2016 (2) TMI 562 - AT - Income Tax

Denial of registration u/s 12A and approval u/s 80G - Held that - Genuineness of the activities of the trust cannot be gone into at the time of registration of the trust. It is only after the activities of the trust are commenced the genuineness of the objects can be examined during the course of assessment proceedings after the grant of registration by the IT Authorities. We direct the ld.CIT(Exeptn.) to grant the registration u/s 12A of the IT Act after satisfying himself that the objects of the trust are charitable in nature. With this direction we restore the matter to the file of the ld.CIT(Exeptn.). - Decided partly in favour of assessee for statistical purpose.

Summary

Issues:
Appeal against denial of registration u/s 12A and recognition u/s 80G of the IT Act by CIT(Exptn.)

Analysis:

Issue 1: Denial of registration u/s 12A and recognition u/s 80G by CIT(Exptn.)

The assessee trust filed appeals against the orders of CIT(Exptn.) denying registration u/s 12A of the IT Act and recognition u/s 80G of the IT Act. The trust was formed with objectives related to environmental sustainability and waste management. The CIT denied registration citing lack of activities by the trust, questioning the genuineness of its operations. The AR contended that registration cannot be denied based on lack of activities, referencing relevant case laws. The Tribunal noted that the trust had not commenced activities at the time of application, emphasizing that assessing activities is post-registration. Citing precedents, the Tribunal held that the genuineness of trust activities is not assessed during registration but during subsequent operations. The Tribunal directed the CIT to grant registration u/s 12A after ensuring the charitable nature of the trust's objectives. The issue of approval u/s 80G was deemed consequential to registration and also restored for consideration.

Conclusion:
The appeals by the assessee trust were partly allowed for statistical purposes, with the Tribunal directing the CIT to grant registration u/s 12A and approval u/s 80G after verifying the charitable nature of the trust's objectives. The judgment emphasized that the genuineness of trust activities is assessed post-registration, in line with established legal principles.

This detailed analysis covers the issues involved in the legal judgment comprehensively, providing a thorough understanding of the case and its implications.