2012 (11) TMI 395 - AT - Income Tax

Registration u/s. 12A - rejection of application as assessee trust admitted no activities of commencement - Held that - As decided in Panna Lalbhai Foundation Versus The DIT (Exemption) Ahmedabad 2012 (11) TMI 293 - ITAT AHMEDABAD at the stage of registration satisfaction on genuineness of activity is not a pre-condition. Thus in this view of the matter DIT(E) ought to have granted registration when he was satisfied about the objects of the assessee-trust - in favour of assessee.

Summary

Issues:
- Appeal against the order of Director of Income-tax (Exemptions) regarding registration under Section 12AA of the Income-tax Act, 1961.
- Whether commencement of activity is a pre-condition for granting registration under Section 12A of the Act.

Analysis:
1. The appeal was filed against the order of the Director of Income-tax (Exemptions) regarding the registration under Section 12AA of the Income-tax Act, 1961. The assessee raised a ground stating that the activities of the Trust were not considered genuine by the Director, leading to a refusal to grant registration under Section 12AA.

2. The facts revealed that the assessee-trust was formed by a trust deed dated 17-02-2011 and registered with the Charity Commissioner on 18th April, 2011. An application for registration under Section 12A of the Act was made on 23-11-2011, which was rejected on 16-05-2012 due to the lack of commenced activities. This rejection prompted the appeal by the assessee.

3. The assessee's representative argued that the commencement of activities should not be a mandatory requirement for granting registration under Section 12AA. Reference was made to a previous case to support this argument. The contention was that satisfaction on the genuineness of activities should not be a pre-condition at the registration stage.

4. On the contrary, the Senior-DR supported the Director's decision, emphasizing that the Director must be satisfied about the objects of the trust and the genuineness of its activities. It was argued that the absence of commenced activities could hinder the Director from being satisfied about the genuineness of the trust's activities.

5. The Tribunal analyzed the issue and referred to a previous decision where it was held that satisfaction on the genuineness of activities is not a pre-condition for registration under Section 12A. Consequently, the Tribunal directed the Director to grant registration under Section 12A to the assessee-trust, while reserving the right to take action if the activities were found to be not genuine.

6. In conclusion, the Tribunal allowed the appeal of the assessee, emphasizing that the commencement of activities should not be a pre-condition for registration under Section 12A. The Tribunal directed the Director to grant registration under Section 12A to the assessee-trust, with the provision to take further action if the genuineness of activities is in question.