Trust intending to carry out charitable activities outside India entitled to sec. 12AA registration

Facts:

a) The assessee-institution was formed vide a trust deed. It sought registration under section 12AA.

b) The DIT rejected the registration application as he was of view that the trust intended to carry out activities outside India.

c) The aggrieved-assessee filed the instant appeal.

The ITAT held as under:

1) Registration as per section 12AA by itself will not automatically confer the benefits of sections 11 and 12 to a trust, but the trust will get the benefit only on complying with the requirements of sections 11 & 12, which compliance can be examined by the assessing authority while processing the return filed by the trust. So long as the trust has objects which are charitable in nature, it is eligible for registration under section 12AA, unless there is a finding that the trust is not genuine.

Entity set-up for providing housing and other infra facilities is charitable in nature; entitled to registration

Facts:

a) The assessee ('Jaipur Development Authority') was wholly owned and controlled by Government of Rajasthan.

b) It was formed for planning, coordinating and supervising proper, orderly and rapid development of the areas in Jaipur region and of executing plans, projects and schemes for such development, so that housing, community facilities, civil amenities and other infrastructural facilities were created in such region.

c) The registration was granted to the assessee under section 12AA. During the relevant year, the CIT withdrew the registration by observing that the objects of the assessee were not charitable but came under the purview of last limb of section 2(15) of the Act, i.e., 'Advancement of any other object of general public utility'.

The Tribunal held in favour of assessee as under:

1) The Jaipur Development Authority was a tool of State Government for coordinated and planned development in Jaipur region. In practical, the main work of Jaipur Development Authority was construction of roads, sewerage, parks, play grounds, provide plots for educational, health and cultural institution for over all development of the community.

2) By making planned development it provides smooth transportation so that air pollution can be minimized and save time of the public. If it would be left in the hands of private operator, these facilities would not be provided on similar price as provided by the Jaipur Development Authority. The intention of the institution was not to earn profit but recover the cost of the establishment as well as other expenditure to implement its objects.

3) The CIT can cancel the registration in two situations, viz, if the activities of the institution are not genuine and if the activities assessee not carried out in accordance with the objects of the institution.

4) In the instant case, as the assessee was a government authority, its object was to prove civil amenities and infrastructure and no trade or business, therefore, withdrawal of registration by the CIT was not justified. - Jaipur Development Authority v. CIT (2014) 52 taxmann.com 25 (Jaipur - Trib.)

Mere non-commencement of charitable activities won't lead to denial of trust's registration

Facts:

a)The assessee, a registered trust, applied for registration under section 12AA.

b)The Director of Income-tax (Exemption) (‘DIT(E)’) rejected application on the ground of non-commencement of charitable activities by assessee.

c)The reason behind non-commencement of charitable activity was shortage of funds as no admission fees was received by assessee from its life members and general members and no fund was raised from public.

d)Aggrieved by the order of DIT(E), assessee filed the instant appeal before the Tribunal.

The Tribunal held in favour of assessee as under:

1)There was no dispute about the charitable nature of the objectives of the trust as per the memorandum. 2)The adverse inference had been drawn by DIT(E) on the ground that assessee had no intension to commence charitable activity as no membership fees was received from members and no fund was raised from public for the same.

3)The non-contribution of membership fee by general members and life members could not be a ground for denial of registration to the trust as membership fees may be paid later on by members otherwise rights of membership could not devolve upon them.

4)As far as raising of funds from public is concerned, it is at the discretion of the trust that can be undertaken in due course, may be at the time of issue of section 80G registration which is consequent to section 12AA registration

5)Thus, mere non-carrying of the activities of trust at the time of registration per se could not be detrimental to registration of the trust under section 12AA when the objects were charitable and there was no adverse comment about them.

6)Thus, the order of the DIT(E) was reversed and it was held that the assessee was eligible for registration under section 12AA -SOHAM FOR KIDS EDUCATION SOCIETY CENTRE V. DIT(E) [2014] 49 taxmann.com 493 (Delhi - Trib.)

Institutions providing event management courses without awarding any diploma not entitled to sec. 12AA registration

Institutions conducting classes in event management were not entitled to Section 12AA registration as such courses do not result in conferment of any degree or diploma; such activity would not fall within the meaning of education under Sec. 2(15).

Facts:

a)The assessee-institution was formed with an object to establish and administer schools, colleges, etc.

b)In furtherance of its objects, it established an institution for teaching event management course. It filed an application seeking registration under section 12AA.

c)The CIT held that activity carried on by assessee would not fall within meaning of education as mentioned in section 2(15) and rejected assessee's claim for registration. The aggrieved assessee filed the instant appeal.

The Tribunal held in favour of revenue as under:

1)The Supreme Court in case of Sole Trustee, Loka Shikshana Trust v. CIT [1975] 101 ITR 234 held that the acquisition of all kinds of knowledge would not fall within the definition of education as provided under Section 2(15) and the acquisition of knowledge should be through a normal schooling to be regarded as education.

2)Thus, it was a well-settled principle that there had to be a systematic instruction to the students by way of normal schooling to be regarded as education. Mere conducting of event management classes might provide some kind of knowledge to the students; but that acquisition of knowledge would not fall within the meaning of 'education' as provided in section 2(15).

3)In the instant case, the assessee was conducting classes in event management but the government or any governmental bodies did not recognize the institution run by the assessee.

4)Therefore, the teaching courses conducted by the assessee would not result in conferment of any degree or diploma and remained unrecognised. Thus, the assessee was not eligible for registration under section 12AA. – IMPRESSARIO EDUCATIONAL TRUST V. CIT [2014] 47 taxmann.com 259 (Cochin - Trib.)

