Charitable registration cannot be refused for incidental revenue activity where the predominant object remains charitable.

At the registration stage under section 12AB, enquiry is confined to the charitable objects of the trust and the genuineness of its activities. The trust's objects included relief of the poor and environmental preservation, and its activities of procuring rejected agricultural produce, solar dehydration processing, distribution to weaker beneficiaries, and limited sales to sustain the project were intrinsically linked to those objects. Incidental revenue generation, purchase and sale accounts, salary expenditure, and CSR support did not by themselves establish a commercial venture or private profit motive. The proviso to section 2(15) was inapplicable on the facts, and exemption-related questions were held to arise at assessment, not registration. Rejection of registration was therefore unjustified and registration was entitled to be granted.

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Issues: Whether the rejection of registration under section 12AB of the Income-tax Act, 1961 was justified on the ground that the trust's activities were commercial in nature and outside the scope of charitable purpose.

Analysis: The scope of enquiry at the registration stage is confined to the charitable nature of the objects and the genuineness of the activities. The trust deed disclosed objects such as relief of the poor and preservation of environment, and no adverse finding was recorded that the objects were non-charitable or the activities were not genuine. The activities described, namely procurement of rejected agricultural produce, processing through solar dehydration systems, distribution to economically weaker beneficiaries, and sale of processed goods to sustain the project, were found to be intrinsically linked to charitable objects. Mere maintenance of purchase and sale accounts or incurring salary expenditure did not by itself establish a commercial venture. The proceeds from CSR support were also not shown to be consideration for any commercial obligation. Applying the predominant object test, the presence of some revenue generation did not alter the charitable character, particularly where surplus was ploughed back into the activity and no private profit was shown. The proviso to section 2(15) was held inapplicable on the facts, and in any event questions of exemption and income computation were held to arise at the assessment stage, not at the stage of registration.

Conclusion: The rejection of registration under section 12AB was unjustified, and the trust was entitled to registration.

Ratio Decidendi: At the stage of registration, the authority must examine only the charitable objects and genuineness of activities, and registration cannot be denied merely because incidental revenue-generating activity exists if the predominant object remains charitable and no profit motive or private benefit is shown.

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