2019 (6) TMI 1629 - AT - Income Tax

Trust granted registration under section 12AA despite lack of immediate charitable activities

The Tribunal allowed the appeal, directing the Ld. CIT(E) to grant registration to the Assessee Trust under section 12AA of the Income Tax Act. Despite ... Exemption u/s 11 - registration u/s 12AA - proof of charitable activity u/s 2(15) - denial of registration by the Ld. CIT is that in the absence of Balance sheet, Income Expenditure, Receipts & Payments accounts, thus difficult to verify genuineness and nature of activities - assessee trust was further asked to provide a rationale why registration should be granted in the absence of any apparent charitable activity being pursued - HELD THAT:- In our view, the trust that at the time of filing application for registration was un-doubtly at nascent stage and has not carried out any activity therefore, one can not expect from the trust to do activity of the charity immediately. As at the time of registration u/s 12AA of the Act, the Ld. CIT(E) is required to see the objects of the trust or institutions and genuineness of its activities, however, if we come to the instant case, then it is not disputed that the trust was formed and created only on 22.01.2015 and immediately within one year of its creation, the application for registration u/s 12AA of the Act has been filed on 30.11.2015 which has been rejected vide impugned order dated 26/05/2016 so it is not in controversy that the assessee trust at the time of applying the registration was at nascent stage, therefore, could not carry out any activity. Opinion at the time of disposal of application, the Ld. CIT(E) in order to satisfy himself about the genuineness of the activities of the trust or institution can call for such documents or information from the trust or institution as he thinks necessary and also empowered to make such enquiry as he may deem fit necessary in this behalf , secondly that after satisfying himself about the object of the trust or institution and the genuineness of the activities, he shall pass the order in writing either to register or refusing to register the trust or institutions. In the instant case no activity was carried out therefore question of genuineness did not arise. Finally in our considered opinion as at the time of applying the registration the assessee trust has not carried out many activities and even otherwise it cannot be expected so at the nascent stage, therefore, the assessee trust is entitled to get registration u/s 12AA of the Act from the date of application, hence, we direct the Ld. CIT(E) to grant the registration u/s 12A of the Act to the assessee. - Decided in favour of assessee. Issues:1. Rejection of registration u/s 12AA of the Income Tax Act, 1961 by the Ld. CIT(Exemptions), Chandigarh.2. Consideration of application for registration u/s 12A of the Act.3. Judicial verdicts on the issues at hand.4. Reasons for rejection of the application for registration.5. Analysis of the law and judgments regarding registration u/s 12AA.6. Decision and direction to grant registration to the Assessee Trust.Issue 1: Rejection of registration u/s 12AA:The appeal was filed by the Assessee Trust against the order dated 26.05.2016, where the Ld. CIT(Exemptions) rejected the registration u/s 12AA of the Act due to the absence of essential financial documents and lack of apparent charitable activities.Issue 2: Consideration of application for registration u/s 12A:The relevant provisions of Section 12AA were analyzed, emphasizing the requirement for the Ld. CIT(E) to verify the genuineness of activities of the trust or institution before granting registration.Issue 3: Judicial verdicts on the issues:Various judicial verdicts were cited, highlighting that the commencement of charitable activities is not a prerequisite for registration u/s 12AA, and registration can be granted even if the trust is at a nascent stage.Issue 4: Reasons for rejection of the application:The rejection was based on the absence of financial documents and the lack of charitable activities being pursued by the trust at the time of application.Issue 5: Analysis of the law and judgments:The Tribunal analyzed the law and judgments, concluding that the trust being at a nascent stage and not having carried out activities did not impact the genuineness of its intentions for charitable activities, thus entitling it to registration u/s 12AA.Issue 6: Decision to grant registration:The Tribunal directed the Ld. CIT(E) to grant registration to the Assessee Trust, considering that the trust had provided details of charitable activities and financial documents for subsequent years, despite not having carried out activities at the time of application.In conclusion, the appeal was allowed, and the Assessee Trust was granted registration u/s 12AA of the Act, with a caution that any future discrepancies or noncompliance may lead to withdrawal or cancellation of the registration.