2017 (10) TMI 528 - AT - Income Tax

Registration u/s. 12A - no activities of the Trust were started - Held that - The law is now well-settled that while granting the registration to the charitable institution or trust, if it is at the commencement stage, the powers of CIT, with whom the application is filed by such trust/institution, are limited to the aspect of examining that whether or not the objects of trust are charitable in nature. A perusal of the object ives sought to be achieved by the assessee Trust is undisputedly carrying of charitable activity. It should be kept in mind that at the stage of commencement of institution/ assessee Trust, it is not relevant to decide whether the Trust has actually carried out the charitable activities because in this case it is in the nascent state only ie, within four months of its incorporation the relevant applications were moved by the appellant. So long the objects of the trust are charitable in nature; registration cannot be refused, if the trust is genuine. - Decide in favour of assessee.

Summary

Issues:
1. Refusal of registration u/s. 12AA of the Income-tax Act, 1961.
2. Refusal of approval u/s. 80G(5)(vi) of the Income-tax Act, 1961.

Analysis:
1. The case involved the rejection of registration u/s. 12AA by the Ld. CIT(E) due to the Trust being new and not having carried out charitable activities. The assessee argued that at the commencement stage, the CIT(E)'s powers are limited to examining the charitable nature of the trust's objects. The Ld. AR emphasized that as long as the trust's objects are charitable and activities genuine, registration should not be denied. The Tribunal referred to precedents supporting this view and directed the Ld. CIT(E) to grant registration considering the charitable nature of the trust's objects. The Tribunal did not directly order the grant of registration but instructed the Ld. CIT(E) to reconsider the application within three months, citing binding decisions.

2. The refusal of approval u/s. 80G(5)(vi) was also challenged by the assessee based on similar grounds as the registration issue. The Ld. AR contended that the rejection was unjustified as the trust's charitable objects were not in dispute. The Tribunal, following the same reasoning as in the registration issue, directed the Ld. CIT(E) to reconsider granting approval under section 80G, in line with established legal principles and previous decisions. The Tribunal allowed both appeals of the assessee, emphasizing the importance of charitable objects and genuine activities for registration and approval under the Income-tax Act, 1961.

This detailed analysis of the legal judgment highlights the key issues, arguments presented, legal principles applied, and the final decision rendered by the Tribunal.