2023 (2) TMI 1298 - HC - Income Tax

Rejection of Registration application u/s 12AA and u/s 80G(5)(vi) - application u/s 12AA rejected on the ground that the assesee trust has been formed by the settler for the purpose of carrying out its CSR activities and also rejected application u/s 80G (v) holding that, the application is void ab initio in terms of provisions of Rule 11AA - HELD THAT - Application for grant of registration was dismissed by the Commissioner and the Tribunal has recorded its satisfaction as the trust fulfills following two basic conditions for grant of registration under Section 12AA of the Act, 1961 - 1. The object of the trust 2. the genuineness of the activities of the trust/institution. The Commissioner was not to examine with respect to genuineness of the activities of the trust and whether the trust, if transfers fund to another charitable society, can be given exemption under Section 11 of the Act, 1961. This power is restricted only to the Assessing Officer. Hence, in the present case, no useful purpose would be served to remand the matter back to the Commissioner to pass appropriate orders of registration of the trust under Section 12AA of the Act, 1961. The Tribunal, thus, has rightly directed CIT to grant registration under Section 12AA of the Act, 1961 and also approval under Section 80 G(5)(vi) of the Act, 1961 to the assessee. Decided against revenue.

Summary

Issues:
- Appeal against orders under Section 12AA and Section 80G(5)(vi) of the Income Tax Act, 1961.
- Grant of registration to a trust for carrying out CSR activities.
- Examination of trust's objects and activities for registration.
- Jurisdiction of the Tribunal to direct registration without satisfaction recorded by the registering authority.

Analysis:
The judgment by the Punjab and Haryana High Court addressed six income tax appeals with identical issues. The respondent, a trust formed for CSR activities, faced rejection of registration under Section 12AA and Section 80G(5)(vi) of the Income Tax Act, 1961. The Tribunal allowed the appeals, setting aside the orders based on detailed reasoning. The Tribunal emphasized that forming a trust for CSR activities does not preclude registration under Section 12AA. It highlighted the charitable nature of the trust's objects and activities, essential for registration. The Tribunal clarified that the Commissioner's role is limited to assessing the trust's charitable objectives and genuine activities, not its compliance with the Companies Act.

Regarding the jurisdiction of the Tribunal to direct registration, the judgment referred to a case from the Allahabad High Court. The Allahabad High Court emphasized that while the Tribunal can direct registration, it must do so judiciously. The Tribunal's power to order registration should be exercised only when the Commissioner's satisfaction is in question based on existing records. The judgment noted that remand to the Commissioner is necessary if the Tribunal's view differs based on new material. The High Court applied this ruling to the present case, where the Tribunal's satisfaction with the trust's objectives and activities warranted registration under Section 12AA.

The High Court upheld the Tribunal's decision, emphasizing that the Commissioner's role is not to delve into all activities of the trust but to focus on charitable objectives and genuine activities. The High Court concluded that remanding the matter back to the Commissioner would serve no purpose, as the trust met the basic conditions for registration. Therefore, the High Court dismissed the appeals and directed the Commissioner to grant registration under Section 12AA and approval under Section 80G(5)(vi) to the trust.