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TMI Blog2024 (7) TMI 286X X X X Extracts X X X X X X X X Extracts X X X X ..... tion 12AA of the Income Tax Act, 1961 (hereinafter referred to as 'the Act, 1961') and also submitted an application of even date for granting registration under Section 80G of the Act, 1961. The Commissioner of Income Tax (Exemption) examined the application of the respondent for grant of registration under Section 12A (1) of the Act, 1961 and rejected it by the order dated 01.05.2017 on the ground that the respondent trust is yet to start charitable activities as defined in Section 2(ii) of the Act, 1961. Consequently, the application for registration under Section 80G of the Act, 1961 was also rejected by a separate order dated 11.07.2018. Aggrieved with the aforesaid orders, the respondent preferred two separate appeals being ITA Nos. 1366 & 1367/Kol/2017 before the Income Tax Appellate Tribunal, "A" Bench, Kolkata. The ITAT allowed the appeal by the impugned order dated 11.07.2018. Aggrieved with the aforesaid order of the ITAT, the revenue has filed present appeal which was admitted on the afore-noted substantial question of law. Submission : 4. Learned Counsel for the appellant submits that the order passed by the CIT(E) was correct and the Tribunal has committed a manife ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... st has not yet started its activities. The ITAT has set aside the order of the CIT(E) holding as under: "4. We have heard rival submissions and gone through the facts and circumstances of the case. We note that the issue before us is as to whether it is essential for a trust to commence charitable activity before it can be considered eligible for registration u/s. 12AA of the Act We note that the objects of the assessee trust are relief of the poor, education, medical relief and advancement of objects of general public utility, to establish support, maintain and/or grant aid or other assistance financial or otherwise to schools, colleges, vidyapiths, libraries, read rooms, lecture halls and other establishments and institutions for the advancement of education and diffusion of knowledge in art, humanities, science, commerce, industry. agriculture and any other objects of similar nature pertaining to education, grant scholarship, stipends, prizes, rewards allowance or other financial assistance ete., to establish support and/or maintain hostels, boarding houses etc. From the reading of the objectives of the Trust, it is clear that these are charitable objects and are supported by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... order on the assessee's application for registration u/s: 12AA and approval u/s. 80G of the Act keeping in view the law governing the subject and pass a speaking order after hearing the assessee trust. 6. In the result, both the appeals of assessee are allowed for statistical purposes." 9. In Director of Income Tax vs. Ophthalmic and Optometry Research Education Centre reported in 2013 ITR (355) 361 the Delhi High Court considered substantial question of law "whether the Income Tax Appellate Tribunal was right in holding that while examining the application under Section 12AA (1) (b) read with Section 12A of the Income Tax Act, 1961, the concerned Commissioner/Director is not required to examine the question whether the Trust has actually commenced and has, in fact, carried on charitable activities ?" and answered this question in favour of the assessee and against the revenue. Similar view was also taken by the Allahabad High Court in M/s. Hardayal Charitable and Educational Trust vs. CIT, Agra reported in [2013] 32 taxmann.com 341 (Allahabad). 10. In M/s. Ananda Social and Educational Trust vs. The Commissioner of Income Tax & Anr. reported in AIR 2020 SC 1189 : 2020 ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sioner is bound to satisfy himself that the object of the Trust are genuine and that its activities are in furtherance of the objects of the Trust, that is equally genuine. 11. Since section 12AA pertains to the registration of the Trust and not to assess of what a trust has actually done, we are of the view that the term 'activities' in the provision includes 'proposed activities'. That is to say, a Commissioner is bound to consider whether the objects of the Trust are genuinely charitable in nature and whether the activities which the Trust proposed to carry on are genuine in the sense that they are in line with the objects of the Trust. In contrast, the position would be different where the Commissioner proposes to cancel the registration of a Trust under sub-section (3) of section 12AA of the Act. There the Commissioner would be bound to record the finding that an activity or activities actually carried on by the Trust are not genuine being not in accordance with the objects of the Trust. Similarly, the situation would be different where the trust has before applying for registration found to have undertaken activities contrary to the objects of the Trust. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rial for the purposes of achieving its object and may also make such enquiries as he may deem necessary in this behalf; and after satisfying himself about the objects of the trust or institution and genuineness of its activities as required under sub-Clause (i) of clause (a) and compliance of the requirement of sub-clause (ii) of clause (a), he shall pass an order in writing registering the trust or institution or if he is not satisfied then pass an order in writing refusing to register the trust or institution. Thus in matters where the trust recently came into existence and application for registration under Section 12AA (1) of the Act, 1961 is filed by the trust before the Principal Commissioner or Commissioner of Income Tax, then at that stage the Principal Commissioner or Commissioner of Income Tax has to satisfy himself that the objects and activities of such trust or institution are genuine and that its activities are in furtherance of the objects of the trust. Therefore, at the very initial stage i.e. immediately after the trust or institution came into existence and applies for registration under Section 12A of the Act, 1961, the Commissioner is required to satisfy himself ..... X X X X Extracts X X X X X X X X Extracts X X X X
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