Om Sri Sai Charitable Society, Lucknow V. Commissioner of Income Tax (Exemptions), Lucknow, Lucknow

ITA 41/LKW/2021

AI Insights

The case involves Om Sri Sai Charitable Society appealing against the decision of the CIT (Exemptions), Lucknow, which rejected their application for registration under section 12AA of the Income Tax Act, 1961. The rejection was based on the grounds that the society had not filed income returns showing corpus funds as income, nor provided sufficient documentation to support the corpus fund claims. The CIT's decision was supported by various judicial precedents emphasizing the necessity of tax compliance for registration under section 12AA. However, before the appeal could be adjudicated, the society withdrew it following the successful registration under the new section 12AB.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 113259 (ITAT-LUCKNOW)
• Duration Of Justice: 2 year(s) 5 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-09-2023
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 04-09-2023
• Assessment Year: misc
• Appeal Filed On: 04-04-2021
• Other Referred Cases: CIT vs. U P Forest Corporation, New Life in Christ Evangelsit Association vs. CIT, CIT vs. Red Rose School, M. Visvesvaraya Industrial Research & Development Centre vs. ITAT, CIT vs. Otacamund Gymkhana Club, Gouri Shankar Deity vs. Union of India
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Benefit of exemption
• Section: 11; 12A; 12AA; 251

Judgement Text

I.T.A. No.41/Lkw/2021 1 IN THE INCOME TAX APPELLATE TRIBUNAL LUCKNOW BENCH ‘A’, LUCKNOW BEFORE SHRI SUDHANSHU SRIVASTAVA, JUDICIAL MEMBER AND SHRI ANADEE NATH MISSHRA, ACCOUNTANT MEMBER I.T.A. No.41/Lkw/2021 Assessment Year: N.A. Om Sri Sai Charitable Society, 96/214, Old Ganeshganj, Lucknow. PAN:AABAO1551A Vs. CIT (Exemptions) Lucknow. (Appellant) (Respondent) O R D E R PER ANADEE NATH MISSHRA:A.M. (A) The present appeal vide I.T.A. No.41/Lkw/2021 has been filed by the assessee against impugned order dated 02/02/2021 (DIN & Order No.ITBA/EXM/S/EXM1/2020-21/1030273709(1) passed by learned CIT (Exemptions) rejecting the assessee’s application for registration u/s 12AA of IT Act. Relevant portion of the aforesaid order is reproduced as under: “4. On perusal of the submissions made by the applicant, it is observed that the applicant has shown substantial amount Rs.20,00,000/- in the corpus fund in F.Y. 2019-20 did not file the Appellant by Shri Ashish Kapoor, C. A. Respondent by Shri H. S. Usmani, CIT (D.R.) I.T.A. No.41/Lkw/2021 2 return of income for A.Y. showing the same corpus fund as income. The trust should have been taken the corpus fund as income in the Income & Expenditure account in respective financial year and should have been filed Return of Income accordingly. Further, the applicant society has not submitted any details/documentary evidence of corpus fund i.e. fund received with specific direction. 5. As per the provisions of the Income Tax Act, 1961, corpus donation would be exempt only under Section 11(1)(d) and an assessee can claim benefit u/s 11 only when such assessee is registered u/s 12A or 12AA. This assertion is not only backed by the statute but also by the decision of Hon'ble Supreme Court in the case of CIT vs. U P Forest Corporation, 230 ITR 945 (SC) [1998] and decisions of various other Hon'ble High Courts in case of: (A) New Life in Christ Evangelsit Association vs. CIT reported in 246 ITR 532 (Madras) [2001]; (B) CIT vs. Red Rose School reported in 212 CTR (All) 394; (C) M. Visvesvaraya Industrial Research & Development Centre vs. ITAT reported in 251 ITR 852 (Mumbai) [ 2001]; (D) CIT vs. Otacamund Gymkhana Club reported in 110 ITR 392 (Madras) [1977] and (E) Gouri Shankar Deity vs. Union of India 145 ITR 67 (MP) [1984]. 6. Before the period of grant of registration, all voluntary contributions (including the ones with specific direction that they shall form part of the corpus) is income of a charitable, religious or charitable cum religious trust. Therefore, in the present case, the corpus donation shown by the applicant is the income of the applicant and, thus, the trust becomes liable to pay tax for respective year/years. Unless the legitimate tax against the said income is not paid, the application for registration u/s 12AA of the Act cannot be considered. The trust has illegally taken the benefit of provisions of the Income Tax Act for getting tax exemption benefits and has tried to subvert the Income Tax laws. 7. In light of the above discussion, it can be concluded that the applicant has not paid the legitimate taxes and also failed to furnish the sufficient documents/information necessary for forming satisfaction for granting registration u/s 12AA.” I.T.A. No.41/Lkw/2021 3 (A.1) Grounds of appeal are as under: “1. That the Learned Commissioner of Income Tax (Exemptions), Lucknow has gone beyond her jurisdiction to reject the application of the assessee on the pretext of non-filing of ITR and taxes paid therein, which had not become due for filing till the date of submission of the assessee. 2. That the Learned Commissioner of Income Tax (Exemption), Lucknow has erred in facts and in law by rejecting the application of the appellant on the grounds that the application for registration u/ s 12AA of the Act cannot be considered until the legitimate tax on the income (corpus donation in this case) of the appellant is not paid is non-sustainable. The Learned Commissioner has erred in law by going beyond her jurisdiction by attracting provisions of assessment of returns at the time of granting registration u/s 12AA whereas at the time of passing of order for granting or refusing registration, only genuineness of objects of the applicant and its activities should have been examined. 3. That the Learned Commissioner of Income Tax (Exemption), Lucknow erred in facts and in law in rejecting the application for registration under section 12AA of the Income Tax Act, 1961 despite of the fact that the applicant has fulfilled all the requirements as specified in section 12AA of the Income Tax Act, 1961 read with rule 17A of the Income Tax Rules, 1962. 4. That the Judicial pronouncements relied on by the Ld. Commissioner of Income Tax (Exemption), Lucknow in her order are distinguishable and are not applicable on the facts and circumstances of the present case and hence cannot be relied upon to form an opinion.” (B) At the very outset, it was noticed that the assessee has submitted an application dated 04/09/2023 in which request has been made by the I.T.A. No.41/Lkw/2021 4 appellant assessee for permission to withdraw the present appeal. Relevant portion of the letter is reproduced as under: “Due to insertion of section 12AB of the IT Act, 1961, as per the Finance Act, 2020, the assessee got its requisite form filed under the said section and received the registration accordingly. Therefore, the assessee trust would not like to press the matter ahead and wishes to withdraw the appeal made before your honour. I hope that your goodself shall consider my application and withdraw the appeal made before the Income Tax Appellate Tribunal.” (C) Learned Commissioner of Income Tax (Departmental Representative) expressed no objection to withdrawal of the appeal by the assessee. Accordingly, we permit the assessee to withdraw the present appeal. (D) In the result, the appeal of the assessee is dismissed as withdrawn. (Order pronounced in the open court on 11/09/2023) Sd/. Sd/. (SUDHANSHU SRIVASTAVA) (ANADEE NATH MISSHRA) Judicial Member Accountant Member Dated:11/09/2023 *Singh Copy of the order forwarded to : 1. The Appellant 2. The Respondent. 3. CIT (Exemptions) 4. D.R., I.T.A.T., Assistant Registrar