Cancellation
of S.12 A registration
As tax authorities are more and more
resorting to cancellation of charitable status of Trusts, a Punjab High Court
decision would come as a relief.
As per the decision, Income Tax
authorities must record findings in writing that a Charitable Trust is either
not undertaking its activities in accordance with its objects or the activities
stated are not genuine, before issuing an order for its cancellation of S. 12A
registration.
This
is a pre-condition before cancellation of the
registration, since the Trust originally is registered under S. 12A after due consideration of its activities.
[Case CIT, Ludhiana vs Ved Niketan
Dham, Public Chaitable Trust, (2013)]
Denial of S.80 (G)
Relief
In another case, Delhi High Court rejected an appeal by tax authorities for denying S.80G relief to a charitable trust.
In another case, Delhi High Court rejected an appeal by tax authorities for denying S.80G relief to a charitable trust.
The
tax authorities argued before High Court that the charitable trust did not
maintain regular accounts as required under S. 80G (5) (iv). However the Court
rejected appeal by the tax authorities on the ground that Director IT
(Exemptions) order only talked of minimal level of activities undertaken by the
Trust and did not elaborate on non-maintenance of accounts. Hence the Tribunal
Order setting the same aside was valid.
[Case Director Income Tax vs Neel Gagan Charitable Trust, (2013)]
[Case Director Income Tax vs Neel Gagan Charitable Trust, (2013)]
From the above two decisions it is
clear that order issued by the Tax authorities must be read very carefully. It
is essential that order complies with all requirements of the legislation
to be legally compliant.
