TaxTMI 
TaxTMI 
2016 (8) TMI 1220
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.... 2. That on the facts, circumstances and legal position of the case and in law, the Worthv (TT has erred in rejecting the application of the appellant trust for grant of registration u/s 12AA of the Act on incorrect allegation that the power granted in the memorandum to Chairman to incur expenditure upto Rs. 10,00,000/- without the approval of governing body and its subsequent ratification in the next meeting is very high and is liable to be misused as there is no time fixed for meeting of Governing Body before AGM in the memorandum. The respondent held that this clearly attracts provisions of s. 13(l)(c ) of the Act. Firstly, the power is legal and valid and does not attract provisions of s. 13(l)(c). Further, the provisions of s. 13(l)(c ) cannot be gone into by the Worthy CIT while adjudicating the application u/s 12AA of the Act. 3. That on the facts, circumstances and legal position of the case and in law, the Worthy C1T has erred in rejecting the application of the appellant trust for grant of registration u/s 12AA of the Act on incorrect allegation that the clause 6 of memorandum of the appellant society regarding investment of funds attracts provisions of s. 13(....
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....the Chairman has power to utilise any funds upto Rs. 10,00,000/- for a period of one year without the approval of the governing body which clearly attracts the provision of 13(l)(c) of the Act." 4. Before us the ld AR submitted that the ld CIT(A) has misread the provisions of section 13(1)(c) of the Income Tax Act. The provision of movable and immovable properties shall be with the governing body is for safety and security of the trust property and it does not give any benefit to it. He further stated that authority granted to the chairman is for better administration and not for any benefit in his favour. Further, the trust shall invest in the funds, which are approved u/s 11(5) of the Act for claiming such exemption, and merely there being a provision of investment in shares of joint stock company does not result into the rejection of the application of the assessee. He further submitted that clause 3 itself speaks about investment which is permitted by law. He further stated that at the time of registration the ld CIT(A) needs to look at whether the object of the trust are charitable in nature or not and genuineness of the its activities. He further stated he is empowered to ....
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....ich the application was received under clause (a) 70[or clause (aa) of sub-section (1)] of section 12A.] [Extracted from taxmann.com] 71[(3) Where a trust or an institution has been granted registration under clause (b) of sub-section (1) 72[or has obtained registration at any time under section 12A [as it stood before its amendment by the Finance (No. 2) Act, 1996 (33 of 1996)]] and subsequently the 73[Principal Commissioner or] Commissioner is satisfied that the activities of such trust or institution are not genuine or are not being carried out in accordance with the objects of the trust or institution, as the case may be, he shall pass an order in writing cancelling the registration of such trust or institution: Provided that no order under this sub-section shall be passed unless such trust or institution has been given a reasonable opportunity of being heard.] 74[(4) Without prejudice to the provisions of sub-section (3), where a trust or an institution has been granted registration under clause (b) of sub-section (1) or has obtained registration at any time under section 12A [as it stood before its amendment by the Finance (No. 2) Act, 1996 (33 o....
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.... or there is violation of the Income tax Act. Undisputedly, the activities of the assessee trust are eligible for registration. In our opinion rejection order passed by the Ld CIT (A) does not contain the reasons which can justify the rejection of the application of assessee trust u/s 12 AA of the Act. In view of this we direct the ld CIT (A) to examine the objects and genuineness of activities of the trust and after proper enquiry may grant registration. 8. In view of this appeal of the assessee in ITA no 166/CHD/2016 is allowed for statistical purposes. 9. Now we come to ITA No. 165/Chd/2016 wherein assessee has raised the following grounds of appeal:- 1. That on the facts, circumstances and legal position of the case and in law, the Worthy CIT has erred in passing that order in contravention of the provisions of Section 80G of the Income Tax Act, 1961. 2. That on the facts, circumstances and legal position of the case and in law, the Worthy CIT has erred in rejecting the application of the appellant trust for grant of approval u/s 80G on the ground that since today application for registration u/s 12AA of the Act has been rejected and for processing appli....