In the case of ITA 2000/DEL/2020, Plastics Packaging Research & Development Centre, Noida, challenged the denial of registration under section 12AA by CIT(Exemptions), Lucknow. This case analysis delves into the procedural aspects, arguments presented, and the tribunal’s final decision.
The appellant, Plastics Packaging Research & Development Centre, is a newly established trust aimed at conducting research and development in the field of plastic packaging. The trust filed an application for registration under section 12AA of the Income Tax Act, 1961, on 30.01.2020. Registration under this section is crucial for trusts to avail benefits under sections 11 and 12 of the Act.
The appellant raised the following grounds of appeal:
The case was fixed for hearing on 24.06.2020 and 10.07.2020. The CIT(E) rejected the registration application, citing a lack of supporting documents for the claimed charitable activities and incomplete responses to the questionnaire issued by the department.
During the hearing, the appellant’s representative, Sh. M. P. Rastogi, CA, argued that at the stage of registration under section 12A, the CIT(E) should only assess whether the trust’s objects are charitable and not delve into the application of income. The representative claimed that the rejection was hasty and requested an opportunity to present all relevant facts and documents.
On the other hand, the revenue’s representative, Sh. T. Kipgen, Sr. DR, argued that no further opportunity should be given to the appellant due to previous non-compliance with the notices issued.
The tribunal, presided by Dr. B. R. R. Kumar (Accountant Member) and Sh. Yogesh Kumar US (Judicial Member), reviewed the case. The tribunal referred to the Hon’ble High Court of Allahabad’s decision in the case of Fifth Generation Education Society Vs. CIT dated 10.05.1990, which emphasizes the importance of providing a fair opportunity to the appellant at the stage of registration.
The tribunal noted that the CIT(E) should have examined only the charitable nature of the trust’s objects and not the application of income at the registration stage. The tribunal decided that in the interest of justice, the matter should be referred back to the CIT(E) for a fresh examination after giving the appellant an opportunity to be heard.
The tribunal allowed the appeal for statistical purposes, directing the appellant to comply promptly with the notices from the CIT(E) without unnecessary adjournments. This decision underscores the procedural fairness required in the registration process for trusts under section 12AA.
This case highlights the necessity for tax authorities to provide clear and fair opportunities for trusts seeking registration under section 12AA. The decision also reinforces the principle that at the registration stage, the focus should be on the charitable nature of the trust’s objects rather than the application of its income.
The tribunal’s decision in ITA 2000/DEL/2020 serves as a precedent for similar cases, ensuring that newly created trusts are given a fair chance to present their case and obtain the necessary registrations to benefit from the provisions of sections 11 and 12 of the Income Tax Act.
The case is now referred back to the CIT(E) for a fresh evaluation, providing Plastics Packaging Research & Development Centre another opportunity to substantiate its claims and secure the registration needed for its charitable operations.
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