SARSWATI EDUCATIONAL & WELFARE SOCIETY,NAWANSHAHAR vs. COMMISSIONER OF INCOME TAX (EXEMPTIONS), CHAQNDIGARH

Submissions of the AR 5. The appellant was registered as a Society Under the Societies Registration Act, 1860 and as Amended by Punjab Amendment Act; 1957 on 19.06.2013, with basic objective of imparting education alias mentioned in Memorandum of Society, having Registered Office at Gahoon Road, Balachaur, Distt. S.B.S Nagar-144521_ The Society is running and operating a school called Saraswati Public Sen. Sec. School at Gahoon Road Balachaur under the Affiliation of Punjab School Education Board (P .S.EB): 6. After the appellant filed the application for registration under the Income Tax Act 1961, the respondent had raised 34 questions for ascertaining whether the activities of the assessee are charitable in nature Or not: 7 The Id. AR had submitted that from the perusal of the order; it is clear that CIT exemption has neither doubted the objects of the assessee being charitable nor had doubted the genuineness of the activities. 8 The Id. AR had submitted that The Ld. CIT (E) has neither doubted nor found any deficiency to the following facts: a) That activities undertaken , satisfy the requirements of term "Education" and not falls in the category of tradel commercel Business. Therefore, not doubted to the charity made by the appellant: b) That the appellant's Objects are charitable and is engaged in charitablel purelsincere activities in line to the Objects. c) That all Education Fees received from students were spent in accordance to the Objects and not even a single penny was unrelated to the Objects of the Society: Therefore, the ITA 157/Asr/2020 Ultimate beneficiaries are the students and not the Authors/ Membersl family members of the Society: d) That the Fees charged was neither huge nor substantial and there was no diversion of any funds towards noneducational purposes. The appellant has not adopted any unethical methods/ any wrong means for collection of fees and has not charged any capitation fee. e) That all expenditures are genuinellegitimatel bonafideland charitable f) That the Ld. CIT(E), had not doubted that the activity of imparting education has been completely demonstrated in all the previous years by the assessee society in its Financial Statements which were produced before Ld. CIT (E) and did not have doubtedl recorded any of the activities which are not in accordance with the objects of the society. 9 In response to the observation of the learned CIT exemption reproduced hereinabove (para 5 of the impugned order), it was submitted by the AR, "The Ld. CIT (E) has asked about why the admission fees directly credited in Balance Sheet vice Notice dated 11.06.2020. 1. The appellant replied that the schools normally receive one time charges i.e. the charges which are paid only once during the tenure of the studentship in the school. That is why it has been treated as One Time Receipts and credited to Balance Sheet: 2 Further, the appellant is raising the following contentions: a) That the appellant's replyl bonafide view on treatment of admission fee was nowhere rebutted by the Ld. CIT(E) ITA 157/Asr/2020 b) Mere classification of one transaction/ item in Books of Accounts under a particular opinion and that too are not wholly unrealisticl unreliable, would not make the entire Society sham/ dubious/ illegall camouflage. That the treatment of admission fee in Books of Accounts has nowhere subverted the Income Tax Law nor evade any tax because of following details/ facts emerged from BS only: ITA 157/Asr/2020 Year Admission Adm. Fee Income in Aggregate Fee in BS Received & Annual E Receipts during Year Account V=lll+Iv Eligible Uls 10(23C) (iiiad)| 31.03.2019 23,10,630 5,06,910 A A-B 92,40,017 97,46,927 Aggregate Annual 31.03.2018 18,03,720 5,72,830 B B-C 76,37,566 82,10,396 Receipts are less than Rs. 31.3.2017 12,30,890 3,76,690 61,64,365 65,41,055 1 CRORE IN EACH YEAR C-D 31.3.2016 854200 57,38,348 That even if any, non-adherence to taxation statute was doubted; it would be in the direction of the AO. That it is equally accepted that the admission feelreceipts had been applied towards its charitable object: 10.Lastly it was submitted that the order was passed under section 12 AA(1)(b)ii) of the Act as is clear from the heading of the order: It was submitted that the application was filed on 23 December 2019 under section 12 a read with section 12 AA of the Act. By the finance Act 2020 it was provided that section 12 AA shall not apply on or after 1 June 2020_ It was further provided that all application pending as on 31 may 2020 shall be dealt aS per section 12 AB (2) of the Act: On the basis of the above it was submitted that the application of the assessee was ITA 157/Asr/2020 required to be disposed of up to 30 June 2020 as per the new provision and inserted in the act. It was submitted that the provisions under which the order was passed was not available to the CIT exemption at the time of passing the order: 11.On the other hand, the Id. DR for the revenue relied upon the order passed by the CIT exemption and it was his contention that the order was passed in accordance with law. It was submitted that with a view to examine the genuineness of the activities of the assessee, the CIT exemption has examined the profit and loss account and the balance-sheet and found that the admission fees has been wrongly debited to the balance-sheet, though it was to be routed through P&L; It was the opinion of the CIT exemption that by doing s0, the assessee had not paid the legitimate taxes to the revenue 12.We have heard the rival contentions of the parties and perused the material on record. Section 12A and provided in the Income Tax Act on the date of application provides as under:- 12AA."9(1) The 29[***] 2[Principal Commissioner or] Commissioner, on receipt of an application for registration of a trust or institution made under clause (a) 22[or clause (aa) 2[or clause (ab)] of sub-section (1)] of section 124 shall 232 I(a) call for such documents or information from the trust or institution as he thinks necessary in order to satisfy himself about;_ the genuineness of activities of the trust or institution; and the compliance of such requirements of