TaxTMI 
TaxTMI 
2025 (5) TMI 679
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.... as under: 2. The assessee is stated to be a trust and was established with an object to provide scholarship to the needy students. It is submitted that the trust has just started the activity in the financial year 2023-24 and the corpus accumulated as on 31/03/2023 was Rs. 2,34,582/-. It was submitted that assessee carries out charitable activity by giving education scholarships to students and thus imparting education. Assessee was granted provisional registration under NEC on 28/05/2021 for a period till assessment year 2024-25. 2.1 The Ld. CIT(E) issued notice dated 02/09/2024 calling upon assessee to furnish details in respect of object clause 5A(8) and 5B (4) of the trust deed that intends to apply the funds outside India. Assessee was also called upon the assessee to file details of the religious activities as per clause E of the objects of the trust deed. The said clause reads as under : "Clause 5A(8) Grants of Scholarships for Education in deserving student studying in India or abroad. Clause 5B(4) Grant of Medical help and treatment to the poor and deserving persons in India and in abroad. Clause 5(E) Setting up or helping by endowments or....
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....ivities and the compliance of all the conditions mentioned in section 80G(5) clause (i) to (v) of the act. In the absence of satisfactory compliance by the applicant, the undersigned is unable to arrive at a satisfactory conclusion on these parameters. As such the undersigned is left with no other option but to reject the application seeking approval under section 80G of the act, as a limitation to decide the application is on 30/09/2024." Aggrieved by the order of the Ld. CIT(A)(E), assessee is on appeal before this Tribunal. 4. The Ld.AR submitted that the object clause that has been the subject matter for rejection of provisional registration under section 80G has not yet been amended by the assessee. The Ld.AR once again emphasised that the invention behind those object clause is not to carry out any charitable activity outside India. It is submitted that assessee would always make the payment in Indian rupees to the needy and deserving people either for education abroad or for any medical treatment outside India. He thus submitted that assessee has not carried out any activity in voile Asian of section 12AB of the act or any other provisions of the income tax. 4.1 On ....
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.... 3) Amended process w.e.f. 01.10.2023 where in only organizations who have not started any activity may apply for provisional registration and where the activity is commenced then direct application for five-year registration is permissible. 4.1. In the present facts of the case, the assessee, was incorporated on 28/07/2021 and filed its application under section 10A subsequently. Thus, the assessee falls under the new regime of registration process, seeking registration/approval from 01.04.2021 to 30.09.2023, w.e.f. 01.04.2021 under section 12AB of the Act. The key features of registration under the amended scheme from 01.04.2021 to 30.09.2023 under section 12AB are as under: (i) Concept of provisional registration introduced for charity institutions is applicable to all applying for the first time, irrespective of whether they are new or existing institutions. (ii) Concept of perpetuity of registration stands withdrawn under the new scheme and provisional registration is valid for a maximum period of 3 years. The provisional registration is subsequently required to be regularized into five years regular registration within six months of commencement of ....
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.... or within 6 months of the commencement of its activities, whichever is earlier. For Converting provisional registration into final registration, procedure is identical to what it was prevailing prior to 01.04.2021, under section 12AB(1)(b)(i). That is, the Ld. PCIT/CIT shall call for such documents or information or make such inquiries as he thinks necessary in order to satisfy himself about genuineness of the activities of the trust or institution and the compliances of other laws. The relevant provisions are as under: (1) The Principal Commissioner or Commissioner, on receipt of an application made under clause (ac) of sub-section (1) of section 12A, shall,- a) where the application is made under sub-clause (i) of the said clause, pass an order in writing registering the trust or institution for a period of five years; b) where the application is made under sub-clause (ii) or sub-clause (iii) or subclause (iv) or sub-clause (v) 66[or item (B) of sub-clause (vi)] of the said clause,- i) call for such documents or information from the trust or institution or make such inquiries as he thinks necessary in order to satisfy himself about- a) the genuineness ....
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....ce with the risk management strategy, formulated by the Board from time to time, for any previous year, the Principal Commissioner or Commissioner shall- (i) call for such documents or information from the trust or institution, or make such inquiry as he thinks necessary in order to satisfy himself about the occurrence or otherwise of any specified violation; (ii) pass an order in writing, cancelling the registration of such trust or institution, after affording a reasonable opportunity of being heard, for such previous year and all subsequent previous years, if he is satisfied that one or more specified violations have taken place; (iii) pass an order in writing, refusing to cancel the registration of such trust or institution, if he is not satisfied about the occurrence of one or more specified violations; (iv) forward a copy of the order under clause (ii) or clause (iii), as the case may be, to the Assessing Officer and such trust or institution. Explanation.-For the purposes of this sub-section, the following shall mean "specified violation",- (a) where any income derived from property held under trust, wholly or in part for....
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....:- i) Registration or approval of non-genuine trusts or institution under automated approval system: First and second provisos to clause (23C) of section 10 of the Act were substituted by new provisos by the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 w.e.f. 01.04.2021. These provisos provided that the application for the approval of any trust or institution under the first regime, shall be made to the jurisdictional Principal Commissioner or Commissioner and such Principal Commissioner or Commissioner shall grant approval after examination of the application. Earlier such applications were required to be filed before the prescribed authority. Similarly, provisions of clause (ac) of sub-section (1) of section 12A provide that application for the trusts or institution under the second regime shall be made to the principal Commissioner or Commissioner. The provisional registrations or provisional approval orre-registrations or approvals in certain cases, under these clauses, are granted in anutomated manner and the respective rules have been amended accordingly. It is essential to ensure that non-genuine trusts or institutions do not ge....
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....r charitable or religious purposes, to the extent to which such income is applied to such purposes in India; and, where any such income is accumulated or set apart for application to such purposes in India, to the extent to which the income so accumulated or set apart is not in excess of [fifteen] per cent of the income from such property;" 4.4.3. Hon'ble Delhi High Court in case of DIT (E) vs. National Association of Software and Services Companies reported in (2012) 208 Taxman 178 interpreted natural grammatical meaning of the words "to the extent to which such income is applied to such purposes in India" appearing in section 11(1)(a) of the Act. Courts have held that, the words "in India" appearing in section 11(1)(a), qualifies only the words 'such purposes', would not only be contrary to the plain grammatical meaning of section but also render the provisions of section 11(1)(c) redundant and otiose. Further the Courts have held that, if it was accepted that income of trust can be applied even outside India so long as the charitable purposes are in India, then there is no need for a trust which tends to promote international welfare in which India is interested and was....
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.... application of income abroad. However, the portion of income actually applied abroad or accumulated for application abroad was not exempt. B. Hon'ble Delhi High Court that in case of Digamber Jain Society for Child Welfare v. DGIT (Exemptions)reported in (2010) 228 CTR 517 that, existence of other objects can not affect the charitable status of a Trust or NGOs. Hon'ble Allahabad High Court in the case of Ewing Christian College Society v. CCIT reported in [2009] 318 ITR 160 held that, the objective to serve the church and nation would not mean that the society was not existing solely for educational purposes; therefore, any additional object clauses normally should not affect the charitable status of a trust/institution/NGO. C. Similarly, Hon'ble Andhra Pradesh High Courtin CWT v. Trustees of the Nizam's Religious Endowment Trust reported (1977) 108 ITR 229 relied by the Ld.AR, it was held that, the charitable or religious expenditure incurred in India will not be affected by a provision for activities outside India or even actual expenditures abroad. Exemptions towards activities in India remain intact and in the case of a clause in the trust deed empowering the....