INCOME TAX ACT, 1961

Section 12AA

Charitable trust - Registration under section 12AA - Rejection of application - Whether rejection was justified when trust was yet to start its charitable activities

Assessee-trust had filed an application for registration under section 12AA. PCIT (E) denied the registration as the assessee had failed to file any documentary evidence to satisfy about the genuineness of the activities and to verify that the activities were in consonance with its object. Assessee contended that it had clearly pointed out that it was proposed to run the institution and since it was at nascent stage and that hardly any activity had taken place therefore, the details as observed by PCIT (E) were not available. Hence, same could not be furnished at the time of registration. However, the assessee thereafter, started functioning and doing activity of which audited accounts were already furnished. Held: It was undisputed fact that the Trust has at the commencement stage and no activities were carried on, however, the objects of the Trust were clearly established. Thus, it was premature to decide or conclude the activities of the Trust. Moreover, as the registration of trust did not involve enquiry into the actual activities or application of funds, etc., therefore, at this stage, the only enquiry required to be conducted was with respect to the object of the trust alone. Hence, denial of registration under section 12AA is not proper when the trust is yet to start its charitable activities. Accordingly, the matter of registration under section 12AA should be set-aside to the PCIT (E) for examination of the basic facts and pass fresh order.

REFERRED : CIT v. M/s. Dawoodi Bohara Jamat (2014) 364 ITR 31 (SC) : 2014 TaxPub(DT) 1754 (SC),CIT v. Babu Ram Education Society in (Income Tax Appeal No. 341 of 2013, dt. 14-12-2017) : 2017 TaxPub(DT) 5316 (All-HC),Director of Income Tax (Exemption) v. Panna Lalbhai Foundation in (Tax Appeal No. 853 of 2012, dt. 2-4-2013) : 2013 TaxPub(DT) 2067 (Guj-HC) Hardayal Charitable & Educational Trust v. CIT-II, Agra (2013) 355 ITR 534 (All) : 2013 TaxPub(DT) 1480 (All-HC),Babu Ram Education Society v. CIT (2013) 26 ITR (Trib) 351 (Agra) : 2013 TaxPub(DT) 2327 (Agra-Trib),CIT v. Babu Ram Education Society in (Special Leave Petition (Civil) Diary No(s). 22641/2018, dt. 23-7-2018) : 2018 TaxPub(DT) 5139 (SC)

FAVOUR : In assessee's favour by way of remand

A.Y. :

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