TaxTMI 
TaxTMI 
TaxTMI 
2016 (2) TMI 460
X X X X Extracts X X X X
X X X X Extracts X X X X
....le and refused regn. u/s 12AA even without finding "objects" of the trust as not genuine and hence order is inherently illegal. 3. That learned Commissioner of Income Tax has gone beyond the scope of provision of section 12AA and erred in recording findings like ".....trust has not maintained its affairs in a transparent and logical manner....." Without any evidence or material against the assessee and hence order is perverse. 3. The Ground of appeal raised in ITA No. 6202/Del/2013, are as under: 1. The learned Commissioner of Income Tax grossly erred in law as well as on facts in refusing to grant registration u/s 80G of the Income Tax Act, 1961 ignoring the fact that assessee has complied with all the requirement provided under the circumstances of the case. 2. That, learned commissioner of Income Tax ignored the fact that the assessee has complied with all the conditions laid down in clauses (i) to (v) of sub-sec. (5) of Section 80G of the Income Tax Act, 1961 and as such trust is entitled for approval u/s 80G(5). 3. Because, learned Commissioner of Income Tax has gone beyond the scope of relevant provisions and erred in recording like "......trust has not maintaine....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ner. Further, the learned Authorized Representative submitted that there was nothing wrong in extending loan to the trust by managing trustee or transferring land by one of the trustees to the trust through registered sale deed and having sale consideration at arm's length price. Learned Authorized Representative also drawn our attention to the object clauses of the trust deed placed at page no. 3 of the assessee's paper book and the application of the funds at page 7 to 9 of the assessee's paper book. The learned Authorized Representative also submitted that the subordinate officer in his report has not found anything adverse in the activities of the trust and he recommended for grant of registration. In support of his proposition that at the time of registration of trust only genuineness of objects are to be examined, he relied on the judgement in the case of CIT Vs RS Bajaj Society (2014) 42 taxmann.com 573 ( Allahabad) and other cases submitted in the form of paper book. 7. On the other hand, ld. Commissioner of Income-tax (DR) submitted that the seller of the land was one of the relatives of the trustees and the trust was not having any funds to finance the property, and for ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....gistration under Section 12AA of the Act, the Commissioner of Income Tax is required to satisfy the twin conditions of charitable nature of the objects of the trust and genuineness of the activities carried out, but where the trust is new, the Commissioner of Income Tax cannot reject registration merely on the ground that no activity have been carried out. The assessee trust was constituted on 02.11.2011 and thereafter the assessee has commenced the activity of purchase of land for the purpose of achieving one of its objects of education. In the present case the first condition of charitable nature of object has not been disputed by the Revenue. In respect of the second condition, the learned Commissioner of Income-tax given finding that the trust has not maintained its affairs in transparent and logical manner and transaction made by the trust for purchase of land were highly disproportionate to the known funds available with the trust. The learned CIT(DR) has interpreted the said transaction of purchase of land from one of the relatives of the trustee as a colorable transaction. The learned Authorized Representative has denied such allegations of CIT(DR). We are also in agreement....
X X X X Extracts X X X X
X X X X Extracts X X X X
....oduced as under: 17. We are not inclined to accept the Revenue's contention that this was a colourable device and that the entire arrangement was a paper arrangement. Firstly, there is no provision in the Act which would prevent the assessee from selling loss making shares. Simply because such shares were sold during the previous year when the assessee had also sold some shares at profit by itself would not mean that this is a case of colourable device or that there is a case of tax avoidance. Further, there is no restriction that such sale or transaction cannot be effected with a group company. As long as the Revenue could not doubt the sale price of the shares, it would not be open for the Revenue to contend that the assessee had shown loss which it did not really suffer. In the present case, it is not even the case of the Revenue that shares were sold at a price lower than the market rate. If that be so, the question of inflating the loss by transferring the shares to group company would not arise. Under ordinary circumstances, it is always open to the assessee in his own wisdom to either hold on to certain bunch of shares or to sell the same to avoid further loss, if he f....