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TMI Blog2011 (10) TMI 623X X X X Extracts X X X X X X X X Extracts X X X X ..... ust had not commenced its activities by then, although the objects of the Trust were found to be only 'charitable' in nature. Aggrieved, the Assessee-Trust has filed these appeals. The grounds raised before us in relation to registration u/s 12A and approval u/s 80G are as under: "(a) The order of the Director of Income-tax (Exemptions), dated 30.08.2010, rejecting the application for registration under Sec. 12AA of the Income Tax Act, on the ground that the Trust has not commenced business and hence it is not possible to verify the genuineness of the Trust, is erroneous on facts and in law. (b) The Director of Income-tax (Exemptions) is wrong in his view that the satisfaction of the genuineness is dependant on the commencement of the activities by the Trust. (c) The Director of Income-tax (Exemptions) is wrong in declining to grant approval under Sec. 80G on the grounds on which he has rejected the application for registration under Sec. 12AA of the Income Tax Act." 4. We have considered the rival submissions and have carefully treaded through the records. The Assessee-Trust had applied for registration u/s 12AA in Form 10A on 8.2.2010. While processing the application, cer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... have not yet started, the genuineness of the 'activities' cannot be examined. So, Trust cannot be registered. Finally, the DIT(E) has taken a view that unless the Trust or institution starts its activities, the second limb of requirement of section 12AA i.e satisfaction of genuineness of the activities for furthering its objects cannot be reached. So, he has found this case as premature for registration but he has fairly given option of freedom to the Assessee- Trust to again apply for registration after it started its activities significantly, so that these could be examined with respect to its objects. Based on this premise, the ld. DIT(E) has refused registration, and consequently, has declined to grant approval u/s 80G, thereby, he has dismissed both the applications filed in Form No.10A and 10G. 6. It was argued by the ld. AR, Dr.Anita Sumanth, disputing ferociously the premise and consequent conclusion reached by the ld. DIT(E) that satisfaction of the genuineness of the Trust's activities regarding its objects is dependent on the commencement of its activities. It was polemically argued that the DIT(E) cannot reject the applications of the Assessee-Trust on the ground that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l Trust (WET) vs CIT in I.T.A.No. 227/Mds/2009, order dated 9.10.2009, the Tribunal has taken a view that carrying on of activities by the Trust is not a pre-condition for grant of such registration. Para 4 of this order is very categorical, and is being extracted for ready reference: "4. We have gone through the supplementary trust deed and are satisfied that the objects of the trust are only charitable in nature. It is trite that at the time of granting registration u/s 12AA of the Act, the activities carried out in the past or application of funds of the trust are not at all relevant factors in view of the decision of the Hon'ble Madras High Court rendered in the case of New Life in Evangelistic Association vs CIT, 246 ITR 532. Therefore, we set aside the order of the ld. CIT and remit the matter back to his file with a direction to decide the issue of registration u/s 12AA of only after examining the objects of the trust." From the reading of the above, it becomes clear that application of funds of the Trust or institution, or carrying on its activities is not relevant at the time of grant or refusal of registration u/s 12AA of the Act. 9. While deciding the case of Ram ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... also one of us [JM] was a party. The above finding is categorical on the issue and it would be not out of place to mention that the decision was taken after the amended provisions. 10. Likewise, similar view was taken by both of us, while deciding the case of Jerome Educational Trust vs The Addl. CIT, in I.T.A.No. 1265/Mds/08, order dated 7.12.2009, of which para 3 is relevant and is being extracted herein below: "3. On merits, it was found that the ld. CIT has not passed a speaking order, therefore, the entire matter is restored back to his file with the direction that at the time of grant of registration u/s 12AA of the Act, application of the funds and the activities carried on by the assessee-trust are not relevant for consideration and at that stage only the objects have to be examined whether these are charitable in nature or not. Hence, we restore the entire issue to the file of the ld. CIT for taking a fresh decision after affording due opportunity of hearing to the assessee. " In the above decision, it has been clearly held that application of funds and carrying on of activities by Trust are not relevant at the stage of considering the application for registration u/s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n should be financially well off or should possess certain professional qualifications. We further find that the ld. CIT has not doubted about the genuineness of or identity of any of the trustees. In our considered opinion, the capacity or the competence of the trustee is a matter of discretion of the settler and willingness of the trustee and it is not for the Revenue to prescribe as to who is competent to run or manage the charitable trust or not. Further, we also observe that the ld. CIT could not point out any object contained in the trust deed of the assessee trust