Question, Whether Taxes are due to be paid on any Income, shall be considered during Assessment, Not on granting Registration: ITAT [Read Order]

The Income Tax Appellate Tribunal (ITAT), Pune Bench held that the question of whether taxes are due to be paid on any income shall be considered during Assessment, and not on granting Registration.

The assessee trust, Lad Shakhiya Wani Samaj Kalyan & Shikshan Prasarak Mandal was established in 1980 and claims to be engaged in activities such as blood donation camp, felicitation of students, tree plantation etc.

On perusal of Financial statements uploaded on the ITBA Portal, it was observed by the CIT (Exemption) that the assessee has shown the addition of Rs.3.82 lakhs, Rs.8.22 lakhs, and Rs.8.14 lakhs under the head “Building Fund” during the Financial Year 2016-17, 2017-18 and 2018-19 respectively directly credited to the respective reserve without routing it through the income and Expenditure account.

Since the assessee has not submitted any details of taxes paid on the said funds, it was found that it has claimed the same as exempt and the assessee accordingly claimed exemption under section 11(1)(d) of the Act in the years before the year in which it has applied for grant of registration.

The CIT (Exemption) has not granted registration under section 12AA of the Act since whatever donations were received by the assessee trust, included under the head “Building Fund”, as income, the taxes were not paid and on this threshold, the registration under section 12AA cannot be denied. It is left always to the Assessing Officer to take appropriate steps at the time of assessment proceedings.

The coram consisting of Inturi Rama Rao and Partha Sarathy Chaudhary observed that all the requirements of registration under section 12AA of the Act has been satisfied by the assessee trust, registration therein should be granted.

Therefore, the ITAT while setting aside the order of the CIT (Exemption), directed the Department to grant registration under section 12AA of the Act to the assessee trust.

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