TaxTMI 
TaxTMI 
2024 (10) TMI 856
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....elling the provisional registration under Section 12AB of the Act. Facts of the case: 2. The assessee, a company registered under section 8 of the Companies Act, 2013, was provisionally registered under sub-clause (vi) of clause (ac) of sub-section 1 of section 12A of the Act with effect from 02-10-2021according to which the provisional registration was approved from A.Y. 2022-23 to A.Y. 2024-25. The assessee filed an application for registration u/s 12A(1)(ac)(iii) of the Act on 27-06-2023. 2.1. Upon examining the assessee's objectives and activities as described in its Memorandum of Association (MOA), the CIT(E) noted that many activities were focused on the welfare of the members of the association rather than the public at large. The....
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....CIT(E) filed an appeal before us with following grounds of appeal: 1. The order passed by the Ld. CIT (E) rejecting the Application filed in Form No.10AB u/s 12(1)(ac)(iii) of the Act is against law, equity & justice. 2. The Ld. CIT(E) has erred in law and facts in rejecting the application filed U/S 12A(1)(ac)(iii) of the Act stating that the objects of the Trust are only for the benefit/welfare/interest of the members. 3. The appellant Craves liberty to add, amend, alter or modify all or any grounds of appeal before final appeal. 4. The Authorised Representative (AR) of the assessee referred the Memorandum of Association and stated that there are four main objects of the assessee which are of general public interest and there are 4....
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....out being disqualified from registration. In such cases, the overall focus on public charity should prevail. The CIT(E)'s interpretation ignored the public welfare elements embedded in the trust's larger mission, such as promoting charitable giving, health, and self-sufficiency in society. The provisions of Section 13(1)(c) and 13(3) of the Act, which deny exemptions to trusts that provide benefits to specified persons, are intended to be invoked during the assessment proceedings, when the actual application of income is scrutinized. At the stage of registration under Section 12A of the Act, the focus should solely be on whether the objects and activities of the trust are charitable in nature. 6.1. Multiple judicial precedents, including t....
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....ons occur is to be examined when the income is applied, not when the trust seeks registration. In the present case, the CIT(E) prematurely invoked the provisions of Section 13(1)(c) of the Act without giving due consideration to the charitable objects of the assessee. This mirrors the errors in the decisions seen in the aforementioned cases. The Hon'ble Gujarat High Court in CIT(E) vs. Bayath Kutchhi Dasha Oswal Jain Mahajan Trust [2016] 74 taxmann.com 199 (Guj), further confirmed this principle, holding that Section 13 would only be applicable at the time of assessment, not during the registration stage. 6.2. The CIT(E)'s order is flawed both in its interpretation of the assessee's objects and in the premature invocation of Section 13(1)(....