AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2023 (11) TMI 1098
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....Exemptions) has erred in law and on facts in not allowing the registration under section 12AA of the I.T. Act by holding that the applicant trust has been formed to implement the CSR activities and not amenable to public charity whereas as per explanation filed and material placed on record and in view of section 135(1) and Schedule VII of the Companies Act, 2013 read with Companies (Corporate Social Responsibility Policy) Rules, 2014, the company as well as trust duly qualifies all the conditions as laid down under the Companies Act and Income Tax Act. As such, the trust is entitled to registration. The same be allowed. 3. That the appellant craves to add or amend the grounds of appeal." 3. The assessee has filed application in Form No. 10A in the office of the Commissioner of Income Tax (Exemptions) 17.10.2016 for seeking registration u/s 12AA of the Act, 1961. The applicant society claimed to be in operation since 14.10.2015 which has been claimed to be created by the Board of the Company for the objects and activities as per Schedule-VII of the Companies Act. The Ld. CIT exemption while rejecting the exemption under section 12AB of the Income Tax Act, has observed as gende....
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....along with the documents on record has been perused in the light of requirements of section 12A of the I.T. Act. It has been revealed that the trust is constituted by a company named "Stelco Limited" as settler with a sum of Rs. 5,00,000/- where the trustees are either the directors of the settler company or their relatives. It has been projected by the applicant trust that the trust has been created to fulfil the liabilities of corporate social responsibility of the settler company. There is no concurrence between the expenditure incurred as reflected in the financial statements of the applicant trust and the aims & objects incorporated in the Trust deed. Neither has any note on activities of the trust been submitted nor any evidence supporting its claim has been produced. The formation of the trust is evidently to help the settler company redeem its CSR obligation by creating a captive trust. The applicant is established for working solely on the funds provided by its main contributors and settler M/s Stelco Ltd. as part of fulfilment of their CSR obligation. What the applicant has done is not pursue any of the stated objects. It has been claimed that donating to other entities a....
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....ld also be worthwhile to examine the provisions of other Acts in this regard. 9.1 It is pertinent to examine, at this juncture, the reasoning behind the inclusion of CSR in the case of corporates as a necessary concomitant of the Government's efforts at nation building. The Corporate Social Responsibility has been incorporated through Section 135(1) of Companies Act, 2013 in which 2% of average NP for the last 3 years of some large companies has to be spent on C.S.R. There is no specific tax exemptions available on expenses incurred on C.S.R. However, there are several activities, part of Schedule VII of the Companies Act, 2013, that enjoy exemptions under the Income Tax Act. 9.2 The amount spent by a Company cannot be claimed as business expenditure. The Finance Act, 2014 provides that any expenditure incurred by an assessee on the activities relating to Corporate Social Responsibility referred to in section 135 of the Companies Act, 2013 shall not be deemed to be an expenditure incurred by the assessee for the purposes of the business or profession. 9.3 The companies have been mandated to spend 2% of the NP on social causes. It is also to be borne in mind that the corporate....
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....he benefit of general public nor does it partake the meaning of a public charitable company, and (v) that none of the stated objects of creating and establishing entities in the charitable arena have been pursued. 4. The learned counsel for the assessee has reiterated the submissions made before the Ld. CIT exemption. He submitted that the learned CIT Exemption has erred in law and on facts in not allowing the registration under section 12AA of the I.T. Act whereas as per material placed on record, the assessee appellant fulfils all the conditions required for granting registration under section 12AA of the I.T. Act and that he was wrong in holding that the applicant trust has been formed to implement the CSR activities and not amenable to public charity whereas as per explanation filed and material placed on record and in view of section 135(1) and Schedule VII of the Companies Act, 2013 read with Companies (Corporate Social Responsibility Policy) Rules, 2014, the company as well as trust duly qualifies all the conditions as laid down under the Companies Act and Income Tax Act. Therefore, the trust is entitled to registration and the same has to be allowed. The Ld. AR has filed a....
