2009 (3) TMI 641 - AT - Income Tax

Summary

Issues Involved:
1. Rejection of Registration of Trust u/s 12AA of the Income-tax Act, 1961.
2. Timeliness and completeness of the application for registration.
3. Genuineness of the activities of the Trust.

Summary:

Issue 1: Rejection of Registration of Trust u/s 12AA of the Income-tax Act, 1961
The appeal filed by the assessee is against the order of CIT-III, Thane dated 13-3-2006, rejecting the registration of the Trust u/s 12AA of the Income-tax Act, 1961. The CIT noted that the application was not filed within one year from the date of creation of the society and that the Trust had incurred very negligible amounts on its objects, with most expenses going towards establishment costs. Additionally, the CIT observed that the expenditures were for persons related to a particular religion, leading to the refusal of registration.

Issue 2: Timeliness and Completeness of the Application for Registration
The Trust was created on 11-2-2001, but the application for registration was filed on 22-12-2004, beyond the one-year period stipulated u/s 12A(1)(a) of the Act. The CIT requested additional documents on 17-5-2005, which were provided by the assessee on 6-12-2005. The Tribunal noted that once the defects in the application were rectified, it should relate back to the original filing date, as per the doctrine of relating back and the precedent set by CIT v. Sohan Lal Chhajan Mal.

Issue 3: Genuineness of the Activities of the Trust
The CIT questioned the genuineness of the Trust's activities, but the Tribunal found no merit in these observations. The Tribunal referred to the case of Dharma Sansthapak Sangh (Niyas) v. CIT, which held that the objects of a trust to carry on religious activities could be construed as charitable and that the level of activity at the commencement stage is not relevant for deciding entitlement to registration.

Conclusion:
The Tribunal held that the CIT failed to initiate the enquiry in time to complete the process of granting registration within the stipulated six-month period. Consequently, the application is deemed to have been granted, and the order of the CIT refusing registration is quashed. The appeal filed by the assessee is allowed, and the registration is deemed to have been granted.