2020 (12) TMI 466 - AT - Income Tax

Assessee society denied registration under Income Tax Act due to non-compliance with religious objectives.

M/s. Evangelical Missionary Society Mission House, Baripada Versus CIT (Exemptions), Hyderabad

The Tribunal concluded that the assessee society was not eligible for registration under section 12A(a) of the Income Tax Act, 1961. The society's ... Exemption u/s 11 - application filed under section 12AA and 80G for grant of registration, which was rejected - assessee society has been denying registration u/s.12A of the Act by observing that applicant society has been established and registered abroad under the religious educational and charitable institution Act of 1861 in Australia and has not been registered in India - HELD THAT:- As observed that the applicant society is controlled by head office located abroad and thus, having regard to the provisions of section 11(1) r.w.s 12A(a) of the Income tax Act, 1961 read with Rule 17A of the income tax Rules, 1962, the society is not eligible for desired certificate of registration u./s.12A(a) of the Act. Ld CIT (E) observed that since the applicant society is governed not in Indian Regulation and is subject to regulations under that of foreign Act in Australia, therefore, it is not permissible to grant necessary certificate sought u./s.12A(a) of the Act. From the copy of previous order dated 27.9.2013 passed by ld CIT (E) denying registration u/s.12A of the Act to the assessee society, it is ample clear that the assessee society was denied registration as application for grant of registration u/s.12A(a) was rejected Assessee could not show any change in the objects of the society, any change in the source of establishment of the society and also could not controvert that the activities of the society are still being controlled by the head office located at abroad in Australia. We also clearly observed that issue is covered by the decision of the Tribunal dated 13.6.2014 (supra) in favour of the revenue. Therefore, we have no alternative but to uphold the order of the ld CIT(E) denying registration u/s.12A of the Act. Appeal of the assessee society is dismissed. Issues Involved:1. Eligibility for registration under section 12A(a) of the Income Tax Act, 1961.2. Compliance with the original objectives of the trust.3. Registration and control of the trust abroad.4. Previous rejections of the registration application.Issue-wise Detailed Analysis:1. Eligibility for Registration under Section 12A(a) of the Income Tax Act, 1961:The primary issue revolves around the eligibility of the assessee society for registration under section 12A(a) of the Income Tax Act, 1961. The CIT (E) rejected the registration application on the grounds that the society is registered in Australia and not in India. According to section 11(1) read with section 12A(a) of the Income Tax Act and Rule 17A of the Income Tax Rules, 1962, the society must be governed by Indian regulations to be eligible for registration. The Tribunal upheld this view, noting that the society's control and registration abroad disqualify it from receiving the desired certificate under section 12A(a).2. Compliance with the Original Objectives of the Trust:The CIT (E) observed that the activities carried out by the assessee society were not in accordance with the original objectives mentioned in its constitution, which were of a fully religious nature. The primary objective was to 'preach and teach the Gospel to the people of this district by means of itineration and settled work at Mission Stations within the district of Mayurbhanj and to establish indigenous churches.' The CIT (E) concluded that the society's activities did not align with these religious objectives, thus making it ineligible for registration under section 12A(a).3. Registration and Control of the Trust Abroad:Another significant issue was that the assessee society was established and registered in Australia under 'The Religious Educational and Charitable Institution Act of 1861'. The CIT (E) emphasized that since the trust is governed by foreign regulations and not Indian law, it cannot be granted registration under section 12A(a). The Tribunal agreed, noting that the society's control by a head office located abroad further disqualifies it from registration under Indian tax laws.4. Previous Rejections of the Registration Application:The CIT DR highlighted that the assessee society's previous application for registration under section 12A was dismissed by the CIT (Exemptions) on 27.9.2013, and the subsequent appeal was also dismissed by the Tribunal on 13.6.2014. The Tribunal observed that there were no changes in the objects or activities of the society since the previous rejection. The Tribunal reiterated that the society's activities and objectives remained unchanged and continued to be controlled by the head office in Australia, thus upholding the previous decisions and denying the registration.Conclusion:The Tribunal, after considering all submissions and perusing the records, concluded that the assessee society is not eligible for registration under section 12A(a) of the Income Tax Act, 1961. The society's registration and control abroad, non-compliance with its original religious objectives, and previous rejections of the registration application were key factors in the decision. Consequently, the appeal of the assessee society was dismissed.