2017 (5) TMI 575 - AT - Income Tax

Application for grant of approval u/s.12A rejected - Held that - We find that none of the objects of the society has been found after examination by the CIT as not-genuine or not charitable in nature. CIT at the time of grant of registration u/s.12A of the Act, has to consider whether the objects of the trust are charitable and the activities of the trust are genuine. If he finds that the objects of the trust are charitable and the activities of the trust are genuine, then he should grant registration u/s.12A of the Act to the assessee society. It has been held that at the time of registration, the CIT is not to examine the application of income or carrying on any activity by the assessee trust or institution. In view of foregoing, we hold that the rejection of registration application of the assessee society u/s.12A by the CIT is not justified and hence, we set aside his order and direct him to grant registration u/s.12A of the Act - Decided in favour of assessee.

Summary

Issues:
1. Rejection of application for grant of approval u/s.12A of the Income Tax Act, 1961.

Analysis:
The appeal was filed against the order of the Commissioner of Income Tax (CIT) rejecting the application for registration u/s.12A of the Income Tax Act, 1961. The CIT based the rejection on the grounds that the society failed to establish its engagement in charitable activities and did not respond adequately to queries regarding its activities and financials. The CIT specifically noted that the only charitable activity claimed by the society was a health check-up camp, which was not deemed sufficient to prove charitable engagement.

The Authorized Representative of the assessee argued that the objects of the trust, as outlined in the trust deed, were charitable in nature and that the CIT's rejection was unjustified. The representative highlighted that the CIT's role was to assess the genuineness of the trust's objects and activities, not to scrutinize the utilization of funds, which falls under the Assessing Officer's purview during regular assessments. The representative provided detailed submissions and documents to support the charitable nature of the trust's activities.

Upon reviewing the submissions and arguments, the Tribunal found that none of the society's objects were deemed non-charitable or non-genuine by the CIT. Citing precedents, the Tribunal emphasized that the CIT's role in granting registration u/s.12A was to verify the charitable nature of the trust's objects and the genuineness of its activities. As the objects were found to be charitable and the activities genuine, the Tribunal concluded that the rejection of the registration application was unwarranted. The Tribunal directed the CIT to grant registration u/s.12A to the assessee society, thereby allowing the appeal.

In summary, the Tribunal's decision overturned the CIT's rejection of the registration application, emphasizing the importance of assessing the charitable nature of trust objects and the genuineness of activities in granting registration u/s.12A. The Tribunal's ruling was based on the understanding that the CIT's role was not to delve into the application of income or day-to-day activities but to ensure the charitable intent and genuine operations of the trust.