Vishwa Kalyan Charitable Trust was formed on 1st March, 2017. It filed with the Commissioner of Income-tax (Exemption) its application for registration as per section 12A on 31st August, 2019 explaining that for good and

CS Professional · Direct Tax Law & Practice · PYQS · December 2020
Vishwa Kalyan Charitable Trust was formed on 1st March, 2017. It filed with the Commissioner of Income-tax (Exemption) its application for registration as per section 12A on 31st August, 2019 explaining that for good and sufficient reasons, it could not file the application so long after its formation and thus the registration to be granted since 01.03.2017. The trust for the accounting year ended on 31st Mach, 2020 earned an income of ₹5,70,000 and has claimed that the income earned by it be treated as exempt under section 11 of the Income-tax Act, 1961. Explain with brief reasons in the context of the provisions contained under the Income Tax Act, 1961: can the trust be deemed to be registered in absence of an order of registration from the Commissioner of Income Tax (Exemption) on its application filed on 31.08.2019 and if so, then from which date?

Answer & Explanation:

As per section 12AA(2), every order granting or refusing registration should be passed before the expiry of 6 months from the end of the month in which the application was received under section 12A of the Income tax Act, 1961. The Supreme Court in case of CIT vs. Society for Promotion of Education (2016) 382 ITR 6 held that the trust should be deemed as registered if the application under section 12AA is not disposed of within the stipulated period of six months. Therefore, in this case, the trust would be deemed as registered with effect from 31.8.2019 if the order of registration is not passed by CIT (exemption) by 28.02.2020. The benefit of exemption under section 11 and 12 would be available from A.Y. 2020-21 being the assessment year relevant to the financial year in which the application is made by trust on 31.08.2019.

Topics: Exemptions and Deductions

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