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TaxTMI 
TaxTMI 
TaxTMI 
2016 (6) TMI 129
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....A. Thus the application for registration u/s 12A was neither filled in properly nor accompanied by the documents as required by Rule 17A of the Rules. (iii) Besides the society has not filed the application within the stipulated time period of one year from the creation of the trust as per provisions of section 12A(1)(a) of the IT Act. For this reason petition for registration u/s 12A cannot be acted upon. The rejection of the assessee's request for registration u/s 12AA was communicated through this office letter dated 30.8.2012. The assessee trust filed a petition on 25.9.2012 requesting to review the order and grant registration u/s 12AA of the IT Act. In order to finalise the case on merit, the applicant was given ample opportunity of hearing to substantiate genuineness of its creation and activities. During the course of proceedings, for consideration of its claim of review petition in course of hearing on 8.11.2012 & 7.12.2012 the applicant trust filed various supporting documentary evidences including evidencing creation of trust i.e photo copy of trust deed dated 267.2006 and registered on 2.8.2006, certified copy of minute book (dated 19.2.2006), certified copy of ca....
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....unless declared by a non-testamentary instrument in writing signed by the author of the trust or the trustee and registered or unless the ownership of the property is transferred to the trustee. In case of movable property the trust may be declared either (i) by a non-testamentary document or by will in the case of immovable property , (ii) by mere transfer of ownership of the property without making any declaration, or executing any document or will. Hence, in the case of the applicant trust , the sum of Rs. 9 lakhs comprising the movable property to be settled upon creation of the trust was not available with the settlors on the date of registration of the trust deed i.e on 26.7.2006, as discussed in above paragraph. Here the essential precondition of creation of trust is not satisfied. Trust was created on false statement. There was no valid trust on the date of application for registration u/s 12AA. A show cause notice was issued on 13.12.12, asking the applicant to show cause as to why application for registration u/s 12AA should not be rejected in view of that no valid trust was come into existence. 2.1. The assessee explained that the seven settlors were seized and ....
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.... in the facts, circumstances as well as under the law, the ORDER passed by Ld. CIT - XXI on 30.08.2012, refusing grant of Registration u/s 12AA in violation of statutory period of six months as required u/s 12AA(2), got barred by limitation and the Appellant, in consequence, should be presumed to be granted Registration. [2004]91 ITDI (BANG)." 4. The Learned AR argued that the order granting or refusing registration should have been passed in terms of section 12AA(2) of the Act within 6 months from the end of the month in which application in Form 10A was filed. In the instant case, the order was passed beyond six months refusing the registration. Hence he placed reliance on the decision of the Co-ordinate Bench of Bangalore Tribunal in the case of Karnataka Golf Association vs Director of Income Tax reported in (2004) 91 ITD 1 (Bang. ITAT) in support of his contentions wherein it was held that where the trust files an application for registration, but no order is passed within statutory period, authority cannot deprive assessee benefit of registration. He argued that the registration has been refused only on the ground that the trust had come into existence in view of the fact ....
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....uineness of the activities of the Trust as well as its objects in terms of section 12AA(1)(a) of the Act. It was argued that admittedly no adverse remarks were sent by the Learned AO in this regard. However, the Learned CIT had proceeded initially to reject the application on the ground that the same was not made within one year from the date of creation of the trust and there is no power to condone the delay provided in the statute. In this regard, we find that in case the applicant had preferred an application on or after 1.6.2007, the Learned CIT, if satisfied with the charitable objects of the trust and genuineness of the activities of the trust, is duty bound to grant registration from the date of application of the trust. He cannot simply reject the application just because it is filed beyond one year period. We also find that this order refusing registration on flimsy ground was passed beyond the period of six months from the end of the month in which application was filed by the assessee which is in gross violation of section 12AA(2) of the Act. 5.1. We find that in the second round of rectification proceedings, the Learned CIT ultimately had again rejected the registrat....
