New trust registration under section 12AA can rest on proposed activities where objects qualify as general public utility

Section 12AA registration for a newly formed trust depends on the Commissioner being satisfied about its objects and the genuineness of its proposed activities, even where there is no past activity. For a fresh trust, the enquiry may extend to planned activities to test whether they align with genuinely charitable objects. Objects aimed at promoting and protecting the interests of pharma dealers, together with related welfare and awareness work, were treated as advancement of an object of general public utility under section 2(15). On that basis, registration was considered justified.

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Issues: Whether registration under section 12AA of the Income-tax Act, 1961 could be granted to a newly formed trust on the basis of its objects and proposed activities, and whether the trust's objects concerning pharma dealers fell within the fourth limb of section 2(15) as advancement of an object of general public utility.

Analysis: The statutory scheme under section 12AA requires the Commissioner to satisfy himself about the objects of the trust and the genuineness of its activities before granting registration. The governing principle is that, for a newly constituted trust with no past activity, the enquiry extends to proposed activities as well, and the Commissioner must see whether the objects are genuinely charitable and whether the proposed activities are in line with those objects. Applying that principle, the objects of the assessee society, which were directed to promotion and protection of the interests of pharma dealers and related awareness and welfare activities, were treated as falling within the fourth limb of section 2(15), namely advancement of any other object of general public utility. On that basis, the Tribunal's view that the assessee was entitled to registration was found to be justified.

Conclusion: Registration under section 12AA was rightly granted to the assessee, and the appeal failed for want of any substantial question of law.

Ratio Decidendi: For a newly registered trust, the Commissioner may consider proposed activities in judging genuineness under section 12AA, and objects advancing a section of the public's interests may qualify as charitable under section 2(15) as an object of general public utility.

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