TaxTMI 
TaxTMI 
2018 (6) TMI 1657
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....cts of the society by not considering them as Charitable without giving sufficient opportunity of hearing to appellant society." 3. The brief facts of the case are that an application for registration u/s 12AA of the Act was filed before the Ld. CIT(E) on 7th March, 2017 which came up for consideration on 2nd August, 2017 and the assessee society was requested to file the details /clarifications as enumerated in para no.5 of the order, on dated 16.08.2017 which was replied by the assessee society vide letter dated 16.08.2017. Although the reply along with documents of this assessee society was considered by the Ld. CIT(E), however, the registration was declined mainly on the ground that no charitable activity has been conducted by the appellant society since its inception except purchasing land worth of Rs. 1,04,48,900/- for its future plan for constructing the Hospital. Secondly, it was observed by the ld. CIT(E) that the loan of Rs. 1.06 Crores taken by the applicant society from the relative of the society inextricably linked loan givers and office bearers of the society and even no details whether the loan is interest bearing or free of interest has been provide....
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....d ground for rejection of application does not survive. 3.1Second main ground with regard to the inextricable link between the loan giver and offer bearer of the society, we realized that there is no embargo under the Act that such persons cannot be related to each other by blood or otherwise. Our view even fortified by the judgment passed by the Delhi High Court in the case of Viswamohan Gupta vs. Registrar of Society, in Writ Petition No.6965/2011 dated 2nd May, 2012. 3.2 The third reason for rejection of registration by the CIT(E) was that no charitable activity has been conducted by the applicant society since its inception except purchasing land. We have given our thoughtful consideration to this reason of rejection. In the instant case the society has been formed only 19.08.2016 and thereafter application for registration was filed on 7th March, 2017 and the order was passed on 29th Sep. 2017 which goes to show that society came in existence recently only which clearly spell out that the assessee society is at a nascent stage and we cannot expect the society to start its operation in high pedestal at the beginning itself. The assessee society h....
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....)shall, if he is not so satisfied, pass an order in writing refusing to register the trust or institution, and a copy of such order shall be sent to the applicant : Provided that no order under sub-clause (ii) shall be passed unless the applicant has been given a reasonable opportunity of being heard. (2) Every order granting or refusing registration under clause (b) of sub-section which the application was received under clause (a) of section 12A.] From the contents of the Sec.12AA, it encompass that the Ld. CIT(E) in order to satisfy himself about the genuineness of the activities of the trust or institution can call for such documents or information from the trust or institution as he thinks necessary and also empowered to make such enquiry as he may deem fit necessary in this behalf. Second Clause deals with that after satisfying himself about the object of the trust or institution and the genuineness of the activities, he shall pass order in writing either to register or refusing to register the trust or institutions. Let us to consider judicial verdicts on the issues in hand : Delhi High....
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....eason for denial of registration by the Ld. CIT was that that the assessee trust has not carried out any activity. Second reason that the assessee trust has initially decided to construct school & meditation hall at Asar Doda but later purchased land for school at Niabhat, Nagrota Third reason that the activities of assessee trust are controlled by one family . The reasons given by the Ld. CIT(E ) does not sound good because , one side reasoned that no activity has been carried out by the Assesse Trust , on the other hand has doubted the intents of the objects and further observation that initially the Assessee wanted to construct school & meditation hall at Asar Doda but later purchased land for school at Niabhat, Nagrota , in our view , the trust that time was un-doubtly at nascent stage and has not carried out any activity except to make efforts for procuring land for school , however later on purchased the land for school at Niabhat, Nagrota , which clearly shows the intention of the trust as the main object of the trust is to establish schools etc. and to provide education, therefore, one can expect from the trust to do activi....
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....e objects of the trust or institutions and genuineness of its activities, however, if we come to the instant case, then it is not disputed that the trust was formed and registered only on 12th March, 2015 thereafter, application for registration u/s 12AA was filed on 15.05.2015 and the impugned order was passed on 30th Nov. 2015 and till the disposal of the application the assessee has only received single donation and tried to procure the land for establishment of the School and further because the assessee trust was at nascent stage, therefore, could not carry any activity and according to aforesaid judgments it is clear that statute does not prescribe a waiting period for a newly registered trust to qualify itself for registration under Section 12AA of the act and wait till the activity commence. From the conjoint reading of the aforesaid judgments, it can be safely concluded that even otherwise if no activity was carried out by a trust or institution, still registration can be granted by the CIT(E) and even otherwise it is not the case of the Revenue that at the time of consideration of application of the Assessee , the assessee has carried out many activities and t....
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....stration u/s 12A of the Act to the assessee and it is clarified in case, the assessee does not qualify/satisfy the objects of the trust and/or not involved in genuine activities , then the concerned authority shall be at liberty to withdraw or to cancel the registration u/s 12A of the Act. Hence, in the aforesaid observations, the appeal filed by the assessee is allowed." In view of the aforesaid observation and conclusion drawn by the Co-ordinate Bench, we are of the considered opinion that where the assessee society is a nascent stage then it cannot be expected that the society must do some charitable work for grant of registration u/s 12AA of the Act. 3.3 In para No.6 of the impugned order, it reflects that additional queries have been raised by the Ld. CIT(E) vide show cause letter dated 25.09.2017 which are reproduced herein below. (i)How does the object of constructing a hospital qualify for any of the limbs of charitable purpose u/s 2(15) of the 'Act' ? (ii)How can the Hospital running be taken as medical relief ? Why can't the same be construed as an enterprise for commercial gains? ....