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TMI Blog2016 (6) TMI 121X X X X Extracts X X X X X X X X Extracts X X X X ..... payable by the Appellant. Ground No.3: The Ld. CIT(I) erred on the facts and circumstances of the case and in law, the order under section 12-AA of the Income Tax Ac t, 1961 passed by the Ld. CIT(I) is erroneous, bad in law and void authorities below initio and must be quashed with directions for appropriate relief. The Appellant further craves leave to amend, alter, add or delete the above grounds of appeal. 3. The issue arising in the present appeal before us is against denial of registration under section 12AA of the Act. 4. Briefly, in the facts of the present case, the assessee trust was set up vide Trust Deed dated 20.10.2010, which was registered under the Bombay Public Trust Act, 1950 (BPT Act) vide Certificate of Registration dated 01.04.2011. The assessee filed an application in form No.10A requesting to grant of registration under section 12A of the Act. The said application for registration under section 12AA(1) of the Act was filed on 12.11.2013. The Commissioner noted that the said application was filed much after creation of the Trust on 20.10.2010 and its registration under the BPT Act, 1950 on 01.04.2011. From the records available in the office, the Commissio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it could not be judged on the basis of objects mentioned in the Trust Deed. While the genuineness of the Trust had to be judged also on the genuinenity of the activities vis-à-vis the objects for which it was found. It was admitted by the assessee that the Trust had not carried out any activity of the nature of education and medical relief, but only claimed to have started an old age home, which falls under the category of relief of the poor. The Commissioner observed that the assessee had furnished sketchy details in this regard though the assessee was aware that his earlier application was viewed adversely for similar reasons. Hence, it was requested to give the details of charitable activities carried out by the Trust during the financial years 2010-11 to 2012-13 and to substantiate the same with proper evidence and also was asked to produce copies of bills of expenditure incurred on charitable activities in support. The assessee in this regard relied on the statement of accounts for these years and did not substantiate the claim by submitting evidence like copies of bills of expenditure, etc. In the absence of the same, the Commissioner was of the view that the account e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is placed at pages 13 and 14 of the Paper Book. As per para 2.3, the activity of trust was running home for senior citizens. He further stated that there was no finding that the activities carried out by the Trust were not genuine. It was the contention of learned Authorized Representative for the assessee that where the Trust was a public trust and was registered under the BPT Act, and was carrying on the activity of providing housing for senior citizens, then the objects and genuineness of the activities stands established and the assessee was entitled to the registration under section 12A of the Act. He stressed that predominantly, if the primary object was charitable, then other activities are also to be allowed. The Commissioner while granting the registration has to look into what are the objects of the trust and whether the same are genuine. He further stressed that the trust was not catering to a particular community and our attention was drawn to the copy of trust deed, placed at page 36 of the Paper Book in this regard. The learned Authorized Representative for the assessee further pointed out that there was no merit in the observations of Commissioner with regard to corp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... titution. The copy of such order is to be sent to the applicant and no order under sub-clause (ii) shall be passed unless the applicant has been given a reasonable opportunity of being heard. Under clause (2), it is provided that every order granting or refusing registration under clause (b) of sub-section (1) shall be passed before the expiry of six months from the end of the month in which the application was received under clause (a). The power of cancellation of registration granted to a trust or institution is also provided in sub-clause (3) to section 12AA of the Act, where the Principal Commissioner of Commissioner after grant of registration to a trust or institution, is satisfied that the activities of such trust or institution are not genuine or are not being carried out with the objects of trust or institution, then he has to pass an order in writing cancelling registration of such trust or institution. Reading the provisions of the Act, it is apparent that the Commissioner is to decide an application for registration of a trust or institution and the requirement of the Act is that he has to be satisfied about the objects of trust or institution and genuineness of its ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 31.10.2012. The Commissioner in the said order noted that the assessee had furnished the return of income for assessment years 2011-12 and 2012-13, in which it had erroneously claimed exemption under sections 11 and 12 of the Act without there being any registration under section 12A of the Act. Since the assessee had not complied with the law, the application could not be considered for such a privilege, more so when the same was in the nature of total exemption from tax under sections 11 and 12 of the Act. The Commissioner concluded by saying that irrespective of the merit or otherwise of the other submissions made by the applicant with reference to the queries raised during the course of present proceedings, the request for grant of registration under section 12A of the Act could not be entertained unless and until the applicant correctly works out as well as pays its tax dues for assessment years 2011-12 and 2012-13. For these reasons, the applicant's request for grant of registration under section 12A of the Act was rejected. However, it was further observed by the Commissioner that this order shall not preclude the applicant from making a fresh application for registration u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the registration cannot be declined only because the Trust has not commenced its activities. Relying upon a Division Bench judgment of this Court in Commissioner of Income Tax-II, Chandigarh Vs. M/s Surya Educational & Charitable Trust (2013) 355 ITR 280, it is argued that subsections (1A) & (2) of Section 12AA of the Act are procedural in nature, whereas sub-section (3) of Section 12AA of the Act empowers the Commissioner to cancel the registration, if he is satisfied that the activities are not genuine or are not carried out in accordance with the objects of the Trust or Institution. It is, thus, argued that the genuineness of the activities of the Trust, as a pre-condition for registration under Section 12AA of the Act deals with the existing activities or the activities, which are to be taken in hand in future. If an assessee does not satisfy the test of genuineness of activities at any subsequent stage, the registration itself can be cancelled in terms of sub-section (3) of Section 12AA of the Act. Therefore, the genuineness of the activities of the appellant cannot be pre-judged only for the reason that the activities have not been undertaken." 12. In view of finding of t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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