2021 (4) TMI 761 - AT - Income Tax

Exemption u/s 11 - refusing to grant registration u/s 12AA and Section 80G(5)(vi) - CIT (E) held that the activities of the trust reveal that the trust has restricted itself to religious activities only and hence not covered under definition of charity as explained u/s 2(15) - HELD THAT - Admittedly, at the time of grant of registration the Commissioner is not empowered to examine the application of income but he has to examine whether the application is made in accordance with the requirements of section 12A and whether form No.10A has been proper or not. Commissioner is further to examine whether the objects of the trust are charitable or not and also to satisfy himself about the genuineness of the activities of the trust or the institution. Commissioner is not to examine the application of income at this juncture. The Hon'ble Supreme Court in CIT v. U.P. Forest Corpn. 1998 (3) TMI 5 - SUPREME COURT , held that in order to take advantage of the provisions of section 11 of the Act, the trust or the institution has to get itself registered. Whether the income of the institution can be regarded as being held for charitable purposes and whether the institution is entitled to registration under section 12A of the Act, requires investigation of facts. In view thereof, section 12AA recognizes the principle laid down by the Hon'ble Supreme Court and Commissioner under section 12AA of the Act is empowered to call for such documents or information from the trust or the institution in order to satisfy himself that the objects of trust are charitable and also about the genuineness of the activities of the trust or the institution and is also empowered to make such enquiries as he deem necessary in this regard. From the enquiries conducted by the ld. CIT (E), we find that ld. CIT (E) has not brought anything on record to prove that the objects of the trust or institution are not charitable in nature. Hence, we set aside the order of the ld. CIT (E) declining the registration u/s 12AA and u/s 80G(5)(vi) - Appeals of the assessee are allowed for statistical purposes.

Summary

Issues:
Appeal against refusal to grant registration u/s 12AA and Section 80G(5)(vi) - Activities of trust not considered charitable - Non-genuine activities questioned - Compliance with provisions of Section 12A and 12AA - Interpretation of charitable purpose under section 2(15) of the Act.

Analysis:

1. Refusal of Registration under Sections 12AA and 80G(5)(vi):
- The appeals were filed against the orders refusing registration u/s 12AA and Section 80G(5)(vi) by the ld. CIT (E), Chandigarh. The trust aimed to establish various activities including spiritual knowledge provision, educational institutions, health services, and gaushala.

2. Non-Genuine Activities and Charitable Nature:
- The ld. CIT (E) observed expenses debited to non-charitable entities and held that the trust was limited to religious activities, not meeting the definition of charity under section 2(15) of the Act.

3. Arguments and Precedents:
- The ld. AR argued against the findings, providing evidence of donor details and justifying Bhandara expenses as charitable. Relevant judgments were cited to support the argument.

4. Compliance with Provisions and Interpretation of Charitable Purpose:
- The revenue contended that the trust's activities were not charitable, emphasizing the need for genuine activities for registration under Section 12AA. Various case laws were cited by both parties.

5. Judicial Interpretation and Registration Criteria:
- The Tribunal analyzed the provisions of Section 12AA and the definition of charitable purpose under section 2(15) of the Act. It highlighted the need for genuine charitable activities for registration and the Commissioner's role in examining trust objectives and activities.

6. Decision and Conclusion:
- The Tribunal found that the ld. CIT (E) failed to prove that the trust's objectives were not charitable. As a result, the order refusing registration under sections 12AA and 80G(5)(vi) was set aside, and both appeals of the assessee were allowed for statistical purposes.

This detailed analysis covers the issues raised in the judgment, including the examination of trust activities, compliance with registration provisions, interpretation of charitable purpose, and the final decision based on the evidence and legal principles presented during the proceedings.