Non-commencement of activities does not ipso facto defeat charitable registration; Section 12AB and 80G approvals must be granted.

The article addresses denial of charitable registration and donation approval where activities had not commenced, holding that the statutory test requires satisfaction as to the trust's objects and the genuineness of activities, which includes proposed activities; mere non-commencement is not ipso facto proof of non-genuineness. It states that contemporaneous financial statements, documentary disclosure of assets, steps taken toward conversion and commencement, change of trustees, and subsequent donations can corroborate genuineness. On that basis the prior rejections were unjustified and the authority must grant registration and donation approval, subject to normal examination of entitlement on returns.

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Issues: (i) Whether the Commissioner of Income-tax (Exemptions) was justified in rejecting the assessee's application for registration under Section 12AB of the Income-tax Act, 1961 on the ground that the trust's activities were not genuine due to non-commencement and related omissions; (ii) Whether the Commissioner was justified in rejecting the assessee's application for approval under Section 80G of the Income-tax Act, 1961 for the same reasons.

Issue (i): Rejection of application for registration under Section 12AB on ground of non-genuineness of activities.

Analysis: The statutory test requires satisfaction as to the objects of the trust and genuineness of its activities. The authorities and precedents recognise that "activities" include proposed activities and that mere non-commencement at the time of application is not ipso facto proof of non-genuineness. The assessee demonstrated charitable objects, acquisition of land for educational/medical institution, documentary disclosure of fixed assets in financials, steps taken for conversion of land, change of trustees and subsequent steps toward commencement, and receipt of donations after provisional registration. The Commissioner's concerns about omission in a form column and outstanding unsecured loans were addressed by contemporaneous financial statements and explanation of funding sources; those facts did not establish that activities were contrary to objects or that assets/loans were not genuine. Applicable precedent supports remand/allowance where proposed activities are charitable and subsequent steps corroborate genuineness.

Conclusion: The rejection of the Section 12AB application on the ground that activities were not genuine is not justified; registration must be granted and the impugned order quashed.

Issue (ii): Rejection of application for approval under Section 80G for same reasons as Section 12AB rejection.

Analysis: The grounds and evidence relevant to registration under Section 12AB are identical to those considered for grant of approval under Section 80G. Having held that the Section 12AB rejection was unjustified for the reasons above, the parallel rejection of the Section 80G application cannot be sustained.

Conclusion: The rejection of the Section 80G application is not justified; approval under Section 80G must be granted.

Final Conclusion: The orders rejecting the applications under Section 12AB and Section 80G are quashed and the Commissioner is directed to grant registration under Section 12AB (issue Form 10AD) and approval under Section 80G, subject to the Assessing Officer's power to examine entitlement to exemption on returns filed.

Ratio Decidendi: Mere non-commencement of proposed charitable activities at the time of application does not constitute a specified violation to deny registration where the trust's objects are charitable, proposed activities are in furtherance of those objects, and contemporaneous evidence shows genuineness of assets and funding; registration authorities must consider proposed activities and subsequent developments before denying registration.

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