2012 (9) TMI 178 - AT - Income Tax

Charitable Trust - registration granted u/s 12AA - subsequent cancellation on ground that assessee trust was engaged in advancement of Hinduism and the expenses thus could not be treated as applied for charitable purposes for general public utility - Held that - Trust or institution whether engaged in charitable or religious if is found to be carrying on its activities and the said activities are genuine, then such trust or institution subject to fulfillment of the provisions of the Act, are to be registered u/s 12AA, in order to entitle the trust or institution to claim deduction allowable u/s 11/12. Since activities of the trust were not found to be non-genuine and further there is no finding that the trust was not carrying out its activities in accordance with the objects of the trust. In the absence of the same, exercise of power by the CIT u/s 12AA(3) is unwarranted and the same is hereby cancelled. CIT directed to grant registration to the assessee u/s 12AA - Decided in favor of assessee

Summary

Issues:
1. Cancellation of registration under sections 12AA and 80G of the Income Tax Act, 1961.

Analysis:
The judgment by the Appellate Tribunal ITAT, Chandigarh involved two appeals filed by the Revenue against the order of the Commissioner of Income-tax-I, Ludhiana regarding the cancellation of registration under sections 12AA and 80G of the Income Tax Act, 1961. The Commissioner of Income Tax had directed the Assessing Officer to report on the activities of the trust, which led to a show cause notice for cancellation of registration. The Commissioner observed that the trust's expenses were mainly for religious purposes and not for general public/charitable purposes. Consequently, the registration granted to the trust was cancelled as the objects were deemed to be for the advancement of Hinduism, not for general public utility. The trust appealed against this cancellation, arguing that it was entitled to registration under section 12AA of the Act regardless of carrying out charitable or religious activities. The Revenue, represented by the learned D.R., relied on the Commissioner's order.

The central issue in the appeal was the revocation of registration by the Commissioner under section 12AA(3) of the Act. The Commissioner had cancelled the registration granted to the trust based on the nature of its activities, which were perceived to be advancing Hinduism rather than serving general public utility. However, the Tribunal found that the trust had been granted registration under section 12AA in 2003, and its activities remained consistent. The Tribunal noted that the conditions for revocation of registration under section 12AA(3) were not met in this case, as there was no evidence of non-genuine activities or deviation from the trust's objects. Therefore, the Tribunal deemed the cancellation of registration unwarranted and directed the Commissioner to cancel the order under section 12AA(3) and reinstate the registration. The appeal in this regard was allowed.

Regarding the appeal related to registration under section 80G of the Act, the trust expressed disinterest in pursuing this recognition. Consequently, the Tribunal dismissed the grounds of appeal in this regard. In conclusion, the appeal in ITA No.959/Chd/2009 was allowed, while the appeal in ITA No.960/Chd/2009 was dismissed as per the respective decisions made by the Tribunal.