2019 (1) TMI 1846 - AT - Income Tax

Trust's Charitable Nature Recognized for Registration

Vastushodh Foundation Versus The Commissioner of Income Tax-1, Pune.

Vastushodh Foundation Versus The Commissioner of Income Tax-1, Pune. - TMI Issues:1. Condonation of delay in filing the appeal.2. Denial of registration u/s.12AA of the Income Tax Act, 1961 to the assessee.3. Interpretation of the objects clause in the Trust deed for charitable status.4. Comparison of judicial precedents regarding charitable status.5. Procedure for granting registration u/s.12AA and its implications.Analysis:Issue 1: Condonation of delay in filing the appealThe appeal was filed with a delay of 483 days. The Assessee submitted an affidavit explaining the reasons for the delay, stating it was not intentional. The Delay was condoned after considering the reasons in the affidavit, as the delay was satisfactorily explained.Issue 2: Denial of registration u/s.12AAThe Assessee, a charitable trust, was denied registration u/s.12AA based on the Trust deed's objects clause not being entirely charitable. The Assessee argued that the decision of the Delhi High Court cited by the CIT was not applicable to the registration issue. The Tribunal emphasized that the primary purpose being charitable, ancillary non-charitable objects do not affect the Trust's charitable status.Issue 3: Interpretation of the objects clause for charitable statusThe Tribunal highlighted that the Trust's objects being predominantly charitable, other non-charitable objects do not disqualify it from being a valid charity. The Tribunal referred to legal precedents, emphasizing that the Trust's overall charitable nature determines its eligibility for registration u/s.12AA.Issue 4: Comparison of judicial precedentsThe Tribunal compared the decision of the Delhi High Court on exemption u/s.11 with the current case on registration u/s.12AA. It distinguished between the two issues and relied on the Supreme Court's decision emphasizing the charitable nature of the Trust's predominant objects.Issue 5: Procedure for granting registration u/s.12AAThe Tribunal clarified that the registration process under u/s.12AA is distinct from assessing the Trust's charitable activities for exemption u/s.11. Compliance with the registration procedure warrants granting registration, leaving the assessment of charitable activities for the assessment stage. The Tribunal directed to grant registration u/s.12AA to the Assessee Trust, allowing the appeal.This detailed analysis of the judgment emphasizes the importance of the Trust's predominant charitable purpose for registration under u/s.12AA, while distinguishing between registration and exemption issues under the Income Tax Act.