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2011 (10) TMI 623 - AT - Income TaxNon granting registration u/s 12AA - Held that - The legal position on the issue becomes crystallized that at the time of consideration of registration it is not a sine qua non that the Trust must have started its activities. In case the Trust has started its activities the ld. CIT can examine them as has been envisaged in the Act. This above conclusion is safeguarded by sub-clause(3) incorporated in section 12AA vide which if after granting registration it is found by the ld. CIT that the activities of the Trust are not carried out in furtherance of its charitable objects he can cancel the registration granted to the Trust. So when these provisions are read in conjunction and a harmonious interpretation is given to them we find that the view taken by the Co-ordinate Benches in numerous successive cases some of which we have mentioned herein above is very logical and the same we are bound to follow. Accordingly we cannot sustain the order of ld. DIT(E) in refusing to grant registration and consequent refusal to grant approval u/s 80G of the Act. No fruitful purpose will be served by restoring the issue to the file of ld. DIT(E). Consequently we set aside the finding of the DIT(E) and direct him to grant registration u/s 12AA and also to grant approval u/s 80G to the assessee-Trust.
Issues Involved:
1. Denial of registration under Section 12AA of the Income Tax Act. 2. Refusal to grant approval under Section 80G of the Income Tax Act. Detailed Analysis: Denial of Registration under Section 12AA: The assessee-Trust, constituted by a Trust-deed dated 27.11.2009, filed an application for registration under Section 12AA on 08.02.2010. The Director of Income-tax (Exemptions) [DIT(E)] declined the registration on the grounds that the Trust had not commenced its activities, making it impossible to verify the genuineness of the Trust. The DIT(E) emphasized that both the charitable nature of the objects and the genuineness of activities must be satisfied for granting registration under Section 12AA. The Tribunal analyzed several precedents and found that the commencement of activities is not a pre-condition for registration under Section 12AA. The Tribunal cited various cases, including Women Development & Educational Trust vs CIT and Ramajunam Memorial Trust vs CIT, which established that at the stage of granting registration, only the objects of the Trust need to be examined, not the application of funds or the commencement of activities. The Tribunal also referred to a decision by the Hon'ble Karnataka High Court in Director of Income Tax(Exemptions) vs Meenakshi Amma Endowment Trust, which held that the objects of the Trust should be considered, and the activities should not be the criterion for registration if the application is made shortly after the formation of the Trust. Based on these precedents, the Tribunal concluded that the DIT(E)'s refusal to grant registration under Section 12AA was erroneous. The Tribunal directed the DIT(E) to grant registration to the assessee-Trust. Refusal to Grant Approval under Section 80G: The refusal to grant approval under Section 80G was consequential to the denial of registration under Section 12AA. Since the Tribunal found the denial of registration under Section 12AA to be incorrect, it also directed the DIT(E) to grant approval under Section 80G to the assessee-Trust. Conclusion: The Tribunal set aside the order of the DIT(E) and directed the granting of registration under Section 12AA and approval under Section 80G to the assessee-Trust. The Tribunal emphasized that the commencement of activities is not necessary for registration under Section 12AA, and only the charitable nature of the objects needs to be examined at that stage.
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