2021 (10) TMI 677 - AT - Income Tax

Tribunal grants registration to appellant under section 12AA, recognizing genuine charitable activities

GKG Foundation Trust Versus CIT (Exemptions), Lucknow

The Tribunal allowed the appeal, directing the CIT(E) to grant registration to the appellant under section 12AA of the Act. The Tribunal found the ... Exemption u/s 11 - rejection of application made u/s. 12AA - genuineness of activities including the proposed activities - Whether charitable activities includes the proposed activities also? - CIT-A discussed the original trust deed and held that the irrevocability clause is not there - HELD THAT:- As assessee are charitable in nature and though assessee had undertaken small expenditures towards charitable activities but the fact remains that such activities are genuine activities when considered in the context of objects clause of the trust deed. Therefore, keeping in view the spirit of judgment of the Hon'ble Supreme Court in the case of Ananda Social & Educational Trust [2020 (2) TMI 1293 - SUPREME COURT] where yours lordships have held that activities includes proposed activities also. We hold that assessee’s activities are genuine when examined in relation of objects clause of the trust deed and therefore we direct the ld. CIT(E) to grant registration to the assessee forthwith - Decided in favour of assessee. Issues:1. Rejection of application for registration u/s. 12AA of the Act by ld. CIT(E).Analysis:The appeal was filed against the order of ld. CIT(Exemption), Lucknow rejecting the application for registration u/s. 12AA of the Act. The appellant submitted various grounds of appeal, focusing on the action of ld. CIT(E) in rejecting the registration application. The appellant contended that they had timely submitted all required documents and responses, including detailed replies, financial statements, trust deed, and notes on activities. The appellant argued that they had started spending on charitable activities during the relevant period, supported by documentary evidence. The appellant also highlighted the charitable nature of their proposed activities, emphasizing compliance with the definition of charitable activities under section 2(15) of the Act. Reference was made to the Hon'ble Supreme Court's decision in the case of Ananda Social & Educational Trust vs. CIT, emphasizing that proposed activities are also to be considered for granting registration u/s. 12AA.The ld. CIT, DR, however, relied on the order of ld. CIT(E), asserting that no significant charitable activities were evident from the Income and Expenditure Account submitted by the appellant. The ld. CIT(E) raised objections regarding the lack of charitable activities and the absence of an irrevocability clause in the trust deed. The ld. CIT(E) contended that the appellant failed to demonstrate substantial charitable activities beyond routine expenses.Upon reviewing the submissions and evidence, the Tribunal found that the appellant had diligently responded to all queries raised by ld. CIT(E) and had provided comprehensive documentation, including a supplementary trust deed addressing the irrevocability clause. The Tribunal noted that the ld. CIT(E) had overlooked the supplementary trust deed while making his decision. Regarding the charitable activities, the Tribunal observed that the appellant had indeed conducted charitable activities, as evidenced by the note on activities and the objects stated in the trust deed. The Tribunal referenced the judgment of the Hon'ble Supreme Court in the Ananda Social & Educational Trust case, emphasizing that the Commissioner must assess the genuineness of both existing and proposed activities. Based on the evidence and legal precedents, the Tribunal concluded that the appellant's activities were genuine and charitable in nature, directing the ld. CIT(E) to grant registration to the appellant.In light of the above analysis and considering the legal principles established by the Hon'ble Supreme Court, the Tribunal allowed the appeal of the appellant, emphasizing the genuine nature of the charitable activities undertaken by the appellant in relation to the objects specified in the trust deed. The Tribunal's decision was aligned with the spirit of the judicial precedents, particularly emphasizing the inclusion of proposed activities in assessing the genuineness of charitable endeavors.