2014 (12) TMI 1146 - AT - Income Tax

Rejection of the application for registration under section 12AA - Held that - The assessee is at the preliminary stage for carrying out the charitable object. The assessee claims that buildings were under construction for starting the educational institution. However, no material is available on record to show that the assessee has started the construction of the building. The fact remains is that the assessee has not applied for permission/approval from the concerned authority for starting the educational institution. Therefore, as of now no charitable activity is carried on. - society has not done any charitable work during the relevant period. Therefore, it does not entitle for registration under section 12AA of the Act. The Division Bench of the Kerala High Court confirmed the liberty given by the learned single judge for filing a fresh application immediately after starting the charitable work. - assessee is not entitled for registration since no charitable activity was carried out. However, it is made clear that the assessee will be at liberty to file fresh application before the Commissioner as soon as the charitable activity, viz., the educational institution starts functioning. If such an application is filed, as observed by the Kerala High Court in the case of Self Employers Service Society 2000 (9) TMI 47 - KERALA High Court , the Commissioner shall consider the same on merit. - Decided against assessee.

Summary

Issues Involved:
1. Rejection of application for registration under section 12AA of the Act due to non-commencement of charitable activities.

Analysis:
The judgment by the Appellate Tribunal ITAT COCHIN involved the appeal of an assessee against the rejection of their application for registration under section 12AA of the Act by the Administrative Commissioner. The assessee-trust was formed with the objective of establishing and administering educational institutions. The representative for the assessee argued that although the trust had not started any charitable activities yet, they were in the process of constructing a building for an educational institution. However, the Departmental representative contended that since no charitable activities had commenced as per the trust deed, the assessee was not eligible for registration.

Upon reviewing the submissions, the Tribunal noted that the assessee was still in the preliminary stage of carrying out charitable activities. It was observed that no construction had commenced, and no application for permission to start the educational institution had been made. Citing a precedent from the Kerala High Court, the Tribunal emphasized the importance of actually undertaking charitable work to qualify for registration under section 12AA. The Kerala High Court's decision in a similar case highlighted that registration could be sought once charitable activities began, and the Commissioner should evaluate any fresh application based on merit.

Consequently, the Tribunal upheld the rejection of the assessee's registration application due to the absence of charitable activities. However, the Tribunal granted the assessee the opportunity to reapply for registration once the educational institution started functioning, in line with the Kerala High Court's guidance. The Tribunal's decision to dismiss the appeal was based on the lack of ongoing charitable activities at the time of the application.

In conclusion, the judgment underscored the necessity for actual charitable work to be carried out before seeking registration under section 12AA of the Act. The Tribunal's decision aligned with the principle that registration should be based on the genuine commencement of charitable activities, as outlined in the trust deed, rather than mere intentions or preparatory steps.