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2019 (3) TMI 1163 - AT - Income TaxApplication for recognition u/s 80G denied - CIT(E) has already granted the assessee trust registration under section 12AA - charitable activity or not? - main objection by the CIT(E) to grant of recognition under section 80G of the Act was that the assessee trust has not carried out any noticeable activity till formation of the Trust - HELD THAT - What is significant / noticeable activity is very subjective and cannot be the basis for rejection of the assessee s application. It is for the assessee to determine which of its activities in furtherance of its objects are to be taken up initially. Grant of approval / recognition under section 80G of the Act can act as a catalyst to encourage prospective donors to look at the intended activities / objects and possibly provide financial support through donations / contributions. Strangely, in the case on hand, on the very same day i.e., 25.07.2018 when he rejected the assessee s application for recognition under section 80G of the Act, the CIT(E) has granted the assessee-trust registration under section 12AA of the Act vide order dated 25.07.2018; ostensibly, after examination of the assessee s objects, etc., which the CIT has categorized as Advancement of any other object of general public utility . Restore the matter to the file of the CIT(E) to examine the matter afresh in the light of his order granting the assessee registration under section 12AA of the Act and our observations hereinabove. - Assessee s appeal is allowed for statistical purposes.
Issues:
- Rejection of application for recognition under section 80G of the Income Tax Act, 1961. - Consideration of charitable activities by the trust. - Grant of registration under section 12AA of the Act. - Justification for rejection of recognition under section 80G. Analysis: 1. Rejection of Application for Recognition under Section 80G: The appeal was against the order rejecting the application for recognition under section 80G of the Income Tax Act, 1961. The CIT(E) had dismissed the application citing that the trust's activities were not charitable and lacked noticeable charitable activities. The CIT(E) relied on this ground for refusal despite the trust applying for both registration under section 12AA and recognition under section 80G simultaneously. 2. Consideration of Charitable Activities by the Trust: The primary contention was that the trust had not engaged in significant charitable activities before its formation. The CIT(E) based the rejection on the absence of noticeable activities by the trust. However, the Tribunal found this criterion subjective and not a valid basis for refusal. It was emphasized that the trust should be allowed to determine the activities aligned with its objectives to attract potential donors for financial support. 3. Grant of Registration under Section 12AA of the Act: Interestingly, on the same day as rejecting the application for recognition under section 80G, the CIT(E) had granted the trust registration under section 12AA of the Act. This decision indicated that the CIT(E) had already verified the trust's objects and charitable purposes during the registration process. The Tribunal noted this discrepancy and directed the CIT(E) to reconsider the application for recognition under section 80G in light of the registration granted under section 12AA. 4. Justification for Rejection of Recognition under Section 80G: The Tribunal set aside the CIT(E)'s order rejecting the recognition under section 80G and instructed a fresh examination of the matter. The decision was influenced by a prior case and aimed to provide the trust with a fair opportunity to present its case and submit relevant details for consideration. The CIT(E) was directed to reevaluate the application, considering the registration under section 12AA and the observations made by the Tribunal. In conclusion, the appeal was allowed for statistical purposes, and the matter was remanded to the CIT(E) for a fresh assessment, ensuring a fair opportunity for the trust to present its case regarding recognition under section 80G.
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