2017 (12) TMI 1540 - AT - Income Tax

ITAT directs registration of trust under 12AA without income proof

The Appellate Tribunal ITAT Lucknow allowed the appeal, directing the Commissioner to grant registration to the trust under section 12AA of the Income Tax ... Rejection of application for granting registration under section 12AA - Whether the income derived by the trust is spent for charitable purposes or whether the trust is earning profit or not? - Held that:- As the case of the present assessee is concerned, it was a new trust and all the details as sought by the Department were duly submitted and even trust deed was filed wherein the objects of the trust were clearly mentioned. When these criteria are complied with, then registration under section 12AA ought to have been granted to the assessee. We, are of the considered view that in the instant case registration under section 12AA of the Act should be granted to the assessee once as per object clause the genuineness of the activities of the trust is established. Thus we direct CIT (Exemptions) to grant registration to the assessee trust under section 12AA of the Act. - Decided in favour of assessee. Issues: Rejection of application for registration under section 12AA of the Income Tax ActIn this case, the Appellate Tribunal ITAT Lucknow dealt with an appeal regarding the rejection of an application for registration under section 12AA of the Income Tax Act. The assessee's grievance stemmed from the rejection of their application for registration, as the Commissioner of Income-tax (Exemptions) found that no charitable activity had taken place within the trust. The Commissioner observed that the trust failed to produce necessary evidence such as books, bank statements, and vouchers to verify their claimed expenses and charitable activities. The Tribunal noted that the trust, formed in 2015, had not yet completed its first accounting year and had submitted all relevant documents, including the trust deed and details of the trust's objectives. The Tribunal referred to judicial precedents emphasizing that registration under section 12AA should be granted once the genuineness of the trust's activities is established, without requiring proof of income spent on charitable purposes. Consequently, the Tribunal directed the Commissioner to grant registration to the trust under section 12AA of the Act, as compliance with the necessary criteria had been met. The appeal of the assessee was allowed, and the order was pronounced on December 7, 2017.