TaxTMI 
TaxTMI 
2013 (11) TMI 903
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....d vouchers and bank statement etc., for verification. In response to the same Shri V. Jawahar and Sri K. Prabhakar, both CAs and ARs of the assessee institution appeared along with Shri Aravind Babu, Manager (Finance) of the said institution, and filed reply to the said questionnaire. They filed also further information to different queries raised during the proceedings before DIT(E). 4. According to the AR, the sole object of the assessee is to carry on charitable activities as defined u/s. 2(15) of the Act. The assessee rendered services to the sick, poor, disabled and handicapped particularly the blind persons so as to prevent permanent disability and blindness. For the purpose of the assessee entered into an agreement on 27.10.2011 with Operation Eight Universal (OEU), a federal corporation formed under the laws of Canada which its head office is located in Alberta, Canada whereby the assessee-company derived rights to use the "OE" brand. According to the AR the licence is not affecting the independence of the assessee in achieving its objects for which it is formed. The assessee is an independent organisation and it is not an extended arm of OEU, Canada or L.V. Prasad Eye I....
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....f rendering medical relief, Eye Care and particularly in the service of blind and prevention of Blindness, etc., and formed "not for profit". As per the Article of Association of the assessee company it has been clearly stated that the company is a private limited company, limited by Guarantee and not having share capital. In such a case obtaining name availability for the company for words like "India" is not allowed vide the availability of names Rules 2011 issued by the Ministry of Corporate Affairs, Ministry of Govt. of India, and in any case absence of the words "India" from the name of the assessee company cannot take away its status as an independent company incorporated under the Companies Act, 1956. The certificate of Incorporation issued by the Registrar of Companies is a conclusive proof that the company is a separate legal entity. The Director of Income Tax (Exemptions) has simply alleged that in the absence of the word "India" in the name of the company will make the assessee company a non independent entity is devoid of any merit and he could not bring any material on records to prove his allegations. The allegation without any substance cannot be taken as a reason of....
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....grant of registration u/s.12A has to be made by the Trust or Institution in Form No.10A, before the expiry of a period of one year from the date of the creation of the Trust or Establishment of the Institution. (ii) Such Form No.10A should be accompanied by the original instrument under which the Trust is created or the institution is established together with a copy thereof. (iii) The application should ordinarily be accompanied by two copies of the accounts for each one of the three years prior to the year in which the application is made. Where, however, the Trust or Institution was not in existence in any of the three previous years or the accounts for any such year have not been made up, copies of the accounts for such year/years need not be submitted along with the application. 12. The AR submitted that from the provisions of Sec.12AA read with Rule. 17A and also as per the contents of the Circular No.108 dated 20/03/1973, the following points will emerge: (i) For the purpose of registration of an institution u/s.12A, the application has to be submitted to the Commissioner of Income Tax in ....
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...., the assessee company has completely satisfied the requirements prescribed u/s.12AA of the IT Act, 1961 r.w. Rule 17A of the Income Tax Rules, 1962 and completely eligible for grant of Registration u/s. 12A of the Income Tax Act. The Director of Income Tax (Exemptions) has declined to grant registration on extraneous issues which are not required to be examined for the grant of registration. The AR relied on the following judicial decisions: (a) Vision Institute (India), v. DIT(E) in ITA Nos. 573 & 574/Hyd/2012 wherein the Tribunal vide its order dated 7/9/2012 has considered a case wherein the application u/s. 12A has been rejected by the Commissioner of Income Tax alleging that the Trust has not carried out many activities from which it may not be possible to determine the genuineness or other wise of the activities of the Trust. The Tribunal has held as follows: "In our opinion the primary examination to be conducted by the DIT(E) at the time of granting registration is to ensure that the objects of the Trust are Charitable in nature as per Sec. 2(15) of the IT Act and it is not formed with a vi....
