A Charitable trust was formed in 2012 by an instrument in writing, the author transferring Rs. 5,000 as trust property. The instrument was not registered with the Registrar. The trust is yet to be registered with CIT under s. 12A. The major activity of the trust during these years was to collect donation for the corpus, and get invested in building. The donation for the year comes around Rs. 1,00,000. Now the trustees want to get it registered with CIT under Section. 12A.
My queries are: -
(1) Whether the registration with the Registrar is necessary for getting registration under Sec. 12 A?
(2) As the application has been delayed, what would be treatment of donation for building corpus- whether it would be treated as capital receipt or revenue receipt? Whether provisions of Sec.147 would be applicable or not in this case?
Sec. 12A lays down two conditions which should be fulfilled before sec. 11 and 12 providing exemption of income of trust and institution referred to therein could operate and one of these conditions is that the person in receipt of the income should have made an application for the registration of trust or institution in the prescribed form and in the prescribed manner to the Commissioner of Income Tax before the expiry of a period of one year from the date of creation of trust or the establishment of the institution. If such an application is made after the expiry of the period of one year, the provision of sec. 11 and 12 would not apply from the date of creation of trust but from the first day of the financial year in which application is made.
Neither s. 1 2A nor Rule 1 7A of the IT Rules, 1962 lays down that the trust should have been registered before the “Registrar” or with any other authority. Form No: 1 OA contains the particulars to be mentioned in the application and documents that should accompany the application. This form also does not envisage prior registration with Registrar The querist should examine the provisions of the local Act dealing with public charitable trusts in order to find out the duties of the trustees of such trusts as prescribed therein. That is altogether a different matter and has nothing to do with registration under s. 1 2A of the IT Act, 1961.
The donation received by the trust would be regarded as voluntary contribution and in view of sub-cl. (iia) of S. 2(24), such voluntary contribution would be regarded as income of the trust. The fact that amounts received from such voluntary donations were spent in constructing building would not mean that said contribution was not income. In case of delay in making an application, the assessment could be made by resorting to provisions of S. 147 ( income escaping assessment).