Vivek Jalan
Consider a society or any other charitable institution or a mere association of persons formed for public welfare. Does the Income Tax Law debar it from getting registered until it is registered under another Law? This question of law was answered in favour of the dept. by The ITAT in the case of INCOME TAX APPELLATE TRIBUNAL BAR ASSOCIATION, SURAT Vs COMMISSIONER OF INCOME TAX, (EXEMPTION), AHMEDABAD [2023-VIL-1478-ITAT-SRT]. However, considering the vide ramifications of the case for Charitable Institutions, it seems that this matter will travel to higher forums. Understanding the case further in detail, Rule 17A(2)(c) of Income Tax Rules requires the assessee to furnish certified copy with registration of companies, or registration of farm or society or registrar of public trust, as the case may be for registration u/s 12A as a charitable institution and reads as under–
"(2) The application under sub-rule (1) shall be accompanied by the following documents, as required by Form Nos.10A or 10AB, as the case may be, namely:-
(c) self-certified copy of registration with Registrar of Companies or Registrar of Firms and Societies or Registrar of Public Trusts, as the case may be;"
The question is whether the registration in other law as per requirement in Rule 17A(2)(c) is mandatory to get a registration u/s 12A of The Income Tax Act as a charitable institution. What about a case when the Institution is not so registered as they are not otherwise required to be so registered under those laws. It does seem that the mandatory provision laid down under Rule 17A(2)(c), that institution should be registered with registrar of Companies or registration of firms or society or registrar of Public Trust, is defective as it bars an association from to get registered under Income Tax Act unless it is registered under another act. Can an assessee not get the benefit of exemption from Income Tax just because it is not registered under another law, whereas its object is the same as another such entity which may be registered? Can The Income Tax Act compel a person to avail registration under another law? These are questions of law which may be needed to be tested.
The Ld.DRs contention is that in case such entity is not registered under any other law, there will not be any legal obligation on the part of trust or institution to maintain any record of the activities; that there would be no control on the activities of such unregistered entities. However, it is a fact that the Income Tax Act itself requires that the same will be tested every five years while renewing the registration.
Hence it does seem that there is still some water to flow under the bridge unless the matter is set to rest.
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