2008 (8) TMI 393 - AT - Income Tax

Registration u/s 12A - Rejected the application that trust has not made any Charitable Activity - Amended Trust Deed is not registered with the Sub-Registrar till that date - Activities of the trust are not Genuine - HELD THAT - We have gone through the supplementary trust deed. The same is registered with the Sub-Registrar. We have also gone through the objects of the trust. The objects of trust are specifying purpose of religious activities. Such facts are also not disputed by the ld DR. The registration cannot be denied to the assessee for the reason that it is not carrying on charitable activities. Religious activities are also construed to be charitable activities as per the decision in the case of CIT vs. Radhaswami Satsang 1992 (9) TMI 71 - ALLAHABAD HIGH COURT and the decision of the Hon ble Supreme Court in the case of Hazarat Pirmahomed Shah Saheb Roza Committee vs. CIT 1966 (10) TMI 43 - SUPREME COURT . The observations of CIT that trust deed does not specify the fate of assets and liabilities in case of dissolution of trust it is observed that cl. 78 of the trust deed specifies that in case of dissolution of trust everything related to trust shall be handed over to the justful national Government. Thus this observation of the CIT is contrary to the facts found on record. 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. So long the objects of the trust are charitable in nature registration cannot be refused if the trust is genuine. Therefore we find no material on record to justify the action of the CIT vide which the assessee trust has been refused for grant of registration. We direct CIT to grant registration to the CIT (sic-assessee trust). The appeal filed by the assessee is allowed.

Summary

Issues:
1. Rejection of registration under section 12A of the Income Tax Act by the CIT.
2. Dispute over whether charitable activities need to be performed for registration or if having charitable objectives is sufficient.
3. Interpretation of the law regarding the registration of charitable trusts.
4. Examination of trust objects and their charitable nature.

Issue 1: Rejection of registration under section 12A:
The appeal was against the CIT's order rejecting registration under section 12A of the Income Tax Act. The CIT based the rejection on the trust's lack of charitable activities, unregistered amended trust deed, and absence of any activity by the trust. The CIT concluded that the genuineness of the trust's activities was questionable, leading to the rejection of the registration application.

Issue 2: Requirement of charitable activities for registration:
The learned Authorised Representative argued that the focus for registration should be on whether the trust's objects are charitable, not on the performance of charitable activities. Citing precedents, it was emphasized that the law does not mandate charitable activities as a prerequisite for registration if the trust's objects are charitable. The contention was supported by various decisions, highlighting that the primary consideration should be the charitable or religious nature of the trust's objectives, not the actual conduct of charitable activities.

Issue 3: Interpretation of the law on charitable trust registration:
The Tribunal analyzed the law concerning the registration of charitable trusts, emphasizing that at the registration stage, the CIT's role is limited to verifying the charitable nature of the trust's objects. The Tribunal referenced previous judgments to assert that religious activities can be considered charitable, supporting the argument that registration should not be denied solely based on the absence of charitable activities, especially if the trust's objects are charitable or religious in nature.

Issue 4: Examination of trust objects for charitable nature:
The Tribunal examined the trust's objects and found that they pertained to religious activities, which were considered charitable based on legal precedents. The Tribunal disagreed with the CIT's observations regarding the trust deed's handling of assets and liabilities in case of dissolution, clarifying that the trust deed did specify the appropriate course of action. Ultimately, the Tribunal concluded that as long as the trust's objects are charitable, registration should not be denied, even if charitable activities have not commenced, directing the CIT to grant registration to the trust.

In conclusion, the Tribunal allowed the appeal, emphasizing that the registration of a charitable trust should primarily focus on the charitable or religious nature of the trust's objectives rather than the performance of charitable activities, as long as the trust is genuine and its objects are charitable.