2018 (5) TMI 1810 - AT - Income Tax

Registration u/s 12A and approval under section 80G denied - no charitable activities done by the assessee - Held that - As decided in DIRECTOR OF INCOME TAX VERSUS FOUNDATION OF OPHTHALMIC & OPTOMETRY RESEARCH EDUCATION CENTRE 2012 (8) TMI 777 - DELHI HIGH COURT as relying on SELF EMPLOYERS SERVICE SOCIETY VERSUS COMMISSIONER OF INCOME-TAX 2000 (9) TMI 47 - KERALA HIGH COURT non commencement of charitable activity could not be a ground for rejection of application for registration u/s 12A. - decided in favour of assessee

Summary

Issues:
1. Rejection of applications for registration under section 12A and approval under section 80G.

Analysis:
The Appellate Tribunal ITAT KOLKATA heard two appeals filed by an assessee against orders rejecting their applications for registration under section 12A and approval under section 80G. The assessee, a charitable trust established in 2015, applied for registration under section 12AA but was denied by the Ld. CIT (Exemptions) due to the lack of proof of charitable activities. The Ld. CIT relied on a Kerala High Court decision stating that entities yet to start charitable activities cannot be granted registration. Consequently, approval under section 80G was also denied. The assessee appealed to the Tribunal.

The assessee's counsel cited a Delhi High Court case where a similar rejection was overturned by the Tribunal based on a Karnataka High Court decision, emphasizing that non-commencement of charitable activities should not be a ground for refusal of registration. The Delhi High Court, after considering the relevant provisions, upheld the Tribunal's decision, stating that the law does not impose a waiting period for a trust to qualify for registration solely based on its objects without activity. The Court preferred the interpretation given by the Karnataka High Court and directed the Commissioner to grant registration under section 12A and approval under section 80G to the assessee.

In conclusion, the Tribunal found the issue in favor of the assessee, citing the Delhi High Court case and directed the Commissioner to grant registration under section 12A and approval under section 80G. Both appeals of the assessee were allowed, and the order was pronounced in the open court on 16th May 2018. A corrigendum was issued to rectify the names of the representatives mentioned in the order.