2017 (5) TMI 576 - AT - Income Tax

Grant of approval u/s.12A denied - books of account of financial year 2013-14 are not produced - 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 to the assessee - Decided in favour of assessee.

Summary

Issues:
- 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 CIT, Raipur, rejecting the application for registration u/s.12A of the Income Tax Act, 1961. The Assessing Officer reported that the society failed to establish its charitable activities' genuineness. The CIT observed the society's activities were not charitable, primarily holding a camp to promote Urologists for mutual benefit. The CIT rejected the registration application based on the society's failure to produce books of account and the nature of its activities.

The Authorized Representative argued that the society's objects were charitable, emphasizing the promotion of health programs and free medical camps. The CIT's refusal was challenged, pointing out the society's charitable aims and activities. The AR contended that the CIT's role was to assess the trust's objects' genuineness, not its income utilization, which falls under the Assessing Officer's purview.

The Tribunal examined the society's objects and found them genuine and charitable. Citing precedents, the Tribunal emphasized that the CIT's role in granting registration u/s.12A was to verify the trust's charitable nature and genuine activities. As the society's objects were charitable and genuine, the CIT's rejection was deemed unjustified. Rulings from Tribunals and High Courts supported the view that registration should be granted based on the trust's genuineness and charitable objectives, not income considerations.

Consequently, the Tribunal allowed the appeal, setting aside the CIT's order and directing the grant of registration u/s.12A to the society. The judgment emphasized that the CIT's scrutiny should focus on the trust's charitable objects and genuine activities, not income utilization, during registration assessments.