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2015 (4) TMI 870 - HC - Income TaxEntitlement to registration under Section 12AA - Held that - Revenue would not be justified in refusing the grant of registration at the threshold. See Director of Income Tax Exemptions Versus M/s. Seervi Samaj Tambaram Trust 2014 (2) TMI 32 - MADRAS HIGH COURT and Commissioner of Income Tax-I, Madurai. Versus Arulmigu Sri Kamatchi Amman Trust 2012 (2) TMI 159 - MADRAS HIGH COURT It is not denied by the assessee that on the date of the application under Section 12AA, it was yet to commence its operation. But nevertheless the genuineness of the objects of the trust were not questioned by the Commissioner. Considering the fact that the continuance of registration is further a subject matter of scrutiny by the Commissioner as contemplated under Section 12AA(3) of the Income Tax Act, we do not think that the Revenue would be justified in refusing the registration at the threshold. - Decided in favour of assessee.
Issues:
1. Entitlement for registration under Section 12AA of the Income Tax Act. Analysis: The High Court of Madras dealt with the issue of entitlement for registration under Section 12AA of the Income Tax Act in the present case. The Revenue filed an appeal against the order of the Income Tax Appellate Tribunal, questioning the grant of registration to the assessee trust. The key question raised was whether the tribunal was correct in holding that the trust is entitled to registration under Section 12AA of the Act. The counsel for the Revenue acknowledged that a similar issue had been addressed by the court in a previous case, T.C.(A)No.579 of 2013, decided on 27.01.2014. In that case, the court had dismissed the appeal filed by the Revenue, emphasizing that the grant of registration cannot be refused merely because the trust had not commenced its activities at the time of application. The court highlighted that Section 12AA(1) focuses on the satisfaction of the Commissioner regarding the trust's objects and activities' genuineness, without mandating the trust to have started operations at the time of application. The power to cancel registration under Section 12AA(3) is available if the trust deviates from its stated objectives. The court also referenced a decision by the Gujarat High Court, concurring with its interpretation. The court noted that a similar view was adopted in another case, T.C.(A)No.261 of 2014, dated 22.8.2014, where the same principle was upheld. Consequently, based on the precedent set by the previous judgments, the court in the present case upheld the decision of the tribunal and dismissed the Revenue's appeal. The court ruled in favor of the assessee trust, emphasizing that the Revenue cannot reject registration merely because the trust had not initiated its activities at the time of application. The judgment concluded by stating that the question of law was answered against the Revenue, and no costs were awarded.
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