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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 ..... after the trust or institution came into existence and applies for registration u/s 12A, the Commissioner is required to satisfy himself that the objects of the Trust are genuine. If the trust or institution has started its activities then he shall also satisfy himself that the activities of such trust or institution are in furtherance of the objects of the trust. The application for registration u/s 12AA cannot be refused by the Principal Commissioner or Commissioner of Income Tax solely on the ground that such trust or institution has not yet started its activities. For all the reasons aforestated, we do not find any merit in this appeal. Decided against revenue. - HON BLE JUSTICE SURYA PRAKASH KESARWANI AND HON BLE JUSTICE AJAY KUMAR GUPTA Appearance: For the Appellant : Ms. Smita Das De, Advocate. For the Respondent : None 1. Heard Ms. Smita Das De, learned senior standing counsel for the appellant/Income Tax Department. None appears for the respondent. 2. This appeal was admitted by this Court by order dated 20.08.20196 on the following substantial question of law:- Whether on facts and in the circumstances of the case, there were fit grounds for cancellation of registratio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssary in order to satisfy himself about,- (i) the genuineness of activities of the trust or institution; and (ii) the compliance of such requirements of any other law for the time being in force by the trust or institution as are material for the purpose of achieving its objects, and may also make such inquiries as he may deem necessary in this behalf; and] (b) after satisfying himself about the objects of the trust or institution and the genuineness of its activities [as required under sub-clause (i) of clause (a) and compliance of the requirements under subclause (ii) of the said clause], he- (i) shall pass an order in writing registering the trust or institution; (ii) shall, if he is not so satisfied, pass an order in writing refusing to register the trust or institution, and a copy of such order shall be sent to the applicant: Provided that no order under sub-clause (ii) shall be passed unless the applicant has been given a reasonable opportunity of being heard. 7. The CIT(E) while refusing to grant registration under Section 12A of the Act, 1961 has neither doubted nor recorded his dis-satisfaction with regard to the objects of the trust. In other words, the CIT(E) has neither ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ution and is in the process of establishing such Institutions, the registration us. 12AA of the Act cannot be refused on the ground that the Trust has not yet commenced the charitable activity . Any enquiry of this nature would amount to putting the cart before the horse. As stated above, when the application far registration under section 12AA of the Act is considered by the Ld. Commissioner only the genuineness of the objectives has to be tested and not the activities which have not commenced. The enquiry of the Commissioner of Income-tax as such is at a preliminary stage should be restricted to genuineness of the objectives and not the activities unless the activities have commenced. Since the assessee Trust came into existence vide Deed of Trust dated 29.04.2016 and the Trust had applied for registration on 17.11.2016 it is at the initial stage only. It has to be noted that the Trust cannot claim exemption unless it is registered us. 12AA of the Act and thus at that initial stage the test of genuineness of the activities cannot be a ground on which the registration can be refused and for that we rely on the decision of the Hon'ble Allahabad High Court in the case of Hardaya ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ection 12AA of the Act. This judgment is assailed before us. 9. Section 12AA undoubtedly requires the Commissioner to satisfy himself about the objects of the trust or institution and genuineness of its activities and grant a registration only if he is so satisfied. The said section requires the Commissioner to be so satisfied in order to ensure that the object of the trust and its activities are charitable since the consequence of such registration is that the trust is entitled to claim benefits under sections 11 and 12 of the Act. In other words, if it appears that the objects of the trust and its activities are not genuine that is to say not charitable the Commissioner is entitled to refuse and in fact, bound to refuse such registration. 10. It was argued before us that the Commissioner is required to be satisfied about two things firstly that the objects of the trust and secondly, its activities are genuine. If there have been no activities undertaken by the trust then the Commissioner cannot assess whether such activities are genuine and therefore, the Commissioner is bound to refuse the registration of such a trust. We have given our anxious consideration to the above submiss ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Vs. Meenakshi Amma Endowment Trust Etc.) holding as under: Delay condoned. In view of the judgment of this Court in 'Ananda Social And Educational Trust v. Commissioner of Income Tax and Another', [(2020) 17 SCC 254], which judgment has approved the view taken by the Delhi High Court in 'Director of Income Tax v. Foundation of Ophthalmic Optometry Research Education Centre' [(2013) 355 ITR 361], the question of law raised in these matters has to be answered against the Revenue and in favour of the assessee. Accordingly, the appeals and the special leave petitions are dismissed. However, dismissal of these cases would not bar the Assessing Officer from cancelling the registration in case he finds that the 'charitable activity' was not undertaken, set up or established by the assessee. Pending application(s), if any, shall stand disposed of. 12. Thus, from bare reading of the provisions of sub-Section (1) of Section 12A it is evident that on receipt of an application for registration of a trust or institution made under clause (a) or clause (aa) or clause (ab) of sub-Section (1) of Section 12A, the Principal Commissioner or Commissioner of Income Tax shall ca ..... X X X X Extracts X X X X X X X X Extracts X X X X
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