2016 (8) TMI 1557 - AT - Income Tax

Exemption u/s 11 - refusal to grant registration u/s 12AA - HELD THAT - We find that the trust was created vide trust deed dated 26 Sep. 2014 and the objects of the trust deed of the society are charitable in nature. At the time of granting registration to an assessee the learned CIT (Exemption) has to only examine the objects for which the society has been registered. The provisions of section 12AA regarding registration are very clear which clearly states that at the time of registration the Commissioner has to satisfy himself about the objects of Trust, and genuineness of its activities. We find that in the next year the learned CIT(Exemption) on the basis of same trust deed has allowed registration to the assessee, therefore, refusal to grant registration in the present year is not justified - we direct the CIT(Exemption) to grant registration to the assessee u/s 12AA of the Act.

Summary

Issues:
Appeal against refusal to grant registration under section 12AA of the Act for the assessment year 2015-16.

Analysis:
The appeal was filed by the assessee against the order of the learned CIT (Exemption) who refused to grant registration under section 12AA of the Act for the assessment year 2015-16. The key contention of the assessee was that the learned CIT (Exemption) had not granted registration as no charitable activity was undertaken, which the assessee disputed by providing evidence of granting a scholarship to a girl student. The learned AR argued that the charitable nature of the activities was evident from the trust deed. The learned DR, on the other hand, supported the order of the CIT (Exemption) stating that no charitable activity was proven by the assessee.

During the proceedings, the learned AR informed that ground No.5 would not be pressed, and it was dismissed accordingly. The AR emphasized that the charitable nature of the activities was evident from the trust deed, and the subsequent year's registration by the CIT (Exemption) supported this claim. The Tribunal observed that the trust deed clearly outlined charitable objects, and the CIT (Exemption) should only examine the objects at the time of registration. The provisions of section 12AA were reiterated, emphasizing the need for the Commissioner to satisfy himself about the objects and genuineness of activities of the trust or institution.

The Tribunal noted that in the following year, the CIT (Exemption) had granted registration to the assessee based on the same trust deed, which indicated inconsistency in the decision to refuse registration for the current year. Consequently, the Tribunal directed the CIT (Exemption) to grant registration to the assessee under section 12AA of the Act. As a result, the appeal filed by the assessee was partly allowed, emphasizing the importance of examining the charitable objects and genuineness of activities at the time of registration.

In conclusion, the Tribunal's decision highlighted the significance of the charitable nature of activities outlined in the trust deed for registration under section 12AA of the Act. The inconsistency in the CIT (Exemption)'s decision regarding registration for different years was a crucial factor in the Tribunal's ruling to grant registration to the assessee for the assessment year in question.