2018 (3) TMI 219 - AT - Income Tax

Tribunal grants registration under Section 12AA to Trust after finding genuine charitable activities

The tribunal allowed the appeal of the Assessee and directed the Commissioner of Income Tax (Exemptions) to grant registration under Section 12AA of the ... Registration u/s. 12A denied - contents of the trust deed claims the trust to be as only a religious trust and not the educational trust or social welfare trust as shown by the assessee in its submissions during the hearing - proof of charitable activities - Held that:- After receiving the Application for grant of registration u/s. 12AA in the prescribed Form, from the Assessee/trust, the Ld. CIT(E) has not proved with the evidences that the Assessee/Trust is not genuine and is not doing any charitable activity to achieve its objects. At the time of granting the registration u/s. 12AA the Authority has to see or examine the genuineness of the activities of the trust or institution. Assessee has established that assessee is doing the genuine charitable activities to achieve the object of the Trust by making every possible efforts even by giving own rent free accommodation to the Trust. Assessee is doing the charitable work to promote the awareness of universal teaching of SGGS (Shri Guru Granth Sahib) and other religious “Granths” among the general public and in the younger generation, which is very much essential in these days for the betterment of the young generation. We further note that Assessee has filed sufficient evidences before the Ld. CIT(E) and before us for establishing the genuineness of the activity of the trust. Thus impugned order passed by the Ld. CIT(E), Chandigarh for not granting registration u/s. 12AA is not sustainable in the eyes of law - Decided in favour of assessee. Issues Involved:1. Rejection of application for registration under Section 12A of the Income Tax Act, 1961.2. Nature and genuineness of the activities of the Trust.3. Interpretation of 'charitable purposes' under Section 2(15) of the Income Tax Act, 1961.Detailed Analysis:1. Rejection of Application for Registration under Section 12A:The Assessee Trust filed an application for registration under Section 12A of the Income Tax Act, 1961, which was rejected by the Commissioner of Income Tax (Exemptions) [CIT(E)], Chandigarh. The CIT(E) held that the objects of the Trust did not qualify as charitable purposes. The CIT(E) observed discrepancies between the Trust's deed, which claimed it to be a religious trust, and the submissions made during the hearing, where the Trust was presented as an educational and social welfare trust.2. Nature and Genuineness of the Activities of the Trust:The CIT(E) noted that the Trust's activities were primarily conducted from the residence of the President and Treasurer, suggesting potential personal benefits derived from the Trust's property. The CIT(E) also observed that the Trust's activities, such as online propagation of teachings, did not cater to the general public but rather to a select few with internet access. Furthermore, the Trust's financial records indicated that most expenses were administrative, with minimal charitable expenditures.The Assessee countered these observations, arguing that the Trust's deed explicitly mentioned it as a Religious and Educational Trust. The Trust engaged in various educational activities, including distributing pamphlets, posters, and conducting exhibitions. The Assessee also provided evidence that the office space was offered free of cost by one of the trustees, and the Trust had not purchased any property, thus negating any personal benefit to the trustees.3. Interpretation of 'Charitable Purposes' under Section 2(15):The tribunal examined the definition of 'charitable purposes' under Section 2(15) of the Income Tax Act, 1961, which includes relief of the poor, education, medical relief, and advancement of any other object of general public utility. The tribunal referred to several judicial precedents, including decisions by the Supreme Court and High Courts, which established that an object beneficial to a section of the public qualifies as an object of general public utility.The tribunal noted that the Trust's activities of promoting religious teachings and providing educational resources fell within the ambit of 'education' and 'general public utility.' The tribunal also highlighted that the CIT(E) failed to provide concrete evidence that the Trust's activities were not genuine or that the Trust was not pursuing its stated objectives.Conclusion:The tribunal concluded that the CIT(E) had not substantiated his claims with adequate evidence and had not thoroughly examined the Trust's activities and objectives. The tribunal emphasized that at the stage of granting registration under Section 12AA, the authority should primarily assess the genuineness of the Trust's activities and its adherence to its stated objectives.The tribunal found that the Assessee Trust had provided sufficient evidence to demonstrate its genuine charitable activities and adherence to its objectives. Consequently, the tribunal directed the CIT(E) to grant registration under Section 12AA of the Income Tax Act, 1961, to the Assessee Trust.Order:The appeal of the Assessee was allowed, and the CIT(E) was directed to grant registration under Section 12AA of the Income Tax Act, 1961.Order pronounced on 01/03/2018.