Tribunal directs grant of registration to trust under section 12AA emphasizing assessment over registration

The Tribunal set aside the Ld. CIT (Exemption)'s order and directed the Department to grant registration u/s.12AA to the assessee trust. It emphasized that tax matters should be dealt with during assessments, not registration, and all registration requirements were fulfilled. The decision underscored the significance of assessing the charitable nature and authenticity of trust activities during the registration process.

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Issues:
Grant of registration u/s.12AA to the assessee trust.

Analysis:
The appeal arose from the Ld. CIT (Exemption) Pune's order rejecting registration to a trust u/s.12AA of the Income Tax Act, 1961. The assessee trust applied for approval under charitable trust/institution category, claiming activities like blood donation camps and tree plantation. However, discrepancies were noted regarding funds credited directly to reserves without routing through income and expenditure account, leading to tax exemption claims under section 11(1)(d) for previous years. The Ld. CIT (Exemption) rejected registration citing non-payment of taxes on donations under "Building Fund" as income, crucial for granting u/s.12AA.

The assessee contended that the denial was unjustified, emphasizing examination of charitable nature and genuineness of activities. Legal precedents like Anand Social and Educational Trust Vs. CIT were cited. The Department did not dispute trust objectives or activities' authenticity. The Pune Tribunal's decision in Kai Shri Mahadebrao Naykude Dnyanvikas Prabhodhini Trust case highlighted that non-filing of return u/s. 139(4A) shouldn't bar registration if trust objects and activities are genuine.

The Tribunal observed that the denial was solely due to unpaid taxes on donations, not disputing trust objects or activities' genuineness. Referring to the Anand Social and Educational Trust case, it emphasized examining trust objects' charitable nature during registration. The Bombay High Court's ruling in CIT Vs. Manekji Mota Charitable Trust stressed that tax issues should be addressed during assessment proceedings, not registration.

In conclusion, the Tribunal set aside the Ld. CIT (Exemption)'s order, directing the Department to grant registration u/s.12AA to the assessee trust. It highlighted that tax matters should be addressed during assessments, not registration, and all requirements for registration had been met. The decision emphasized the importance of examining trust objects' nature and genuine activities during the registration process.

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