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2012 (11) TMI 293 - AT - Income TaxDenial of registration applied for u/s 12A - DIT (Exemption) arrived at a view that the activities of the assessee trust were not in conformity with the terms of object of the trust being educational, medical, advancement of music, art, drama, dance and literatures etc - Trust formed on 19/12/2011, applied for grant of registration 25/01/2012 - Held that - Aforesaid shows that the Trust is at infant stage and the Trust needs to be registered under the provisions of the Act in order to derive benefit under it. legal position is that activities of the trust have to be considered if such registration is sought much later than the formation of the trust or after expiry of the earlier registration granted in favour of the trust. Therefore in a case of this nature where the trust has approached the authority for registration u/s 12A within a short span of its formation, the above-mentioned criteria namely, the objects of the trust for which it was formed will have to be examined to be satisfied about its genuineness and activities of the trust cannot be the criterion, since it is yet to commence its activities. In view of aforesaid, and considering the objects of the trust, DIT(Exemption) is directed to grant registration on its application u/s 12A and 12 AA - Decided in favor of assessee
Issues:
1. Denial of registration under section 12A of the IT Act due to noncompliance with section 12AA(1). 2. Verification of activities of the assessee trust by the Inspector. 3. Disagreement on the conformity of the trust's activities with its stated objects. 4. Argument of the trust being at an infant stage and deserving registration. 5. Comparison with previous judgments allowing registration for similar trusts. 6. Examination of the trust's objects and activities to determine eligibility for registration. Issue 1: Denial of Registration The appeal was filed by the assessee trust against the order of the DIT (Exemption) denying registration under section 12A of the IT Act due to noncompliance with section 12AA(1). The trust had applied for registration on 25-01-2012 but failed to provide complete details of its activities and bank account, leading to the denial. Issue 2: Verification by Inspector The Inspector's report revealed that the trust's premises showed no visible activities related to its charitable objects. The Inspector noted the absence of trustees and directed to meet a staff member who mentioned the charitable activities of the Lalbhai Group. The report formed the basis for the DIT (Exemption) to conclude that the trust's activities did not align with its stated objects. Issue 3: Conformity of Activities The DIT (Exemption) refused registration, citing non-conformity of the trust's activities with its objects related to education, medical relief, and cultural advancement. The trust argued that it was at an initial stage and deserved registration based on its charitable intentions as per the trust deed. Issue 4: Trust at Infant Stage The trust contended that being at an infant stage, it should be granted registration despite the lack of immediate charitable activities. The trust deed outlined various charitable purposes, indicating its intent to engage in charitable work once operational. Issue 5: Comparison with Previous Judgments The ITAT referred to previous judgments where trusts in similar situations were granted registration despite not having commenced charitable activities immediately. The decisions emphasized examining the trust's objects and genuineness rather than its immediate activities. Issue 6: Examination of Trust's Objects After reviewing the trust's objects and the Inspector's report, the ITAT found no adverse inference to refuse registration. Citing the trust's infancy, alignment with charitable purposes, and precedents, the ITAT directed the DIT (Exemption) to grant registration under sections 12A and 12AA of the Act. In conclusion, the ITAT allowed the appeal, considering the trust's infancy, alignment with charitable objects, and the precedents supporting registration for trusts at initial stages.
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