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TMI Blog2016 (2) TMI 563X X X X Extracts X X X X X X X X Extracts X X X X ..... ining, teaching and to run medical, dental, nursing, ayurvedic, medical colleges, to cater to the needs of the economically weaker sections, of the society and minority community. c) To establish,maintain or acquire library or libraries, laboratory, laboratory and/or other research institutions for the benefit of the student community. d) To acquire establish and run professional colleges in medicine, enggg. law, agriculture, computer applications, electronics, commerce and accountancy, business management, pharmacy, nursing, dental, pure and applied science including post graduate centres and research foundations. e) To guide and provide information to those who are seeking schools from KG classes to college levels. f) To establish and run Kannada, English and other medium school from KG classes to college level. g) To institute and award scholarships in India or abroad for the study research and apprenticeship of all any of the aforesaid medical/educational purposes. h) To negotiate and enter into any agreements with the central and state Government Universities, Municipalities or any other public or private authority which may seem conducive or beneficial to any of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... therwise deal with the properties, movable or immovable and subject matter of the trust in such a manner as the trustees deem fit so as to enable the trust to carry out the objects of the trust effectively. t) To organize and/or assist in organizing meetings, conferences, seminars, discussion forums, exhibitions etc. in furtherance of the objects of the trust. u) To accept donations, grants, presents, aid, assistance from the general public, government companies, rusts, societies, associations, firms, institutions in the form of funds properties, movable or immovable services etc to aid further and achieve the objects o the trust. v) To charge and collect moderate tuition fees as well as any other fees and also recoup themselves for the outlay and expenses, incurred in the upkeep and maintenance of institutions established or about to be established under this Trust Deed. w)Institute such stipends, scholarships, medals and prizes and on such terms off any as they may deem fit as may be commensurate with the income of the subject matter of the Trust. x) The activities of the Trust shall not be carried outside India. y) The Trust shall not carry on any activity with an in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e registration u/s 12A and recognition u/s 80G cannot be denied. The issue of violation of provisions of sec.13 can be examined only during the course of the assessment proceedings and similarly he submitted that the genuineness of the activities of the trust can be tested only after the commencement of the activities of the trust. Therefore, he submitted that on none of these reasons, the ld.CIT(Exemptions) can refuse to grant the registration u/s 12A of the Act. In support of this proposition, he relied on the following decisions: i. CIT vs. A.S.Kuppuraju Brothers Charitable Trust (205 Taxman 9(kar) ii. DIT(E) vs. Meenakshi Ammal Endowment Trust (354 ITR 219) iii. DIT vs. Garden City Educational Trust (330 ITR 480) iv. Sanjeevamma Hanumanthe Gowda Charitable Trust vs. DIT(E) (155 ITR 466) 6. On the other hand, learned CIT, DR relied on the orders of the CIT(Exemptions) . 7. We have heard the rival submissions and perused the material on record. In the present appeal, the only issue to be adjudicated is whether the CIT(Exemptions) is justified in denying the registration u/s 12A of the Act and approval u/s 80G of the IT Act, 1961. The ld. CIT(Exemptions) denied the regi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rust would arise only after the trust is registered and carries on the activities. At the time of initial registration, the same cannot be a question to be considered. In our view, the Tribunal has rightly allowed the appeal and directed the DIT(Exptn.) to register the society as a religious trust u/s 12A of the Act". (ii) Further in the case of CIT vs. A.S.Kupparaju Bros. Charitable Foundation Trust (supra), the Hon'ble High Court held that in deciding the genuineness of the trust, what is to be seen is whether in terms of objects set out in the trust deed, whether the trust is carrying on its activities or not. The relevant paragraph is extracted below: ".....The certificate of registration is only an enabling provision to claim exemption. By merely granting a certificate income is not exempted. That is only a first stage to claim exemption. The Commissioner of Appeals should not have confused these two aspects and seems to think as the trustees and his family members are treating the property as their own and misutilising the property it is not a genuine trust. When once it is admitted that in pursuance of the trust deed and in terms of the objects set out therein, schools a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ties of the trust. On the other hand, the grievance of the concerned authorities seems to be that there was no activity which could be termed as charitable as per the details furnished by the assessee, therefore, such registration could not be granted. When the trust itself was formed in January, 2008, with the money available with the trust, one cannot expect them to do activity of charity immediately and because of that situation the authority cannot come to a conclusion that the trust was not intending to do any activity of charity. In such a situation the objects of the trust have to be taken into consideration by the authority and the objects of the trust could be read from the trust deed itself. In the subsequent returns filed by the trust, if the Revenue comes across that factually the 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 section 12AA(3) of the Act. 6. A trust could be formed today and within a week registration under section 12A could be sought as there is no prohibition under the Act seeking such registration. The activities of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y the Commissioner when such question is not before the Commissioner. It is hereby clarified and emphasized that while registration in accordance with the provisions of section 12A of the Act is a condition precedent for claiming the benefits under sections 11 and 12 of the Act, a registration as per section 12A by itself, will not automatically confer the benefits of sections 11 and 12 on a trust, but the trust will get the benefit only on complying with the requirements of sections 11 and 12 of the Act, which compliance can be examined by the assessing authority, while processing the return filed by the trust. Therefore, this appeal has to be dismissed." (v) It may be further added that the co-ordinate bench of the Delhi Tribunal in the case of Paramount Public School Vs CIT, Rohtak in ITA No.5712(Del.)2013 dated 28-10-2015 (to which one of the Members viz., the Hon'ble AM is the author), after referring to the decision of the Hon'ble High Court of Karnataka in the case of Sanjeevamma Hanumanthe Gowda Charitable Trust Vs DIT(Exeptn.) 285 ITR 327 (Kar.,) Hon'ble P&H High Court in the case of CIT Vs Surya Education and Charitable Trust (2013) 355 ITR 280(P&H) and Allahabad High Co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he son of the settler is constructing a building in the name of the entity in which he was interested as a shareholder or director and not in the name of the trust proposed to be used for the purpose of the appellant-trust. This, does not, in any way militate against the charitable character of the objects of the appellant-trust. It is not the case of the ld.CIT(Exemptions) that the funds of the appellant-trust were used for the construction of the building in the name of that entity. This, neither infringes the provisions of sec.13 nor can be examined at the stage of granting registration, as held by the Hon'ble High Court in the cases cited supra. The genuineness of the activities of the trust can be examined only after commencement of the activities of the appellant-trust. Respectfully following the ratio laid down in the cases cited supra, we direct the ld.CIT(Exemptions) to grant registration u/s 12A of the IT Act. 9. The appeal filed by the appellant-trust is allowed. ITA No.1257/Bang/2015 10. Since we have directed the ld.CIT(Exemptions) to grant the registration of the trust under the provision of sec.12A of the Act, appeal No.1256/Bang/2015, the issue of approval u/s 8 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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