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URGENT-TAXATION QUERY

Rahul (CA Practice ) (1818 Points)

18 January 2008

DEAR FRIENDS

MY QUERY IS REGARDING INSTITUTION REGISTERED UNDER SOCIETIES REGISTRATION ACT, 1860.

IF THE INSTITUITON IS RUNNING SINCE 1995 AND SO FAR IT HAD NOT APPLIED FOR REGISTRATION UNDER SECTION 12A OF INCOME TAX AND NEVER FILE ANY RETURN.

FURTHER THE INSTITUION WANT TO GET IT REGISTERED UNDER SECTION 12AA.

1. NOW IF WE APPLY FOR REGN. THEN WILL THE INSTITUTION WILL BE REQUIRED TO PAY TAX ON ALL THE RECIEPTS SINCE 1995.

2. WHAT ARE THE PENAL CONSEQUENCES SINCE INSTITUTION HAD NEVER FURNISHED RETURN OF INCOME.

THANKS IN ADVANCE

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3 Replies

Late CA Sampat Jain (Chartered Accountant) (4772 Points)
Replied 18 January 2008

please tell regarding the nature of activiities of your society ..............

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CA. Amit Daga (Finance Controller CA. CS. CFA. CIFRS. M.COM. ) (9017 Points)
Replied 18 January 2008

Hi Rahul Sec.12A clarified that the charitable institutions that have not taken income tax registration for claiming exemption will be required to pay tax on their net income if they fail to seek registration acc to prov of Act.. As per the new amendment, these institutions will be eligible for tax exemption only from the date they make application under the Income Tax Act. But acc to Rule 17A & Rule 17B The expression “before expiry of the period in proviso (i) of clause (a) of section 12A” requires sufficiency of reasons which prevented the person from making the application for registration within one year as required, and not the reasons for the period beyond the prescribed period of one year. What the authority has to see is whether or not there were sufficient reasons which prevented the person from making the application within the prescribed period and not the total period after which the application was made. Further, refusal to condone the delay in making the application for registration entails consequence of the denial of the benefit of the provisions of sections 11 and 12 from a date anterior to the date from which benefit is granted in the financial year in which the application is made. Since the consequence of refusal has the effect of denial of benefit, principles of natural justice require an opportunity of hearing before an order in this behalf is passed on the ground that the reasons furnished by the applicant were not satisfactory - Society of Divine Providence v. Union of India [1998] 146 CTR (MP) 417.