which was not charitable in nature. Merely because there were several objects of a trust and that the several objects were not inter-connected with each other does not mean that either the objects were not charitable or the assessee was not a charitable trust. There is no prohibition for a charitable trust to carry out different charitable activities even when such different activities are not interconnected with each other. We further find that the ld. CIT has not found either from the activity report or the accounts of the assessee that any fund was utilized for any non charitable activity or purpose. Further we ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in 1468 & 1469/Mds/2010, order dated 8.2.2011, has taken a similar view. Paragraph 4 of this order is relevant and is being extracted herein below: "From the reading of section 12AA, we note that the only duty of the CIT was to satisfy himself about the genuineness of the activities of the Trust. The Hon'ble Madras High Court in the case of New Life in Christ Evangelistic Association vs CIT and Another (2000) 246 ITR 532(Mad) has held that at the stage of grant of certificate under section 12A of the Act, the only enquiry which could possibly be made would be whether the Society has actually made an application in time and whether the accounts of the society are maintained in the manner as suggested by the said section and beyond that the scope of enquiry would not go. Even though it is rendered under section 12A when procedural section 12AA was not available in the statute book, we feel that the ratio is equally applicable even after insertion of section 12AA also because it is only a procedural section. In our view, CIT has gone into unnecessary details instead of looking into the genuineness of the activities of the Trust with reference to documents called for by him. In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ranted and the application of funds and the activities carried on by it has to be examined at the time of making of assessment order for a particular assessment year. The ld. CIT has fairly conceded that the objects of the society are charitable in nature, but the charitable activity could not be exhibited on record. We are of the considered opinion that when the objects of the assessee-society are charitable in nature, the society must be granted registration u/s 12AA of the Act. But when the assessments are considered, the aspect of the relevant provisions allowing exemption from tax, may be deeply scrutinized and considered into. Consequently, we order the ld. CIT to grant registration u/s 12AA to the assessee-society." 17. In this given case also, the objects of the Trust are found to be 'charitable' in nature still the registration has been refused only because the Trust has not started its activities which, according to the above decisions, is not necessary at the time of consideration of application for registration u/s 12AA of the Act. 18. Similar view was taken by another Co-ordinate Bench while deciding the case of Dr.Soundaram Trust vs ITO in I.T.A.No. 1551/Mds/2009, o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s that factually trust has not conducted any charitable activities, it is always open to the authorities concerned to withdraw the registration already granted or cancel the said registration under s. 12AA(3). A trust could be formed today and within a week registration under s. 12A could be sought as there is no prohibition under the Act seeking such registration. The activities of the trust have to be considered if such registration is sought much later than the formation of the trust or after expiry of the earlier registration granted in favour of the trust. Therefore in a case of this nature where the trust has approached the authority for registration under s. 12A within a span of eight months of its formation, the above-mentioned criteria namely, the objects of the trust for which it was formed will have to be examined to be satisfied about its genuineness and activities of the trust cannot be the criterion, since it is yet to commence its activities. The conclusion arrived at by the Tribunal is just and there is no substantial question that could be gone into in the present appeal. " 20. It is very clear from the reading of the above finding that in the case decided by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion of different High Court and there is no contrary decision, it will be just and proper for the Tribunal to follow the said decision. In this case also a direct decision of Karnataka High Court is available. In fact, there is a decision of Hon'ble Jurisdictional High Court but if it is not treated being directly on the issue [being rendered u/s 12A only] the only decision on this issue is that of Hon'ble Karnataka High Court (supra) which is directly applicable on this issue. Likewise, a decision of a Co-ordinate Bench has a binding effect and the Co-ordinate Benches are bound to follow the view expressed by the another Bench of the Tribunal unless the earlier view was rendered per incuriam. The Hon'ble Madras High Court has reiterated this legal position while deciding the case of CIT vs L.G.Ramamurthi & Others, 110 ITR 453, inter alia. Accordingly, the legal position on the issue becomes crystallized that at the time of consideration of registration, it is not a sine qua non that the Trust must have started its activities. In case the Trust has started its activities, the ld. CIT can examine them as has been envisaged in the Act. This above conclusion is safeguarded ..... X X X X Extracts X X X X X X X X Extracts X X X X
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