2020 (3) TMI 639 - HC - Income Tax

Exemption u/s 11 - registration under Section 12AA - activities of the trust whether they fall within any of the above clauses of charitable activities - HELD THAT - This Court is of the opinion that under Section 12AA of the Act, the CIT(E) can only register or refuse the registration of the trust and it cannot direct registration of the trust under a particular category as it had done in the present case i.e. General Public Utility Trust. Tribunal has not held that the CIT(E) should have granted registration to the respondent-Trust without examining its objects and activities. Only the conditions imposed and the categorisation of the trust have been struck down. In the present case, the Tribunal has not replaced the satisfaction of the CIT(E) with its own satisfaction. This Court is in agreement with the Tribunal that it was not open to the CIT(E) to categorise the trust under any particular category. No substantial question of law.

Summary

Issues:
Challenge to order of Income Tax Appellate Tribunal under Section 260A of the Income Tax Act, 1961 regarding registration of a trust under Section 12AA.

Analysis:
The appeal challenged the Tribunal's order directing the Commissioner of Income Tax (Exemption) to grant registration under Section 12AA of the Income Tax Act without examining the objects/activities of the trust. The appellant argued that the Tribunal overstepped its authority by not remanding the matter to the CIT(E) for further examination. The court clarified that under Section 12AA, the CIT(E) can only register or refuse registration, not categorize the trust under a specific category like General Public Utility Trust. The court noted that the Tribunal did not replace the CIT(E)'s satisfaction with its own, but only struck down the conditions imposed and the categorization of the trust.

The court emphasized that the Tribunal did not hold that the CIT(E) should have granted registration without examining the trust's objects and activities. It was clarified that the Tribunal did not replace the CIT(E)'s satisfaction with its own, and it was not within the CIT(E)'s authority to categorize the trust under a particular category. As a result, the court found no substantial question of law arising for determination in the appeal and dismissed it for lacking merit.

In conclusion, the High Court upheld the Tribunal's decision, emphasizing the limitations on the CIT(E)'s authority regarding the categorization of trusts under Section 12AA. The court clarified that the CIT(E) can only register or refuse registration based on the trust's compliance with the Act, without imposing specific categories.