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TMI Blog2012 (2) TMI 579X X X X Extracts X X X X X X X X Extracts X X X X ..... refore, rejected both the applications for registration under Section 12AA as well as for approval under Section 80G of the Act. 3. Now before us, learned A.R. submitted that the objects were of purely charitable and denial of registration under Section 12AA as also approval under Section 80G of the Act was unjustified. Just because activities did not commence, the required registration and approval ought not have been denied. 4. Per contra, learned D.R. strongly supported the order of ld. DIT(E) and submitted that before starting its activities, an assessee could not claim as a matter of right, registration under Section 12AA or an approval under Section 80G of the Act. 5. In reply, learned A.R., relying on the decision of Hon'ble Karnataka High Court in the case of DIT(E) v. Meenakshi Amma Endowment Trust (2011) 50 DTR (Kar) 243, submitted that activities of the Trust would be relevant only if registration was sought long after the formation of the Trust. 6. We have perused the orders and heard the rival submissions. Assessee-Trust was found by a Deed of Trust dated 3rd May, 2010. It had applied for registration under Section 12AA and for approval under Section 80G of the Act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... st or institution and the genuineness of its activities and only thereafter he has to take his decision either to grant or refuse registration. In such a scenario it becomes imperative to examine this legal tangle very minutely. The DIT(E) has, in a way, come to the conclusion that in case the Trust has not commenced its activities, the genuineness of its activities with respect to its objects cannot be examined and consequently the Trust cannot be registered u/s 12AA. Hence, he has laid down a legal position that a 'Trust' (or institution) can be registered under the Act only after it has started its activities; or to put it in other words that no Trust (or institution) can be registered u/s 12AA before it starts its activities. A Trust can apply for registration only after it has done sufficient activities. That is why we have examined this issue in detail. It is not that this issue has arisen for the first time, rater it has arisen in past in many forms and facets. The Courts/Tribunal has discussed and decided the same in umpteen cases. We are analyzing them in the following paragraphs. 8. Almost similar issue was decided by the Co-ordinate Bench, in which one of us [JM] was in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... funds of the trust he has come to the conclusion that the activities carried on by the trust are not genuinely charitable. We differ from his finding and conclude that the activities of helping the cause of education is definitely a charitable activity and once there is no dispute about the genuineness of the activities of the trust, the ld. CIT cannot take shelter of any irrelevant reasoning for refusing registration as he cannot look into the application of funds at the time of dealing with the subject of registration u/s 12AA of the Act. In this regard, support can be drawn from the decision in the case of Shri Haridevji Gaushala Trust vs CIT, (2008) 119 TTJ (Agra) 981 [or (2008) 24 SOT 14], a copy of which was filed by ld. AR and in deciding that case one of us (JM) was a party. It has been categorically held in that case that application of income at the stage of Section 12AA is not relevant till its objects are charitable. The ld. CIT has not made out the case of refusal of registration and in view of these facts of the case, keeping in view the objects of the trust, the assessee-trust is entitled to registration u/s 12AA. Accordingly, we direct the ld. CIT to grant registra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nding by the CIT that objects of the assessee-Trust were noncharitable in nature. We are, therefore, of the opinion that the matter requires re-visit by the CIT. We, therefore, set aside the orders of ld. CIT refusing registration under Section 12AA and refusing approval under Section 80G of the Act and remit the issues back to his file for disposal de novo. Assessee has to cooperate and furnish the documents called for by ld. CIT and prove genuineness of its activities. Ld. CIT shall pass orders in accordance with law." The very reading of the above paragraph makes it clear that in a way starting of activities by Trust is not relevant for deciding the impugned issue. 12. Similar view has been taken by another Co-ordinate Bench (constituted by Shri N.S.Naini, Hon'ble AM and Shri George Mathan, Hon'ble JM) in the case of Adhyapana Trust vs ITO, in I.T.A.Nos.1575 & 1576/Mds/2010, vide order dated 21.7.2011. Para 7 of this order is relevant and the same is being extracted verbatim, as under :- "We have heard the rival submissions and perused the orders of the lower authorities and the material available on record. In the instant case, we find that for a person being a tru ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of hearing to the assessee as per law." 13. From the above finding, it becomes manifest that although the CIT has power to examine the activities of the Trust, but he can examine the activities only if the activities have been started so that he can satisfy himself about the genuineness of its objects, since the Assessing Officer has to look into these aspects while making regular assessment. In case we uphold the view that registration u/s 12AA of the Act has to be granted only after examining the activities of the Trust, then in that case once a Trust is registered u/s 12AA, its activities cannot be again looked into at the time of regular assessment, and the certificate for registration would be enough to claim benefits of Sections 11, 12 & 13, etc. But this is actually not a correct preposition as the Assessing Officer has to examine the entire facts relating to the activities of the Trust which were carried out in a given relevant year, to come to a conclusion if it is eligible for this exemption or not. 14. While deciding similar issue another Co-ordinate Bench (in which one of us [JM] was in the Bench alongwith Shri B. Ramakotaiah, Hon'ble AM) in the case of JITO Che ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... red by the Co-ordinate Bench is in the case of Madurayelerukkum Virudhunagar Hindu Nadargal Maruthuvamanai vs ITO, in I.T.A.No. 1623/Mds/2010, order dated 10.10.2010, in which one of us [JM] was a party. In similar circumstances, this very issue has been clearly churned while passing the order. Paragraph 4 of this order is relevant and is being extracted herein below, verbatim: "It is noted that the assessee had complied with the directions of the ld. CIT and has also produced the books of account pertaining to financial year 2008-09. The ld. CIT has also perused the cash book, ledger, vouchers etc. which were produced before him. The assessee has also furnished copy of the documents filed before the Registrar of Companies as directed by the ld. CIT. Copy of the auditors reports for the years ending 31.3.2007, 31.3.2008 and 31.3.2009 are also placed before us for our perusal. We have perused all these documents. It is true that the ld. CIT has got the power to examine the objects of the assessee-society for registration purposes, but the overwhelming judicial pronouncement is that if the objects as mentioned in the Memorandum of Association of a society or trust is found to be ch ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ance of the registration claiming exemption. The fact that the corpus of the trust is nothing but the contribution of ` 1,000 by each of the trustees as corpus fund goes to show that the trustees were contributing the funds by themselves in a humble way and were intending to commence charitable activities. It is not even the case of the Revenue that by the time the application of the assessee came to be considered by them, the assessee had collected lots of donations for the activities 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 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 sub ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion was refused because the assessee had not started its charitable activities although objects of the Trust were found to be 'charitable' in nature. In the given case, the objects of the Trust are found to be verily charitable in nature, but only because it has not started/commenced its activities, the registration was refused. 22. In such a case, the question arises as to whether a decision of another High Court, not being directly of the Jurisdictional High Court, albeit in this case, the decision of Hon'ble Jurisdictional High Court is available by implication, which has been followed by us in the case of JITO Chennai Chapter as discussed above, is a binding precedent or not. It has been well accepted that though legally, judgment of another High Court is not a binding precedent yet a decision of another High Court should be followed. It is also a well settled dictum of law now. When there is no contrary decision, a decision of another High Court has to be followed by the Tribunal. The income-tax is a Central Act and therefore, the Tribunal should follow the decision of another High Court. It was held in the case of CIT vs Highway Construction Co. P. Ltd, 237 ITR 234(Gauha ..... X X X X Extracts X X X X X X X X Extracts X X X X
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