Charitable registration cannot be denied solely for limited activity if objects are genuine and charitable.

Registration under section 12A(1)(ac)(iii) cannot be refused merely because a trust has not carried out substantial activities during the relevant financial years. At the registration stage, the inquiry is limited to whether the objects are charitable and whether the proposed activities are genuine and consistent with those objects. Where the trust deed discloses charitable objects and the record includes audited accounts, returns, bank statements and donation details, the absence of significant activity alone is not a valid ground to deny registration. On these facts, the rejection of registration and cancellation of provisional registrations were held unsustainable, and Form 10AB was directed to be allowed.

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Issues: (i) Whether the application for registration under section 12A(1)(ac)(iii) of the Income-tax Act, 1961 could be rejected, and the provisional registrations cancelled, on the ground that the trust had not carried out activities during the relevant financial years.

Analysis: The trust deed disclosed charitable objects, and the record included audited accounts, returns, bank statements and donation details. The inquiry at the registration stage is confined to examining whether the objects are charitable and whether the proposed activities are genuine and in line with those objects. The absence of substantial activity during the relevant years, by itself, was not a valid basis to deny registration. The record also showed past donations received and donations made, and the authority had not found the stated objects to be non-charitable.

Conclusion: The rejection of registration and the consequential cancellation of provisional registrations were not sustainable. The assessee was entitled to registration, and the application in Form 10AB was directed to be allowed.

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