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2019 (4) TMI 1135 - HC - Income TaxGrant registration to assessee u/s 12AA - registration was declined after examining that the income derived by the trust is not shown to have been spent for charitable purposes - objects of the applicant/trust and the genuineness of its activities - HELD THAT - Issue as to whether while considering an application for grant of registration under Section 12AA of the Income Tax Act, 1961 the CIT (E) has to consider the objects of the applicant/trust and the genuineness of its activities and not the application of income of the applicant/trust, is no more res integra in view of the decision by co-ordinate Bench of this Court in CIT Vs. M/s DPR Charitable Trust, Satna 2011 (8) TMI 1136 - MADHYA PRADESH HIGH COURT . The language employed by the Legislature in Section 12AA only requires that activities of the trust or institution must be genuine which should be in consonance with the object of the trust. At this stage, the Commissioner is not required to examine the application of income. All that he may examine is whether the application is made in accordance with the requirements of Section 12A read with rule 17A and whether Form No.10A has been properly filled up. He has also to see whether the objects of the trust are charitable or not. In the light of the provision contained under Section 12A and Section 12AA of IT Act, we are not persuaded to take a different view, as would give rise to any substantial question of law.
Issues:
1. Interpretation of Section 12AA of the Income Tax Act, 1961 regarding the registration of a trust for charitable purposes. Analysis: The High Court judgment addressed the issue of whether the Commissioner of Income Tax (E) was required to consider the objects of the applicant trust and the genuineness of its activities, rather than the application of income of the trust, while granting registration under Section 12AA of the Income Tax Act, 1961. The court referred to previous decisions by a co-ordinate Bench, including CIT Vs. M/s DPR Charitable Trust, Satna, to establish the legal position on this matter. The court emphasized that Section 12AA does not mandate the examination of whether the income derived by the trust is being spent for charitable purposes or if the trust is earning a profit. Instead, it requires the Commissioner to ensure that the activities of the trust are genuine and in line with its charitable objects. The court highlighted that the Commissioner's focus should be on whether the application for registration complies with the statutory requirements and if the trust's objects are genuinely charitable. In the case of M/s DPR Charitable Trust, Satna, the court held that Section 12A sets out the conditions for trust registration, while Section 12AA outlines the registration procedure. The Commissioner is tasked with verifying if the application is made correctly, in accordance with the law, and whether the trust's objects are genuinely charitable. The court stressed that the Commissioner is not required to scrutinize the application of income at this stage. The judgment cited relevant case law and highlighted that the trust's activities must align with its charitable objectives for registration under Section 12AA. The court concluded that the language of the law does not necessitate a different interpretation that would raise significant legal questions. Therefore, the court dismissed the appeal under Section 260A of the Income Tax Act, 1961, against the order of the Income Tax Appellate Tribunal. The Tribunal's decision to grant registration to the respondent/assessee under Section 12AA was upheld, emphasizing that the focus should be on the trust's genuine activities in line with its charitable objects, rather than the application of its income. The judgment reaffirmed the legal position established by previous decisions and clarified the Commissioner's role in evaluating trust registration applications under the Income Tax Act.
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