The Commissioner of Income Tax is empowered by section 12AA which prescribes:
- The manner of grating registration in case of trust or institution for the purpose of availing exemption in respect of its income under section 11 of the Act, subject to conditions contained under sections 11, 12, 12AA and 13 and
- The manner of cancellation of said registration.
As per section 12AA, the grounds of cancellation of the trust or institution can be:
- The Principal Commissioner or the Commissioner is satisfied that activities of the exempt entity are not genuine or are not being carried out in accordance with its objects; and
- it is noticed that the activities of the exempt entity are being carried out in a manner that either whole or any part of its income would cease to be exempt .
The proposed amendment under section 12AA has been made to ensure that the trust or institution do not deviate from their objects for which the registration has been granted, it is provided that:
- At the time of granting the registration to a trust or institution, the Principal Commissioner or the Commissioner shall also satisfy himself about the compliance of the trust or institution to requirements of any other law which is material for the purpose of achieving its objects;
- Once the registration has been granted to trust or institution under section 12A and subsequently it is noticed that the trust or institution has violated requirements of any other law and the order, direction or decree, by whatever name called, holding that such violation has occurred, has either not been disputed or has attained finality, the Principal Commissioner or Commissioner may, by an order in writing, cancel the registration of such trust or institution after affording a reasonable opportunity of being heard.
These amendments shall be effective from 1st September, 2019.