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.... between the expenditure incurred as reflected in the financial statements of the applicant trust and the aims and objects incorporated in the Trust deed deserves to be quashed. B. The Appellant Trust has given detailed submissions regarding the aims and objectives and the objects very well clarifies the intention of the trust is to serve the general public at large. 1. Also, no specific link has been established by the Worthy CIT(Ex.) between the Appellant Trust and redemption of CSR activity of M/s Stelco Limited except one that the management of both the organizations have a common director or family members which in itself is not sufficient to doubt the aims and objects of the Appellant trust and is vague reason to reject appellant application for registration u/s 12A of the Act. 2. Without prejudice to the above, even if the Applicant Trust has been created to redeem the CSR function of any company and it has been established by the objects that the Trust is fully engaged in charitable activities then the same is entitled of registration u/s 12AA of the Act. Reliance in this regard is paled on the following two judgments of ITAT, Delhi: * Nanak Chand Jain Charit....
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....ompany which is an independent assessee and has to be examined independently. It can be easily construed that the rejection has been done with pre-set mind of rejecting the application of the Appellant Trust which is clear from the vague and ambiguous basis relied upon by the CIT (Ex.), the Appellant has come to know about this issue being raise only by way of appellate order. Nothing in respect of this was raised during the proceedings. Moreover, the Appellant Trust is not bound by any such clause in trust deed in order to fulfil the CSR requirements of the Settlor Company. D. Here in the concluding paragraph as well, the CIT(Ex.) has indirectly agreed to the fact that there is no defect in the aims and objects of the trust and that when after obtaining registration, the trust will pursue activities in consonance with the objects, the same will be considered as activities of charitable nature as per Section2(15) of the Act. THUS, THERE REMAINS NO VALID GROUND TO SUPPORT THE ACTION OF CIT(EX.) IN REJECTING THE APPLICATION OF THE APPELLANT TRUST u/s 12AA AND THE ORDER OF WORTHY [CIT(EX.) DESERVES TO BE QUASHED. 5. To further elaborate on ground of want of activities raised ....
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....tain donation to the charitable trust, how can the activities of the trust become not charitable with this act. The fact that the CSR expenditure are not allowable expenditure under section 37 of the Act is relevant only for the taxability of the company incurring such expenditure. From the perception of the assessee trust the amount received as donation whether will be eligible for exemption under section 11 depends on the application of such fund for the charitable activities by the trust only. The CIT is empowered to satisfy himself only about two factors i.e. the objects of the trust and the genuineness of the activities of the trust or institution and such powers does not extend to the eligibility of the trust/ institution for exemption u/s 11 r.w.s 13 of the Income Tax Act, 1961 which falls in the domain of the AO. Once the CIT has not doubted about the genuineness of the activities of the assessee nor doubted its charitable object, his powers under section 12AA end." 8. Reliance in this regard is also being placed upon the following case laws wherein it has been held that when no defect in the objects of the trust has been pointed out, the application for registration can....
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....e Company actually running the Trust on their own terms and then also contributed a major chunk of donation to single trust. 4. The Goenka Charitable Trust has relinquished its function as the primary implementation of the agencies and undertaken its own programs to impact targeted beneficiaries by transferring its funds. Facts of case of Appellant 1. There is no specific object in respect of CSR in the trust deed of the Appellant. There is no specific object in respect of CSR of Settler Company and to operate in consonance of directions of the Settlor Company. The Trust is not bound by any such clause. No such exemption has been claimed by our assessee trust and CSR claimed in the return has been added back in the return of the company. 2. The Appellant is not a captive Trust created and is neither operates under control of Settlor Company. 3. The Appellant has not donated all funds available to any single trust, but has in fact actually applied the funds for charitable activities by providing financial aid to needy and helps the public at large. 4. The Appellant has not relinquished its function and is acting as a charitable institution working for the welfar....
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....as been pointed out, the application for registration cannot be rejected. 8. The Goenka Charitable Trust (Supra) relied by the CIT(E) is distinguishable on fact to the instant case as in that case the Trust has relinquished its function as the primary implementation agencies and undertaken its own programs to impact targeted beneficiaries by transferring its funds and the Trust received major donation from the Company actually running the Trust on their own terms and also contributed a major chunk of donation to single trust whereas in the instant case the Appellant has not donated all funds available to any single trust, but actually applied the funds for charitable activities by providing financial aid to needy and helps the public at large and that the Appellant has not relinquished its function and is acting as a charitable institution working for the welfare of the people from all walks of the society. 9. From the above, it is evident that in the present case the main aim and object was of course to implement the CSR activities of the Financing/ parental company, but surely per se to the benefit of general public at large. The observations given by Worthy CIT(E) are vague in....