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....special cases, the trustees had been authorized 10 utilize the corpus fund also for such purposes. The trustees had collected a sum of Rs. 5,71,927 towards contribution to the trust which had been deposited with the bank. The statement of account issued by the bank, which was placed before the Commissioner showed this figure. Therefore, there were sufficient funds available with the trust, from which the charitable activities could be carried out. The Commissioner was not justified in refusing 10 grant registration to the assessee- trust. The reasons given by him for such refusal were extraneous to section 12AA. The Commissioner had not doubted the genuineness of the activities of the trust. For the above reasons, the registration was to be allowed to the assessee and the order passed by the Commissioner under section 12AA was to be set aside." 5.2. We find that the Learned CIT had also observed that the assessee had violated the provisions of section 5 and 6 of Indian Trusts Act, 1882. For the sake of convenience, the relevant provision is reproduced hereinbelow:- Section 5 of Indian Trusts Act, 1882 Trust of immovable property - No trust in relation to immovable prope....
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....ctically become redundant as the registration is granted only with effect from the date on which application is made after 1.6.2007. Hence viewing from this perspective, the assessee trust not bringing in the part of the promised initial corpus fund would not vitiate the status of the trust coming into existence much less seeking registration under the Income Tax Act. We hold that what is relevant at the time of granting registration u/s 12AA of the Act is that the Learned CIT should examine whether the objects of the trust as enumerated in the trust deed are charitable in nature and activities of the trust are genuine. It is well settled that the assessee trust cannot be forced to have carried out the objects as per the trust deed before seeking registration u/s 12AA of the Act. While this is so, both the receipts of the trust as well as the application of the funds of the trust would become irrelevant for examination at the time of granting registration. However, the same would be very much relevant at the time of assessment proceedings wherein the eligibility of claim of exemption u/s 11 of the Act could be examined in detail. We find that the Hon'ble Kerala High Court in its re....
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....thin which the Commissioner shall pass an order either granting the approval or rejecting the application shall not exceed six months from the end of the month in which such application was made: Provided that in computing the period of six months, any time taken by the applicant in not complying with the directions of the Commissioner under sub-rule (3) shall be excluded. In the instant case, the original order refusing registration on flimsy grounds was passed without granting opportunity of being heard to the assessee. Admittedly the details called for by the Learned CIT were submitted in the month of march 2012 itself and order refusing registration at the first instance was passed on 30.8.2012 which is beyond six months from the end of the month in which application was filed. Moreover, we find that the provision relied upon by Learned DR is relevant for granting approval under section 80G of the Act and not for granting registration u/s 12AA of the Act. 5.5. We find that the Learned AR had raised an additional ground stating that the order refusing registration u/s 12AA of the Act has been passed by the Learned CIT beyond the stipulated period of 6 months as per sect....
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....ry order granting or refusing registration under clause(b) of sub-section (1) of that Section shall be passed before the expiry of six months from the end of the month in which the application was received under clause (a) or clause (aa) of the sub-section (1) thereof. Thus while processing the application u/s 12AA of the Act, the time limit of six months has to be adhered to by the Commissioner of Income Tax (Exemptions). However, it has been brought to the notice of the Board that the said time limit has not been observed in some cases. 2. The undersigned is directed to convey that the aforesaid time limit of six months is to be strictly followed by the Commissioner of Income tax (Exemptions) while passing order u/s 12AA. The CCIT (Exemptions) may monitor the adherence of prescribed time limit and initiate suitable administrative action in case any laxity in adhering to the same is noticed." We also find that the Hon'ble Supreme Court in the case of CIT vs Society for the Promotion of Education , Allahabad in Civil Appeal No. 1478 of 2016 dated 16.2.2016 had categorically held as below:- 3. The short issue is with regard to the deemed registration of an application....
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....esides, the said view would not create any irreversible situation, because under section 12AA(3), the registration can always be cancelled by the Commissioner, if he is satisfied that the objects of such trust or institution are not genuine or the activities are not being carried out in accordance with the objects of the trust or institution. The only drawback is that such cancellation would operate only prospectively. Therefore, if a view is taken that non-consideration of the registration application within the time fixed by section 12AA(2) would amount to deemed grant of registration, the only adverse consequence likely to flow from such a view, in respect of any case of that assessee arising in future would, at best, be some loss of revenue from that individual assessee from the date of expiry of the limitation under section 12AA(3) till the date of cancellation of that registration, if such cancellation is called for. [Para 12] For the interpretation of a statute, purposive construction' of the enactment, which gives effect to the legislative purpose/intendment, if necessary, must be followed and applied. [Para 13] Considering the pros and cons of the two views, b....