Wrong claim of exemption u/s 10(23C) would not debar trust from getting registration u/s 12AA: ITAT

Case Details: Sanatan Dharam Sabha v. CIT (Exemption) - [2022] 141 taxmann.com 368 (Delhi-Trib.)

Judiciary and Counsel Details

• • Saktijit Dey, Judicial Member & Pradip Kumar Kedia, Accountant Member
  • Naveen Gupta, Adv. for the Appellant.
  • H.K. Chaudhary, CIT(DR) for the Respondent.

Facts of the Case

Assessee-society, engaged in carrying out charitable and religious activity, filed an application seeking registration under section 12A. The Commissioner (Exemption) rejected the same on grounds that assessee had without any approval wrongly claimed deduction under sections 10(23BBA) and 10(23C)(v).

Aggrieved-assessee filed the instant appeal before the Tribunal.

ITAT Held

The Delhi Tribunal held that a wrong claim of exemption under sections 10(23BBA) and 10(23C)(v) would not debar assessee from getting registration under section 12AA as registration was not dependent either upon section 10(23BBA) or 10(23C)(v).

What is required to be examined at the time of grant of registration, as per the provisions existing at the relevant point of time, is the genuineness of the activities of the trust or institution and the objects of the trust.

The so-called infraction pointed out by the Commissioner (Exemption) such as the claim of exemption under section 10(23BBA) and section 10(23C)(v), neither impinges on the genuineness of the trust nor its charitable/religious nature.

In case, the assessee claims wrong exemption, it can be dealt with appropriately under the relevant provisions of the Act. However, a wrong claim of exemption, by itself, cannot debar the assessee from getting exemption under section 12A.

List of Cases Referred to

• • CIT v. Surya Educational & Charitable Trust [2011] 15 taxmann.com 123/203 Taxman 53/[2013] 355 ITR 280 (Punj. & Har.) (para 7)
  • Fifth Generation Education Society v. CIT [1991] 54 Taxman 237/[1990] 185 ITR 634 (All.) (para 7)
  • Mormugao Port Trust v. CIT [2007] 109 ITD 303 (Panaji) (para 7)
  • Malli Ram Charitable Trust v. CIT [2003] 260 ITR (AT) 118 (Amritsar) (para 7)
  • St. Don Bosco Educational Society v. CIT [2004] 90 ITD 477 (Lucknow) (para 7)
  • Aggarwal Mitra Mandal Trust v. DIT (Exemption) [2007] 106 ITD 531/12 SOT 326 (Delhi) (para 7).