TaxTMI 
TaxTMI 
2018 (2) TMI 42
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....ed by the Trust which are genuine and charitable in nature and are covered under section 2(15) of the Act. 3. That the Id. CIT has also exceeded the scope and nature of enquiries at the stage of grant of registration as prescribed under section 12AA. The said order be set aside and consequently the CIT be directed to grant registration. 4. That the learned CIT has erred in law and on facts in rejecting registration u/s 12AA on the ground of Trust being for Corporate Social Responsibility ('CSR') activities of the settlor being a Company incorporated under the Companies Act, 2013, when all such activities are charitable in nature and are covered under section 2(15) of the Act. Further, the Ministry of Corporate Affairs, GOI vide Circular No. 21/2014 dated 18-6-2014 has allowed the companies to contribute to the Trusts registered under Income Tax Act for carrying out CSR activities as mandated under section 135 of the Companies Act, 2013. 5. That the Id CIT was not justified to reject the application for registration u/s 12A of the Act for which proper opportunity of being heard was not given and no specific show cause notice stating the reasons was....
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....r: "13. Considering all the above, it is safe to conclude in the present case (i) that the main aim appears to be forming a trust merely for complying to CSR requirements (ii) that the trust has been stated to formed to implement the CSR activities of the settler company (iii) that the composition of the trust is restrictive and to that extent not amenable to public charity (iv) that no activity in sync with the requirements of the Companies Act has taken place in the trust so far (v) that the activities so far further show that the trust has relinquished its function, as the primary implementation agency and undertaking its own programmes to impact targeted beneficiaries, by transferring its funds to other societies (vi) that it also militates against the legal principle that social enterprises cannot be a direct recipient of money from a corporate as it is a profit making company. Additionally, it is reiterated to be a mere instrument to carry out the CSR functions of the settler company and given its restrictive composition it surely doesn't ensure to the benefit of general public nor does it partake the meaning of public trust. The applicant for registration u/s 12A is....
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....tration to enable the assessee to respond. Hence, natural justice was denied to the appellant. 5. That the appellant had, however, maintained during the registration proceedings that the donation received from Ludhiana Beverages Private Limited amounting to Rs. 11,00,000 during the previous year ended 31-3- 2016 is out of CSR Obligations under the Companies Act, 2013, and out of this amount a sum of Rs. 10 lacs has been contributed to the said M/s Charity Aid Foundation, New Delhi being an income tax approved charitable institution which has been carrying on public charitable activities including CSR activities as enlisted in Schedule VII of the Companies Act, 2013. 6. Subsequently, the appellant has procured (1) the copy of Trust Deed and (2) the order under section 80G of the Income Tax Act, 1961 of the said M/s Charity Aid Foundation, New Delhi. The Trust deed states the trustees and the objects of the Trust. The said Trust has incorporated various objects as stated in Corporate Social Responsibility (CSR) under the Companies Act, 2013. The Income Tax Department has also approved the Trust under section 80G of the Income Tax Act, 1961. Since these documents wer....
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....s before the Worthy CIT(E). The assessee trust has also made donation to other (unrelated) registered/recognized charitable institutions having valid exemption on similar charitable activities as enshrined in the objects of the Appellant Trust. Further the trust has also provided monetary aid to Government run schools in the surrounding areas and all the amounts if for genuine charitable activities and are appearing in the audited income and expenditure account and no infirmity in the activities carried down by the assessee trust have been pointed out in this regard by the Worthy CIT(E), however, the Worthy CIT has exceeded his powers available to him u/s 12AA and has stepped into shoes of Assessing Officer whose scope is to determine the income of the trust which is an annual exercise for each assessment year. Hence, the order passed by the Ld. CIT(E) is liable to be set aside. 5. On the contrary, the Ld. DR relied upon the order passed by the Ld. CIT(E) and submitted that the order under challenge is well reasoned and logic order, does not suffer from illegality, perversity and impropriety. 6. We have gone through with the facts and circumstances of the case, as it as right....
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....ein below. SCHEDULE VII (See Section 135) Activities which may be included by companies in their Corporate Social Responsibility Policies Activities relating to:- [(i) Eradicating hunger, poverty and malnutrition," promoting health care including preventive health care"] and sanitation '[including contribution to the Swach Bharat Kosh set-up by the Central Government for the promotion of sanitation] and making available safe drinking water. (ii) promoting education, including special education and employment enhancing vocation skills especially among children, women, elderly and the differently abled and livelihood enhancement projects. (iii) promoting gender equality, empowering women, setting up homes and hostels for women and orphans; setting up old age homes, day care centres and such other facilities for senior citizens and measures for reducing inequalities faced by socially and economically backward groups. (iv) ensuring environmental sustainability, ecological balance, protection of flora and fauna, animal welfare, agroforestry, conservation of natural resources and maintaining quality of soil, air and water '[including con....
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....e are in agreement with the observation of the Ld. CIT(A) that the method adopted by the applicant, which is controlled by single company (settler) and managed through trustees who are simultaneously part of the Company, in fact, seems to be in-house captive trust ostensibly for doing C.S.R. activity in order to control the amount which is compulsorily to be spent. With regard to the contention of the assessee, the Ld. AR that the scope of enquiry u/s 12A of the Act is very limited for his satisfaction with regards to the object of the trust and the genuineness of the activities. We are of the considered opinion that certainly it is true that the scope of enquiry by the CIT(E) is very limited to satisfy himself about the objects of the society of institution and the genuineness of its activities and the judgments relied upon by the assessee are not disputed, however, he is fully empowered to call for such documents or information from the society or institution as he thinks necessary in order to satisfy himself about the genuineness of the activities of the society or institution and may also make such enquiry as he may deem necessary in this behalf. Further he is also empowered....