2018 (4) TMI 1712 - AT - Income Tax

Registration u/s 12AA denied - charitable activity or not?- denial of registration as neither the objects have been pursued nor the activities of the trust get corroborated - HELD THAT - In the instant case, the objects of the trust are not in controversy which is first consideration for grant of registration u/s 12AA of the Act. Secondly, the trust is at nascent stage and during the Financial Year 2015-16 having received donation to the extent of ₹ 1,12,000/- only and maximum of (₹ 1,03,250/-), which has already been utilized for the charitable purposes as it reflects from the visiting fees paid to the various doctors for giving free consultations/treatments, which even otherwise not refuted by the Revenue Department and aforesaid facts favours the pursuing of objects . Considering the applicant trust has been formed only first day of April, 2015 which certainly at the nascent stage and application for registration u/s 12AA was filed on 26.09.2016 and the assessee trust do not have much fund at the initial stage to pursue its objections, however, from the records available in file, we do not have any hesitation to say that the some of the stated object vis-a-vis treatment for poor and weaker sections of the society, irrespective of their caste or creed and religion, have already been persuaded by the applicant trust, therefore, the main reason for rejection of the registration as given by the CIT(E) that neither the objects are seems to have been persuaded nor the activities of the trust got corroborated, having no substance and can not be considered as logical reasoning and hence the order impugned herein is perverse, improper and illogical and liable to be set aside. We set the order passed by the CIT(A) and direct the CIT(E) to grant registration u/s 12AA of the Act to the appellant society, henceforth, however, the grant of registration can be subjected to condition, if any, which the Ld. CIT(E) deems fit and proper under the law. - Decided in favour of assessee.

Summary

Issues Involved:
Appeal against rejection of registration under section 12AA of the Income Tax Act, 1961.

Detailed Analysis:

Issue 1: Grounds of Appeal
The appellant raised grounds challenging the order dated 28.03.2017 passed under section 12AA of the Income Tax Act 1961, alleging it was against the law and facts. The CIT (Exemptions) was criticized for making observations that none of the stated objects of the trust seemed to have been pursued, which the appellant argued was against facts and law. The appellant further contended that the CIT (Exemptions) failed to appreciate the factual submissions and documentary evidence supporting charitable activities during registration proceedings. The appellant also argued that the rejection of registration was based on presumptions without proper inquiry, thus violating the provisions of the law for grant of registration.

Issue 2: Facts of the Case
The application for registration under section 12A of the Act was filed by the appellant, and during the process, it was observed that the stated objects of the trust were not being pursued. The CIT (Exemptions) noted the link between the trust and a hospital run by trustees separately on a commercial basis. The CIT (Exemptions) found discrepancies in the submitted documents, such as self-generated letters and handwritten notes, which were not confirmed by beneficiaries or doctors. The rejection of registration was based on the lack of pursuit of objects and uncorroborated activities of the trust.

Issue 3: Arguments and Observations
The appellant argued in support of its case, emphasizing documents already submitted. The CIT (DR) defended the impugned order, claiming it was not illegal or improper. The Tribunal considered the material on record, including details of visiting fees to specialist doctors and patient lists. It found that the trust had received donations and utilized them for charitable purposes, supporting the pursuit of its objects. The Tribunal concluded that the rejection of registration was improper and illogical, setting aside the order and directing the grant of registration to the appellant society.

Conclusion:
The Tribunal allowed the appeal, setting aside the order rejecting registration under section 12AA of the Act and directing the grant of registration to the appellant society. The decision was based on the finding that the trust had pursued its charitable objectives, despite being at a nascent stage with limited funds. The Tribunal deemed the rejection of registration to be without substance and ordered the CIT (E) to grant registration subject to any necessary conditions under the law.