Trust registration denial overturned after proving charitable activities through land purchase and healthcare education funding

ITAT Delhi allowed appeals against denial of registration under sections 12A(1)(ac)(ii) and 80G(5). Revenue authority rejected applications filed in March 2023, claiming no charitable activities were conducted per section 2(15). However, evidence showed land purchase and financial assistance for healthcare education and tribal welfare. Following Ananda Social Educational Trust precedent, ITAT held Commissioner must consider whether trust objects are genuinely charitable and proposed activities align with stated objectives. Court found impugned order resulted in miscarriage of justice, ruling it unjust and illegal.

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Issues:
Appeals against rejection of registration under section 12A(1)(ac)(ii) and Section 80G(5) of the Income Tax Act, 1971.

Analysis:
The appeals were filed by the assessee against the rejection of applications for registration under Section 12A(1)(ac)(ii) and Section 80G(5) of the Income Tax Act, 1971 by the Learned Commissioner of Income Tax (Exemption). The appellant had filed the applications seeking registration, but the documents submitted showed no charitable activity had been initiated, as per the income and expenditure account. The rejection was based on the lack of expenses incurred on charitable activities, as required by section 2(15) of the Income Tax Act, 1961.

The authorized representative for the appellant argued that the rejection was erroneous, highlighting that the Trust had purchased land for charitable purposes, as mentioned in the submitted documents. The representative also pointed out financial assistance provided to other trusts for healthcare and education services. Referring to specific documents and receipts, it was emphasized that the Trust was actively involved in charitable endeavors, contrary to the rejection based on lack of charitable activities.

In support of the appellant's case, reference was made to a judgment by the Hon'ble Supreme Court of India in the case of Ananda Social & Educational Trust. The judgment clarified that the term "activities" in the context of registration of a trust includes proposed activities, and the Commissioner must assess if the proposed activities align with the charitable objects of the Trust. This legal principle was cited to argue that the rejection was unjust and not in accordance with the law.

Considering the arguments and the evidence presented, the Tribunal found that the rejection of the applications had led to a miscarriage of justice. The Tribunal held that the Commissioner should have considered whether the Trust's objects were genuinely charitable and if the proposed activities were in line with those objects. Therefore, the impugned order was set aside, and the Commissioner was directed to reevaluate the issue in accordance with the law.

In conclusion, the appeals of the assessee were allowed, and the order for rejection of registration under Section 12A(1)(ac)(ii) and Section 80G(5) was overturned. The case was remanded back to the Commissioner for fresh consideration in light of the Trust's charitable objectives and activities.

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