2010 (12) TMI 1310 - AT - Income Tax

Summary

Issues involved: Refusal of registration under section 12AA of the Income-tax Act, 1961 to the assessee Trust by the Commissioner of Income Tax.

Summary:
The appeal was filed by the assessee Trust against the order of the Commissioner of Income Tax refusing to grant registration under section 12AA of the Income-tax Act, 1961. The main contention was regarding the alleged deficiency noted in the Trust Deed, specifically related to the vagueness and unworkability of the Trust's objects.

The assessee Trust was created through a Trust Deed executed on 18th March, 2002, and later amended on 26th May, 2009. The application for registration under section 12AA was filed on 22.07.2009. The Commissioner's refusal was based on the perceived deficiencies in the Trust Deed, particularly concerning the vagueness and unworkability of the Trust's objects.

The grounds of appeal by the assessee included contentions that the Commissioner erred in not considering the Trust's objects as per the Trust Deed, inappropriately looking into the accounts of the Trust while rejecting the registration, and not taking into account that it was the Trust's first year of activity. The assessee also cited precedents where similar Trusts were granted registration under section 12AA.

Upon hearing the submissions, the Tribunal found that the reasons given by the Commissioner for denying registration did not align with the requirements for granting or rejecting registration. The Tribunal noted that the Commissioner delved too deeply into the Trust's objects and activities, beyond what was explicitly stated in the Trust Deed. It was established that the Trust was engaged in charitable activities, particularly running a nursing college, which qualified it for registration under section 12AA.

The Tribunal directed the Commissioner to grant registration to the Trust, emphasizing that the examination of the Trust's activities should be done during the assessment stage, not at the registration application stage. Consequently, the appeal filed by the assessee Trust was allowed, and registration was granted.

The order was pronounced in the Court on 22nd December, 2010.