| Tax Law Updates
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| Director of Income Tax vs. Foundation of Ophthalmic & Optometry Research Education Centre, ITA no. 1687 of 2010, Dated 16-08-2012; Delhi High Court
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| Issue Involved: “Whether while examining the application under Section 12AA (1) (b) read with Section 12A of the Income Tax Act, 1961, the concerned Commissioner/Director is required to examine the question whether the Trust has actually commenced and has, in fact, carried on charitable activities?â€
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| Decided in favour of: Assessee |
| Held: It has been held by Hon’ble Delhi High Court that at the time of granting registration u/s 12AA the Income Tax Act, 1961, the concerned Commissioner/Director is not required to examine the question whether the trust has actually commenced and has carried on charitable activities or not and at that time the objects of the trust/society from the trust deed/memorandum of objects have to be taken into consideration. |
| Brief Facts and Reasoning given by the Court: The assessee applied for registration under Section 12AA and which was refused by DIT (Exemption) on the ground that no charitable activity had in fact taken place since the society was a newly established one.
In the case of newly established society, objects of the trust have to be taken into consideration by the authority and the objects of the trust could be read from the trust deed itself. In the subsequent returns filed by the trust, if the Revenue comes across that factually trust has not conducted any charitable activities, it is always open to the authorities concerned to withdraw the registration already granted or to cancel the said registration under s.12AA (3) of the Act. Further, held that the statute does not prohibit or enjoin the Commissioner from registering Trust solely based on its objects, without any activity, in the case of a newly registered Trust. The statutory time limit does not prescribe a waiting period, for a trust to qualify itself for registration. |
| In holding so, Hon’ble Court followed the interpretation given to Section-12AA by the Karnataka High Court in Director of Income Tax (Exemptions) v. Meenakshi Amma Endowment Trust, (2011) 50 DTR (Kar) 243. |
| CIT vs. M/s Panorama Builders Pvt. Ltd. in ITA 5014 to 5016 of 2011, dated 08-08-2012; Karnataka High Court
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| Issue Involved: “Whether non-issuance of the notice u/s 143(2) within the prescribed time, made the whole block assessment order null and void and bad in law, despite the assessee not having raised any objection before the passing of the assessment order and despite the provisions of section 292BB of the Act?â€
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| Decided in favour of: Assessee |
| Held: In this case, Hon’ble High Court has held that section 292BB cures the defects in service of notice but section 292BB is confined to only service of notice under this Act and this section does not apply to ‘Issuance of notice’ under the provisions of Act. It does not lay down that if a mandatory notice is required to be issued by the assessing officer and it has not been issued within the period of limitation fixed under the law, then such notice shall be deemed to have been issued within time. |
| It has been further held that resort cannot be taken by the Revenue to section 292BB to give a go-bye to mandatory requirement of issuance of notice within the statutory fixed by the proviso to section 143(2) of the Act. |
| Securities Law Updates
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| SEBI, vide its Circular dated 11th September 2012, came out with an addendum to Circular No. CIR/MRD/DP/21/2012 dated August 02 regarding activation of temporary ISIN in case of issue of shares/securities. |
SEBI modified its previous Circular by making the following amendments:
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| CP Comments: |
| These mechanisms will make sure that any securities, in respect of which Listing permissions have been issued but Trading permissions are yet to be issued by the Stock Exchange(s), will not or may not be transferred by their allottees, till the time the Exchange(s) grant the Trading approval.
This will also take care of situations, wherein companies being listed on multiple Exchanges, receive the Trading Approval from any one of them and the securities so allotted become tradeable on that Exchange, but continue to remain non tradeable on the other Exchange, which is yet to grant the Trading permission for the same. |