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1 - 3 of 3 (0.23 seconds)Director Of Income Tax (Exemptions) ... vs Meenakshi Amma Endowment Trust on 1 September, 2022
8. We agree with the contention of the assessee that simply
because the assessee collects some school fee, van fee etc., and
incurs expenses in running the school, obtained loan from the
trustees and third parties for the purpose of construction of the
school building etc., alone is not the criteria to say that the Trust is
6 ITA 1806/Mds/12
carrying out educational activities on commercial basis. At the stage
of granting registration, what is to be looked into is whether the trust
formed is for promoting charitable activity or not. That too, when
there is no much time gap between the formation of the Trust and
the date of application for registration. In this case, in a period of 6
or 7 months, the Trust approached the Commissioner of Income Tax
for registration under sec.12AA. The assessee hardly can commence
its activities and in fact it had represented that it is in the process of
setting up of schools, following other formalities etc., so as to bring
the school under the purview of CBSE Syllabus. Buildings are still
under construction. The Hon'ble Karnataka High Court in the case of
Director of Income Tax(Exemptions) v. Meenakshi Amma Endowment
Trust (supra) considered the situation where more or less identical to
the situation faced by the assessee. The Hon'ble High Court held
that the assessee trust having applied for registration under sec.12AA
within a span of 8 months of its formation, registration could not be
refused on the ground that it had not yet commenced any activity
and in such a situation the objections of the Trust have to be
examined to ascertain its genuineness. It is always open to the
7 ITA 1806/Mds/12
Department to examine at the stage of assessment proceedings
whether the assessee has complied with the provisions of sec.11 of
the Act so as to claim exemption and, therefore, there need not be
any apprehension that the assessee Trust is carrying out its activities
on commercial basis. The Assessing Officer is always free to examine
all these aspects at the time of assessment proceedings. Therefore,
in view of the above, we direct the Commissioner of Income Tax to
grant registration under sec.12AA of the I.T. Act to the assessee
Trust.
Section 11 in The Income Tax Act, 1961 [Entire Act]
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