ITAT finds objective of development and propagation of Islam as ‘charitable’; registration allowed

Facts:

a)The assessee-Waqf (Shia Dawoodi Bohra Jamaat Waqf) was created vide indenture dated 9-7-1920 and was duly constituted waqf under Waqf Act, 1995.

b)It applied for registration under section 12AA. The DIT(E) denied registration on ground that assessee was not brought into existence either as trust or society.

c)The Aggrieved-assessee filed the instant appeal.

The Tribunal held in favour of assessee as under:

1)The object of assessee-Waqf was as under:

a)To advance, promote, propagate and preach the religion of Islam amongst the Dawood Bohras,

b)To develop, expand, renovate and maintain masjids, madresa, jamatkhanas, etc.

2)Waqf was created by Customs and tenants of Dawoodi Bohra community well before the enactment of the Income Tax Act, 1961. As the Waqf was existing prior to Income-tax Act, 1961, the object beneficial to a section of the public was an object of "general public utility".

3)To serve as a charitable purpose, it was not necessary that the object must be to serve the whole mankind or all persons living in a country or province. Even if a section of the public is benefited, it cannot be said that it is not a trust for charitable purpose in the interest of public.

4)For granting registration it would be sufficient if the object was beneficial to a section of the public, who were Muslims. Thus, there was no merit in the order of the DIT(E) for denial of registration under section 12AA. - SHIA DAWOODI BOHRA JAMAAT WAQF V. DIT(E) [2014] 45 taxmann.com 340 (Kolkata - Trib.)

Holy Cow! No revocation of registration of trust working for welfare of cows if it made profit from sale of milk

Where assessee-trust was established for purpose of cow breeding and protection of cows and oxen, incidental income earned by it from sale of milk could not be regarded as carrying on activity of trade or commerce within meaning of proviso to section 2(15).

Facts:

a)The assessee-trust was established for cow breeding, protection of cows and oxen. It got registration under section 12AA.

b)The DIT(E) found that income of assessee from sale of milk was far in excess of prescribed limit under proviso to section 2(15).

c)He, thus, opined that assessee was doing regular activities which were in the nature of business by way of sale of milk and was directly hit by the proviso to section 2(15). He, accordingly, cancelled the registration of trust. The aggrieved-assessee filed the instant appeal.

The Tribunal held in favour of assessee as under:

1)The dominant purpose of the trust was to provide asylum for old, sick, weak, disabled and stray animals and birds, more particularly cows and other cattle and to bring about improvement in breeding of cattle for the beneficial promotion, upkeep, maintenance and propagation of cows.

2)It could not be denied that milk needs to be procured from cows, otherwise it will be detrimental if the milk is not procured from time-to-time. The milk so procured was distributed free of charge to children, hospitals, schools, etc., and, thereafter, the remaining milk was distributed to public at large at a very nominal rate. This activity could not be deemed as business, trade or commerce.

3)The assessee-trust was engaged in multifarious activities of diverse nature but the primary and the dominant activity was “panjrapole”. This predominant object had been held as charitable purpose by the Gujarat High Court in case of CIT v. Swastik Textile Trading Co. (P.) Ltd. [1978] 113 ITR 852 (Guj.)

4)The assessee-trust would not loose its character of charitable purpose merely because some profits arose from the activity of the sale of milk. Such activity could not be carried on in such a manner that it would not result in any profit.

5)There was no material available on record, which could suggest that the assessee-trust was conducting its affairs solely on commercial lines with a motive to earn profit only. The proviso to section 2(15) was not applicable to the instant case and the assessee deserved continuance of registration under section 12AA. Accordingly, the order of the DIT(E) was to be set aside.- SHREE NASHIK PANCHVATI PANJARPOLE V. DIT (E) [2014] 45 taxmann.com 220 (Mumbai - Trib.)

Organizing 'sankirtan' and 'bhandara' is charitable in nature; HC allows sec. 12AA registration to trust

Facts:

1)  The assessee-trust had filed application before CIT for purposes of registration under section 12AA and approval under section80G ;

2)  The CIT held that the objects like Akhand Naam Sankirtan, Thakur Sewa of Shri Girdhari Ji and organization of bhandaras on all important religious festivals were purely religious objects in nature and not in accordance with section 2(15);

3)  Accordingly, its registration application under section 12AA and approval request under section 80G were rejected. On appeal, the Tribunal held in favour of assessee. Aggrieved-CIT filed the instant appeal.

The High Court held in favour of assessee as under:

1) From the objects of the trust it could not be said that the object and purpose of establishment of trust was not genuine and that activities as delineated in the object were not carried out by the trust;

2)  'Akhand Naam Sankirtan' is one type of meditation and yoga and activity like bhandara are for providing food to persons, irrespective of any caste or religion, thus, unless it was proved that it was for any particular community or group of persons, registration under section 12AA could not be rejected;

3) Thus, no error of law was found in finding of Tribunal. – CIT v. Sri Radha Raman Niwas Trust [2014] 42 taxmann.com 77 (Allahabad)

Trust can work for charity with life-long members; registration can't be revoked on ground of perpetual members

The High Court held as under:

1)  The object of Section 12AA is to examine the genuineness of the objects of the Trust and though while examining genuineness, the income as well as resources of the Trust may be taken into consideration but any suspicion as to these facts cannot be the sole criteria for rejecting an application under Section 12A;

2)  Merely because a trustee was a life-long member of a trust, same could not itself raise an inference that trust was not charitable. Therefore, Tribunal was justified in directing registration of assessee as charitable trust. – CIT v. Baba Kartar Singh Dukki Educational Trust [2014] 42 taxmann.com 17 (Punjab & Haryana)