the trust deed has been reflected in the bank account of the assessee. The purchase of land is the initial stage for formation of the trust so that the assessee could achieve its objectives. Therefore, there is nothing wrong if assessee started purchasing land for the purpose of establishing educational institution as well as hospital etc. for the purpose of the assessee trust. The assessee has also produced photographs before CIT(Exemption) to show that the assessee has started voluntary services towards the aims and objectives of the assessee trust which have not been disputed. Copies of the same are also filed in the Paper Book. At the stage of grant of registration under section 12AA of the Act, CIT is required to examine the objects of the assessee trust and genuineness of its activities. At the time of registration under section 12AA of the Act, which is necessary for claiming exemption under section 11 and12, the CIT (Exemption) is not required to look into the activities, where such activities have not or are in the process of its initiation. Where assessee trust is set up to achieve its objectives of establishing educational/medical institutions, is in the process of establishing such institution and receives donations, registration under section 12AA cannot be refused on the ground that trust has not yet commenced charitable activities. At this stage only, genuineness of the objects has to be tested and not the activities which have not commenced. 8(i) We are fortified in our view by judgement of Allahabad High Court in the case of Hardayal Charitable & Educational Trust Vs CIT 355 ITR 534, in which it was held as under :