2014 (8) TMI 2 - HC - Income Tax

Grant of registration of trust u/s 12A Assessee trust made donations to another trust Held that - The Tribunal has specifically held that the objective of the Trust is charitable - Relying upon COMMISSIONER OF INCOME TAX-I Versus KUTCHI DASA OSWAL MOTO PARIWAR AMBAMA TRUST 2012 (12) TMI 876 - GUJARAT HIGH COURT - absence of any activity of a trust at the time of registration is not a ground to question genuineness of objectives and activities; registration for trust cannot be denied on the sole ground of non-commencement of activity and such absence of activity does not empower Commissioner to infer absence of genuineness - Tribunal has set aside the decision of the Commissioner denying the registration and directed the Commissioner to grant registration to the assessee trust u/s 12A of the Act - There was no error has been committed by the Tribunal in directing the Commissioner to grant registration to the assessee-trust u/s 12A of the Act Decided against Revenue.

Summary

Issues:
1. Granting registration to assessee trust under section 12A.

Analysis:
The High Court of Gujarat heard an appeal challenging the judgment of the Income-tax Appellate Tribunal (ITAT) regarding the registration of a trust under section 12A of the Income-tax Act. The Tribunal had allowed the appeal of the trust, setting aside the order of the Commissioner of Income-tax who denied registration under section 12AA(1)(b)(ii). The main contention was that the trust had not engaged in activities beyond distributing free note books and providing scholarships. The Tribunal, citing relevant case law, held that the absence of activity at the time of registration does not question the genuineness of objectives and activities. It also noted that donations made by the trust to another charitable trust were used for charitable purposes, thus fulfilling the purpose of establishing the trust.

The Court agreed with the Tribunal's decision, emphasizing the precedent set by a previous case. It upheld that the absence of activity at the time of registration should not lead to the denial of registration under section 12A. The Court found no error in the Tribunal's direction to grant registration to the trust, leading to the dismissal of the appeal by the Revenue. The judgment highlighted the importance of charitable activities and the application of funds for such purposes, even if done through another trust. The Court's decision was based on legal principles and interpretations of relevant provisions of the Income-tax Act, ensuring the trust's registration under section 12A was justified and in accordance with the law.