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2017 (7) TMI 1478 - HC - Income TaxNon grant of registration u/s 12A (a) - no charitable activity was ever carried out by the trust upto 31.3.2008 - ITAT allowed claim/registration - HELD THAT - We are of the view that observations made by the Tribunal that Commissioner cannot comment about genuineness of its activity and he has not pointed out any defect in the clauses of the trust deed. The activity will be carried out only after the trust is registered. We are in complete agreement with the view taken by the Tribunal. The issue is answered in favour of the assessee.
Issues Presented and Considered:
1. Whether the Tribunal was correct in directing the Commissioner of Income Tax (CIT) to grant registration under section 12A(a) to the respondent despite no charitable activity being carried out by the trust up to a certain date. Issue-Wise Detailed Analysis: Relevant Legal Framework and Precedents: The relevant legal framework involves section 12A(a) of the Income Tax Act, which pertains to the registration of trusts for tax exemption purposes based on their charitable activities. The Tribunal considered the case law precedent of Fifth General Education Society vs. CIT, New Life in Christ E. Association vs. CIT, and N.N. Desai Charitable Trust vs. CIT to support its interpretation. Court's Interpretation and Reasoning: The Tribunal noted that the trust had applied for registration under section 12A(a) despite not having conducted any charitable activities up to a certain date. The Tribunal emphasized the procedural requirements under Section 12AA(1) for registration and the Commissioner's duty to satisfy himself about the genuineness of the trust's activities. The Tribunal held that since no activities had been carried out by the trust at the time of application, it would be premature for the CIT to assess the nature of the activities as non-charitable. Key Evidence and Findings: The Tribunal highlighted that the trust had not engaged in any activities up to a specified date, which led to the CIT's rejection of the registration application. However, the Tribunal found that the trust's application met the requirements of Section 12A and Rule 17A, with no defects in the trust deed's clauses regarding charitable objectives. Application of Law to Facts: The Tribunal applied the legal provisions governing trust registration and the requirement to assess the genuineness of charitable activities. It concluded that the CIT could not comment on the trust's activities' genuineness when no activities had been conducted by the trust at the time of the application. Treatment of Competing Arguments: The appellant argued that the CIT's rejection of the registration application was justified due to the lack of charitable activities by the trust. In contrast, the respondent contended that the trust's application complied with the legal requirements, and the CIT should focus on the trust's objectives rather than its activities before registration. Conclusions: The Tribunal held that the CIT could not assess the genuineness of the trust's activities when no activities had been undertaken by the trust at the time of application. It found no defects in the trust deed's clauses and upheld the Tribunal's decision to grant registration under section 12A(a) to the respondent. The appeal was dismissed in favor of the assessee. Significant Holdings: The Tribunal's core principle established in this judgment is that the CIT cannot reject a trust's registration application based on the absence of charitable activities when the trust has not commenced any activities. The final determination was in favor of the assessee, emphasizing the importance of complying with procedural requirements and assessing trust objectives for registration under section 12A(a).
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