Scope of registration inquiry under 12AB is confined to objects and genuineness; registration should be granted.

The scope of inquiry for registration under section 12AB is limited to whether the objects are charitable and the activities genuine; it excludes a roving inquiry into adequacy of expenditure, application of income, or third party creditworthiness, which are assessment-stage matters. Minor public disclosure inconsistencies do not, by themselves, vitiate genuineness where charitable objects and activities are established. There is no statutory requirement that assets used must be owned by the trust; use of settlor or trustee premises does not negate charitable character. Reliance on binding and persuasive precedents supports setting aside rejections based on estimations or extraneous considerations, and the registration was to be granted.

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Issues: Whether the rejection of the assessee's application for regular registration under section 12AB of the Income-tax Act, 1961, founded on alleged discrepancies in animal count, low fodder expenditure, unverifiable donor creditworthiness and non-ownership of assets, is sustainable.

Analysis: The scope of inquiry under section 12AB(1)(b) is confined to (i) the charitable nature of the objects and (ii) the genuineness of activities; it does not permit a roving or detailed examination into adequacy of expenditure, application of income, or third party creditworthiness. Minor inconsistencies in public disclosures (such as website capacity figures) do not, by themselves, negate genuineness where charitable objects and activities are otherwise established. Allegations regarding low fodder expenditure implicate adequacy and manner of application of funds and are matters for assessment proceedings, not for denying registration. Questioning the source or creditworthiness of a donor and demanding the donor's income tax returns exceed the permissible scope of the registration enquiry. There is no statutory requirement that assets used for charitable activities must be owned by the trust; use of premises owned by a settlor or trustee does not negate charitable character or genuineness. Reliance on binding and persuasive precedents supports setting aside rejections based on estimations, presumptions or considerations extraneous to section 12AB.

Conclusion: The rejection of the application for regular registration under section 12AB of the Income-tax Act, 1961 is unsustainable and the application for registration is to be granted in favour of the assessee.

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