2016 (11) TMI 390 - AT - Income Tax

Registration to the assessee Trust under section 12AA and 80G - charitable activities - powers of CIT(A) - Held that - The powers of ld. CIT with whom the application is filed, are limited to the aspect of examining that whether or not the objects of trust are charitable in nature and since the Trust was formed on 22.12.2014 and the application for registration was made on 07.04.2015 , though the activities commenced to some extent, there were less as such is not open for the ld. CIT to go into the quantitative aspect of the activities of the Trust. The carrying of charitable activity at the stage of commencement of institution is not relevant to decide that whether such trust/ institution is entitled for registration. So long the objects of the trust are charitable in nature, registration cannot be refused, if the trust is genuine. Therefore, we find no material on record to justify the action of the CIT vide which the assessee trust has been refused for grant of registration. - See Dharma Sansthapak Sangh (Niyas). Versus Commissioner Of Income-Tax. 2008 (8) TMI 393 - ITAT DELHI-A - Decided in favour of assessee

Summary

Issues:
- Registration under section 12AA of the Income Tax Act, 1961
- Grant of approval under section 80G of the Income Tax Act, 1961

Analysis:

Issue 1: Registration under section 12AA of the Income Tax Act, 1961
The appeals by the Assessee challenged the order rejecting registration under section 12AA by the Commissioner of Income Tax (Exemptions). The Trust, formed for educational purposes, applied for registration which was denied based on the activities being deemed insufficient. The Tribunal considered the argument that at the commencement stage, the CIT's powers are limited to examining whether the trust's objects are charitable in nature. Citing a Delhi Tribunal decision, it was held that as long as the trust's objects are charitable, registration cannot be refused if the trust is genuine. The Tribunal directed the D.I.T. (Exemption) to grant registration to the assessee-trust under section 12AA, following precedents and judicial reasoning.

Issue 2: Grant of approval under section 80G of the Income Tax Act, 1961
The rejection of registration under section 80G was also challenged by the Assessee. The Tribunal considered the argument that the trust was in its ignition period and had started activities, warranting approval under section 80G. Citing previous decisions, the Tribunal directed the CIT to grant registration to the assessee-Trust under section 12AA and also to grant exemption certificate under section 80G. The appeals of the assessee were allowed, and the orders were pronounced in open court on September 23, 2016.

In conclusion, the Tribunal's decision favored the Assessee, directing the grant of registration under section 12AA and approval under section 80G of the Income Tax Act, 1961. The Tribunal emphasized the importance of charitable objects of the trust and the genuineness of the trust in determining eligibility for registration. The judgment relied on precedents and judicial reasoning to support the decision in favor of the Assessee.