TaxTMI 
TaxTMI 
2021 (8) TMI 1088
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....section 12AA of the Act before Ld. CIT(Exemption) on 09.01.2018. The Ld. CIT(Exemption) has gone through the application, so filed by the assessee and then issued a show cause letter dated 02.11.2018 asking the assessee to furnish detailed note on the activities carried out by it and copy of trust deed, Donation received, Donation paid, and other documents. In response, the assessee has furnished documents and its written submissions on 25.12.2018, through e-mail. The assessee has stated in its reply that "the association is formed as an Institution under its Memorandum of association and Rules and Regulation. As the association is neither a Trust nor a Section 8 Company, it does not require any registration from any authority". 4. However, Ld. CIT(Exemption) has denied the registration u/s 12AA of the Act, mainly for the reasons that assessee is neither registered with Registrar of Public Trusts, nor it is registered with Companies Act, as section 8 company. The Ld. CIT(Exemption) also noted that assessee has failed to file documentary evidences to satisfy about the genuineness of its activities and to verify these activities in consonance with its objects. Therefore, looking t....
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.... Learned CIT(DR), representing the Revenue. We find that one key issue arises for our apt adjudication in the instant lis, which is, whether it is necessary for assessee, for registration under section 12AA of the Act, that the assessee should be registered with charity commissioner or it should be a section 8 Company, under the Companies Act? We note that said issue under consideration is no longer res-integra. We note that Coordinate Bench of ITAT Ahmedabad in the case of Panchkuva Cloth Merchant Association (2021) 128 taxmann.com 391 (Ahmedabad - Trib.) held that for the purpose of registration under section 12AA of the Act, it is not necessary for the assessee to be registered with charity commissioner or it should be a section 8 Company, under the Companies Act. The findings of the Coordinate Bench is reproduced below: "The ld. CIT(Exemption) has rejected the application of the assessee for approval u/s 12AA of the Act holding that the assessee has failed to file documentary evidences about the genuineness of its creation and its activities and to verify these activities in consonance with the objects. The relevant part of the decision of the Ld. CIT(Exemption) is ....
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.... conveniently be produced, it shall be open to the Commissioner to accept a certified copy in lieu of the original......... " An analysis of section 12A(a) and rule 17A(a) shows that the fact to be established is the creation of trust and this fact is required to be established by producing constructive and evidential documents. When the trust is created under an instrument, the rule requires the production of the evidential documents, i.e., the documents evidencing the creation of the trust. The evidential documents cannot be limited to documents which directly prove the creation of the trust; they will embrace all documents which afford a logical basis of inferring creation of the trust and all such documents can be described to be 'document evidencing the creation of the trust within the meaning of rule 17A(a). In other words, document evidencing the creation of the trust and existence legally would be the registration certificate issued by the competent authorities i.e. Charity Commissioner, Registrar of Societies or registrar of Company. Here, the Applicant Association failed to satisfy the requirement of Rule 17A of the IT Rule, 1962. ii) Withou....
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....registration. If he is not satisfied of the aforesaid, the request made in the application may be declined." As discussed above, the applicant has failed to file documentary evidences to enable me to satisfy about the genuineness of its creation, its activities and to verify these activities are in consonance with its objects." 4. During the course of appellate proceedings before us, the ld. counsel has filed paper book comprising copies of detail and document filed before the ld. CIT(Exemption). He contended that ld. CIT(Exemption) has erred in rejecting application in a general manner for approval u/s 12AA of the Act without considering the specific nature of object and activities of the assessee as cloth merchant association with object to encourage cloth business and to encourage co-operation and friendship amongst members of the association. The ld. counsel has placed reliance on the decision of Jurisdictional High Court of Gujarat in the case of Gujarat State Plastic Manufacturers Association Vs. CIT Special Civil application No. 6059 of 1996 dated July, 10, 1998. The ld. counsel has further submitted that in the above stated case the association was establi....
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....n will not do any act for its profit, will fulfil the object of the association and that its funds, reserve fund etc, will be used for the general and extraordinary object of the association." The ld. CIT (Exemption) stated that the assessee association was not registered with any competent authorities i.e. Charity Commissioner/Registered Registrar of Societies/Registrar of Companies etc.. In this regard, we have perused the provision of section 12A of the Act r.w.s. Rule 17A of the I.T. Rule, 1962. The Clause (a) of rule 17A of Income Tax Rules requires that the application of registration under section 12A of a charitable or religious trust or institution would be accompanied by the following documents namely, where the trust is created or the institution is established, under an instrument, the instrument in original and where the trust is created or the institution is established, otherwise than under an instrument, the document evidencing the creation of the trust or the establishment of the institution. Thus, rule 17A nowhere envisages the existence of a trust deed or its registration. The factum of existence of trust can also be established by producing documents ev....
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....rs, construction of library, to conduct study meetings, to enhance education, and to publish articles of members in monthly journal etc, and we note that these activities fall under the ambit of "general public utility". We are of the opinion that so far as grant of registration u/s 12AA of the Act is concerned, the Ld. CIT's jurisdiction is only to verify the objects of the institution and genuineness of the activities, meaning thereby that he has to satisfy himself that objects are charitable in nature and activities being carried on or to be carried on are genuine, meaning thereby that they are in consonance for achieving of charitable objects and nothing else. From a reading of section 12A and 12AA of the Act what is intended thereby is only a registration simplicitor of the entity/trust. The registration u/s 12AA of the trust has been made a condition precedent for claiming the benefits of the exemption u/s 11 and 12 of the Act. While processing the application for registration u/s 12AA of the Act, no examination of the modus of the application of the funds of the assessee is called for. The stage for consideration of the application of the funds vis-a-vis objectives of the....