2015 (12) TMI 1369 - AT - Income Tax

Registration under section 12AA - CIT had rejected to grant registration U/s.12AA because the assessee was yet to commence its charitable activities and therefore, genuineness of the activities could not be established -BHeld that - no justification in the action of the Ld. CIT for refusing to grant registration U/s.12AA of the Act on this flimsy ground. The assessee trust is in the incubation stage, and has not carried out its objects at the time of application seeking registration U/s.12A of the Act. Only after getting recognition of the Act, the assessee Trust will be able to seriously pursue its objects. Further on perusing the objects of the trust, we find that they are both religious and charitable in nature because the objects of the Trust provides so. Trust deserves to be granted registration U/s.12AA of the Act. Unless the registration is granted to the assessee trust, it would be difficult for the assessee trust to pursue its objects. Therefore, it is the primary duty of the Ld. CIT to grants registration U/s.12AA of the Act after examining the objects and genuineness of the trust. In this case before us there is nothing adverse to suggest the genuiness of the Trust or its objects. Considering the facts and circumstance of the case, we are of the considered view that the Ld. CIT ought to have granted registration when the assessee has categorically explained the cause of delay in conducting the activities of the trust. Therefore we hereby direct the Ld.CIT to grant registration U/s.12AA of the Act to the assessee Trust, needless to mention that at the time of assessment the Ld.A.O shall be at liberty to withdraw the benefits if the Trust has violated any of the provisions of the Act. - Decided in favour of assessee.

Summary

Issues:
1. Delay in filing the appeal.
2. Refusal of registration under section 12AA of the Income Tax Act, 1961 by the Commissioner of Income Tax.
3. Justification for refusal of registration.
4. Nature of trust activities and objects.
5. Legal arguments regarding registration under section 12AA.
6. Decision on granting registration to the trust.

Delay in filing the appeal:
The appeal was filed with a delay of 57 days, which was sought to be condoned by the assessee. The delay was condoned after considering the petition submitted for the same.

Refusal of registration under section 12AA:
The Commissioner of Income Tax rejected the application for registration under section 12AA of the Act, citing that the trust had not carried out substantial charitable activities and the genuineness of its activities was not established. The assessee appealed against this decision.

Justification for refusal of registration:
The Commissioner's refusal was based on the trust being in an incubation stage and not having commenced its charitable activities at the time of application for registration. The Commissioner's decision was criticized for being unjustified as the trust needed recognition to pursue its objects and the objects of the trust were both religious and charitable in nature.

Nature of trust activities and objects:
The trust's objects included conducting missionary activities, establishing churches and prayer centers, children ministries, conference ministries, evangelism, literature ministry, and various other charitable and social welfare activities. The trust aimed to support the poor, widows, orphans, and provide education, healthcare, and relief during natural calamities.

Legal arguments regarding registration under section 12AA:
The arguments presented by the appellant emphasized that registration under section 12AA should be granted based on the trust's objects, especially when they include charitable and religious activities. It was contended that the trust deserved registration as its objects were genuine and aligned with the requirements of the Act.

Decision on granting registration to the trust:
After reviewing the case and considering the trust's objects and circumstances, the Tribunal found no justification for the Commissioner's refusal to grant registration. The Tribunal directed the Commissioner to grant registration under section 12AA to the trust, highlighting the importance of allowing the trust to pursue its charitable objectives. It was emphasized that any violation of the Act would result in the benefits being withdrawn during assessment.

The Tribunal allowed the appeal of the assessee and directed the Commissioner to grant registration under section 12AA of the Income Tax Act, 1961 to the trust. The decision was based on the trust's genuine objects and the need for recognition to carry out its charitable activities effectively.