2019 (9) TMI 772

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....fter referred to as of the Act) dated 22.09.2017, in the case of above named assessee Trust. I.T.A.No. 2831/AHD/2017: Rejection of Registration u/s. 12AA: 2. Ground no. 1 to 3 states that Pr. CIT (E) has erred in not granting sufficient and reasonable opportunity to the appellant and grievously erred in rejecting application under section 12AA of the Act. 3. Succinctly, facts are that the assessee is a Trust, who had filed an application for registration under section 12AA of the Act on 02.03.2017 before Pr. CIT (E) Ahmedabad. The Trust was constituted by indenture of Trust Deed dated 10.05.2016 and was registered with the Charity Commissioner, Ahmedabad on 13.07.2016. The Pr.CIT(E) vide letter dated 03.05.2017 has asked the assess....

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....er of students, study in various standards, detail of bifurcation of grants received and fee were received were not furnished. The learned counsel for the assessee refer Paper Book Page No. 1 which is letter dated 10.07.2017 submitted before Pr. CIT (E) in which the assessee trust has clearly pointed out that it is proposed to run the institution. Since the assessee trust has not started functioning therefore, the details as observed by the learned Pr. CIT (E) were not available. Hence, same could not be furnished at the time of registration. The learned counsel for the assessee further placed reliance on the decision of Hon'ble Gujarat High Court in the case of Director of Income-tax (Exemption) v. Panna Lalbhai Foundation [2013] 35 tax....

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....ant material on record. We observe that the Pr. CIT(E) has denied the registration under section 12AA of the Act before the Trust starts realizing its objects. It is undisputed fact that the assessee-trust filed an application for registration u/s. 12AA of the Act. The Trust was constituted by indenture of Trust Deed and it was registered with the Charity Commissioner, Ahmedabad. It is also an undisputed fact that the Trust has at the commencement stage and no activities were carried on, however, the object of the Trust were clearly established. Thus, in our opinion, it is premature to decide or conclude the activities of the Trust. As such, it is settled law that the denial of registration under section 12AA of the Act is not proper when t....

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....he charitable or religious activity. Any enquiry of the nature would amount to putting the cart before the horse. At a stage only the genuineness of the objects has to be tasted and not the activities, which have not commenced. The enquiry of the Commissioner of Income Tax at such preliminary stage should be restricted to genuineness of the objects and not the activities unless such activities have commenced. The Trust or society cannot claim exemption, unless it is registered under Section 12AA of the Act and thus at that such initial stage the test of the genuineness of the activity cannot be a ground on which the registration may be refused. It is not denied that for subsequent year the appellant has been granted exemption under....

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.... backdrop of the legislative intent to grant exemption to the trust 'pursuing charitable purpose' as defined under Section 2(15) of the Act. 6. Thereafter, the Tribunal has found that the assessee was set up to achieve its object of establishing educational institution or trust, which activity per se is a charitable purpose under Section 2(15) of the Act. The Tribunal has then reasoned that at this stage the reasons given by the CIT to reject the application for grant of registration are not valid and those issues may arise separately at the stage of assessment proceedings. 7. Having heard counsel for the parties, we find that registration of the trust does not involve enquiry into the actual activities or applicat....

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....e, we are of the opinion that the matter of registration under section 12AA should be set-aside to file of the Pr. CIT(E) for examination the basic facts and pass fresh order in the light of details filed by the assessee and the ratio laid down in above discussed judgements. Nevertheless, the Pr. CIT (E) would give a proper opportunity of being heard and allow the assessee to furnish any material in support of its claim. 8. This appeal is allowed and is set-aside for statistical purposes. I.T.A.No. 2832/AHD/2017: Denial of approval u/s. 80G(5): 9. Ground no. 1 to 3 states that Pr. CIT (E) has erred in not granting sufficient and reasonable opportunity to the appellant and grievously erred in rejecting application under section 80G(....