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2017 (12) TMI 1251 - AT - Income TaxGrant of registration u/s 12A - prescribed conditions for registration of the trust - assessee trust did not produce the books and vouchers in respect of expenses claimed by the society for verification of the activities of the trust - Held that - We find merit in the submission of assessee that at the time of granting of registration the ld. CIT is required only to examine the objects of the trust and is not required to examine the books of account of the trust and it is only during the claim of exemption u/s 11 the Assessing Officer will examine the same and allow or disallow the same as the case may be. Also that since the assessee trust is imparting education by running various schools and colleges, therefore, it is doing charitable activities as according to him education per se is charitable activity. The various decisions relied on by the ld. counsel for the assessee in the Paper Book also supports the view that education per se is a charitable activity. Powers of the Commissioner while granting registration u/s 12A - Held that - We find various courts have held that while granting registration u/s 12A the ld. CIT is required to see only the objects of the assessee trust/society and not to examine the application of income. He is not required to examine whether the income derived by the trust is being spent for charitable purposes or the trust is earning profit while granting registration. He is only required to examine the objects of the trust. See Bhartiya Kisan Sangh vs. CIT 2017 (8) TMI 1065 - ITAT DELHI wherein held that at the stage of granting registration u/s 12A, the ld. CIT (Exemptions) is required to see the objects of the society and not required to examine on the application of income which will have to be undertaken by the Assessing Officer on a year to year basis after the assessee files return of income claiming exemption under section 11 - Decided in favour of assessee.
Issues Involved:
1. Denial of registration under section 12A(1) of the Income Tax Act. 2. Examination of the genuineness of activities and objects of the trust/society. 3. Applicability of judicial precedents on the matter of registration under section 12A. Detailed Analysis: 1. Denial of Registration under Section 12A(1): The assessee society filed an application for registration under section 12A(1) on 30.03.2015. The CIT (Exemptions), Lucknow, denied the registration on the grounds that the assessee society had not carried on any charitable activities and failed to produce books and vouchers to verify the genuineness of activities. The CIT referred to multiple judicial precedents, including the Hon’ble Delhi High Court in Kirti Chandra Tarawati Charitable Society vs. DIT (Exemption) and the Hon’ble Kerala High Court in Self Employers Service Society vs. CIT, to support the decision that a society proposing future charitable activities does not qualify for registration under section 12AA. The CIT concluded that the assessee society did not meet the requirements for registration under section 12AA(1)(b) of the Income Tax Act. 2. Examination of the Genuineness of Activities and Objects of the Trust/Society: The Tribunal examined whether the CIT was correct in denying the registration by focusing on the genuineness of activities and the objects of the society. The assessee argued that at the stage of granting registration under section 12A, the CIT should only examine the objects of the society/trust and not the application of income, which is to be reviewed by the Assessing Officer annually. The Tribunal cited several judicial precedents, including the Delhi Bench of the Tribunal in Bhartiya Kisan Sangh vs. CIT and the Hon’ble Allahabad High Court in Fifth Generation Education Society vs. CIT, which held that the CIT should only verify the objects and genuineness of the trust and not delve into the application of income at the registration stage. 3. Applicability of Judicial Precedents: The Tribunal referenced multiple cases to support the assessee's claim: - Shavak Shiksha Samiti vs. CIT: Education per se is considered a charitable activity. - Shanti Education and Welfare Society vs. CIT: Emphasized that the objects of the society are the primary consideration for granting registration, not the quantum of profits or surplus. - A.S. Kupparaju Brothers Charitable Foundation Trust vs. CIT: The Karnataka High Court held that the CIT should not confuse the registration process with the application of income, which is to be examined by the Assessing Officer. - D.P.R. Charitable Trust vs. CIT: The Madhya Pradesh High Court reiterated that the CIT should focus on the objects of the trust and not the application of income at the registration stage. The Tribunal concluded that the CIT was not justified in rejecting the registration under section 12A based on the non-production of books and vouchers. The Tribunal directed the CIT to grant the registration, emphasizing that the primary consideration should be the objects of the trust and the genuineness of its activities. Conclusion: The Tribunal allowed the appeal filed by the assessee, holding that the CIT should grant registration under section 12A of the Income Tax Act. The Tribunal's decision was based on the principle that at the registration stage, the CIT should only examine the objects and genuineness of the trust/society, not the application of income, which is the Assessing Officer's responsibility during the assessment of income. The Tribunal relied on various judicial precedents to support this view.
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