Parivartan, a public charitable trust has been incorporated on 01.06.2022 and immediately commenced its activities of providing "Relief of Poor".…
CA Final · Direct Tax Laws and International Taxation · PYQS · May 2024
Parivartan, a public charitable trust has been incorporated on 01.06.2022 and immediately commenced its activities of providing "Relief of Poor". During the previous year 2022-23, it failed to file application for Provisional registration under section 12A(1)(ac). However, on 1.1.2024, it applied for the final registration as per section 12AB read with section 12A(1)(ac) in prescribed Form to avail exemption under section 11 for A.Y. 2024-25. Is the action of the trust justified? Can a trust apply for Final registration before applying for Provisional registration? If yes, what is the time period upto which the Principal Commissioner or Commissioner will have to pass the order granting or rejecting the registration? The registration, if granted will be applicable from which assessment year? Explain your answer based on the latest Income tax provisions.
Suggested Answer and Working Notes:
Since Parivartan trust has already commenced its activities and has not availed exemption under section 11 for any P.Y. ending on or before 1.1.2024, (being the date of application) it need not first apply for provisional registration. It can at any time after the commencement of such activities directly apply for final registration under section 12AB 3 . Thus, the action of trust for applying for the final registration as per section 12AB before applying for provisional registration for exemption under section 11 is valid. The Principal Commissioner or Commissioner has to pass the order granting or rejecting the registration before expiry of 6 months from the end of the month in which application is received i.e., by 31.07.2024. Exemption under section 11 and 12 would be applicable from the assessment year immediately following the financial year in which such application is made i.e., from A.Y. 2024-25 (PY 2023-24). 3 Read with section 12A (1) (vi) (B), w.e.f. 1.10.2023
Topics: Assessment of Trusts and Institutions, Political Parties and Other Special Entities
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