12AB registration enquiry limited to charitable objects and genuine activities; alleged benefit to specified persons cannot by itself deny registration.

At the registration stage under section 12AB, the enquiry is confined to whether the objects are charitable, the activities are genuine, and other applicable legal compliance is satisfied. Allegations that income benefited specified persons or that loan and rent transactions were excessive relate to exemption and application of income at the assessment stage, not refusal of registration. Section 13 regulates exemption under sections 11 and 12 and does not by itself authorise denial of registration. As no finding showed non-charitable objects, fictitious activities, or false information under section 12AB(4), rejection of registration was unsustainable and registration was to be granted.

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Issues: Whether rejection of registration under section 12AB could be sustained on the basis of alleged benefit to specified persons and disputed loan or rent transactions, and whether such matters fell within the scope of enquiry at the registration stage.

Analysis: The scope of enquiry under section 12AB is confined to the charitable character of the objects, the genuineness of activities, and compliance with other applicable laws material to the objects. Allegations that income was applied for the benefit of specified persons, or that transactions were excessive or unreasonable, relate to the allowability of exemption and application of income at the assessment stage. Section 13 operates to regulate exemption under sections 11 and 12 and does not authorise refusal of registration. The material on record showed that the assessee was running an educational institution and there was no finding that its objects were non-charitable, its activities were fictitious, or that any statutory non-compliance or false information attracting section 12AB(4) was established.

Conclusion: Rejection of registration was unsustainable, and the assessee was entitled to registration under section 12AB.

Ratio Decidendi: At the stage of registration, enquiry is limited to charitable objects, genuineness of activities, and relevant legal compliance, while alleged misuse of income or benefit to specified persons is a matter for assessment and cannot by itself justify of registration.

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