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....8 (Kerala) wherein the Hon'ble Kerala High Court observations have been reproduced below: "2. A reading of the Section shows that the registration under section 12A is a pre-condition for availing of the benefit under Sec. 11 and 12. Sec. 11 provides for exemption of income which is applied for charitable purpose. Sec. 12 is in the nature of an explanation to Sec. 11. Before a person can claim the benefit of Sec. 11 or Sec. 12, as the case may be must obtain registration u/s. 12A. The application for registration under Sec. 12A has to be made in Form No. 10A prescribed by R. 17A before expiry of one year from the date of creation of the trust or the establishment of the institution, whichever is later. It has to be made by the person in receipt of the income of the Trust. 3. It is evident that, at this stage, the CIT is not to examine the application of income. All that he may examine is whether the application is made in accordance with the requirements of Sec. 12A with R 17A and whether Form No. 10A has been properly filled up. He may also see whether the objects of the trust are charitable or not. At this stage, it is not p....
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....icense agreement for use of name, etc., have nothing to do with the charitable nature of the objectives of the company and the genuineness of the activities it has conducted. There is no dispute about the charitable nature of the objectives and genuineness of the activities and therefore, the refusal of the grant of registration u/s.12A is unjustified. The learned AR prayed that the Tribunal may direct the Director of Income Tax (Exemptions) Hyderabad to grant registration u/s. 12A of the Income Tax Act, 1961 to the Assessee Company. 21. On the other hand, the learned DR submitted that the appeal is filed by the assessee against the rejection of application in Form N0. 10 for registration under section 12 of IT Act. 1961 by the DIT(E), Hyderabad. In this case, the assessee institution received funds from Operation Eyesight Universal (OEU), Canada through L.V. Prasad Eye Institute (LVPEl), Hyderabad. The DIT (Exemption) has held that the foreign organization of Canada was funding for its own programmes through LVPFI. but showing it as in the hands of the assessee-institution. Thus. it was stated that it is only an extension of the said foreign institution, OEU, Canada, which fact....
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....inal vouchers of various expenses are with LVPEI and only photo copies are available with the assessee-institution. Under these circumstances, it was held that the assessee-institution cannot be accepted as an independent charitable organization having existence of its own. Accordingly, the DR prayed the Tribunal to uphold the order of the DIT(E), Hyderabad. 26. We have heard both the parties and perused the material on record. Section 12AA of the Act provides procedure for registration of a trust/charitable institution. Clause (a) of subsection (1) of section 12AA empowers the CIT/DIT(E) to call for such documents or information from a trust/charitable institution as he thinks necessary in order to satisfy himself about genuineness of activities of a trust/charitable institution and may also make such enquiry, as he may deem necessary in this behalf. The said provisions in section 12AA make it clear that the CIT/DIT(E) is not supposed to allow registration with a blind eye. In the present case, the DIT(E) has considered the relevant papers before him which included financial statements, books of account, agreements, etc. The DIT(E) after considering the record before him, has o....
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....or retention, of the income from such activity:] [Provided further that the first proviso shall not apply if the aggregate value of the receipts from the activities referred to therein is [twenty-five lakh rupees] or less in the previous year;]" 29. So, the object of the medical relief has been declared as of charitable purpose by the Legislature. It was held by the Supreme Court in the case of ITO v. Surat Art Silk & Cloth Mfrs. Association (121 ITR 1) as under: "It is now well settled as a result of the decision of this Court in Dharmadeepti v. CIT 1978 CTR (SC) 120 : (1978) 114 ITR 454 (SC), that the words 'not involving the carrying on of any activity for profit' qualify or govern only the last head of charitable purpose and not the earlier three heads. Where, therefore, the purpose of a trust or institution is relief of the poor, education or medical relief, the requirement of the definition of 'charitable purpose' would be fully satisfied, even if an activity for profit is carried on in the course of the actual carrying out of the primary purpose of the trust or institution." 30. At this stage it is also pertinent ....