any other law for the time being in force by the trust or institution as are material for the purpose Of achieving its objects, and may also make such inquiries as he may deem necessary in this behalf; and] (b) after satisfying himself about the objects of the trust or institution and the genuineness of its activities, 2@[as required under sub-clause () of clause (a) and compliance of the requirements under ITA 157/Asr/2020 sub-clause (ii) of the said clause], he_ shall pass an order in writing registering the trust or institution; (ii) 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: 24[(IA) All applications, pending before the 2 [Principal Chief Commissioner or] Chief Commissioner on which no order has been passed under clause (b) of sub-section (1) before the 1st day of June, 1999, shall stand transferred on that day - to the 25[Principal Commissioner or] Commissioner and the ? [Principal Commissioner or] Commissioner may proceed with such applications under that sub-section from the stage at which thev were on that day:] (2) Every order granting or refusing registration under clause (b) of sub-section (1) shall be passed before the expiry of six months from the end of the month in which the application was received under clause (a) Z'[or clause (aa) 22[or clause (ab)] of sub-section (1)] of section 124.] 13. That by the Finance Act 2020, section 12AB was inserted in the institute and sub clause 2 & 3 of the section provides as under:- (2) All applications, pending before the Principal Commissioner or Commissioner on which no order has been passed under clause () of sub-section (1) of section 12AA before the date on which this section has come into force, shall be deemed to be applications made under sub-clause (vi) of clause (ac) of sub-section (1) of section 124 on that date (3) The order under clause (a), sub-clause (i) of clause () and clause (c), of sub-section shall be passed, in such form and manner aS may be prescribed, before expiry of the period of three months, six months and one month, respectively, calculated from the end of the month in which the application was received 14. As per clause (2) of section 12AB where any application is pending before the Commissioner; on which no order has been passed under clause (b) of sub section 1 of section 12AA, then the application was presumed to be made under sub clause (6) of clause a c of sub section 1 of section 12A on that date. ITA 157/Asr/2020 10 15. By the press note dated 01.10.2020, the applicability of section 12AB has been extended to 01.10.2020. Though it is the contention of the assessee that the order has been wrongly passed under section 12AA (1) (6) (ii) of' the IT Act and it should have been passed under section 12AB, and the assessee should have been granted the provisional registration under the new regime. In our view the argument of the assessee was required to be noted for the purposes of summarily rejection. The press note issued by the respondent on 09.05.2020 was issued under the statutory power bestowed on the board under the act and the same is enforcible in the eyes of law. The press noterealease dated 09.05.2020 was instruction to the subordinate authorites Uls 119 of the IT Act and the applicability of section 12AB has been deferred up to 31.03.2021. In view of the above the objection of the assessee that the order has been wrongly passed uls 12AA (1)(b) is rejected. Hence the ground 4 of the appeal is rejected: 16. The Id: CIT(E), admittedly in the order has not objected to the charitable object of the society. In fact the applicant society is running school in the name and style of Sarashwati Public Senior Secondary School, and is registered with Punjab School Education Board. Thus the assessee' $ society is purely into imparting the education which is discernible from the activities undertaken by the society namely to run the educational school The running of the school is undoubtedly a charitable purpose and falls within the four corner of section 2(15) of the IT Act: 17. The objection raised by the Id. CIT(E) was with respect to showing the admission fees under the head reserve and surplus. The ld. CIT(E) was of the opinion that by showing the admission fees under the head reserve and surplus, the assessee has ITA 157/Asr/2020 diverted the receipt to the balance sheet which should have been taken in the income and expenditure account. 18.In our view, the above said wrong treatment of the admission fees under the head reserve and surplus, would not disentitle the assessee from getting the registration 12AA of the IT Act As it is not the case of the CIT(E) that the activities of the assessee ceased to be charitable o account of the above said wrong diversion of admission fees in the balance sheet; 19. For the purposes of registration, uls 12AA of the IT Act it is essential for the registration authorities to examine that the object of the assessee should be charitable and the activities of the assessee are genuine. In our view, in the present case the objects of the assesse are charitable and further the activities of the assessee are genuine. 20.The wrong treatment of the assessee of the admission fees under the head reserve and surplus, undoubtedly an issue which the AO was required to be examined. It has a direct bearing on the eligibility of the assessee uls 10(23C) (iiiad): The financial year 2016-17 to 2018-19, are on record which shows that even if the admission fees is taken into the profit and loss account instead of balance sheet; then also the total aggregate receipt for the financial year 2016-17 and 2017-18 would below Rs. 1 crore. For the financial year 2018-19 the admission fees during the year was Rs.506910/- and the total income for the year was 9240017/- thus the total aggregate annual receipt was Rs.97,46927/-. (Page-22 and 23 of the paper book) thus even for the financial year 2018-19 relevant to the assessment year under consideration the assessee was eligible for uls 10(23C)(iiiad): ITA 157/Asr/2020 12 21.We may like to reproduce the decision of in the case of Dr; Madan Lal Atri Charitable VS. CIT(E) wherein the coordinate bench in paragraph 17 to 20 and paragraph 25 and 26 had held as under:- 17. That it's a well settled Iaw, that at the time of grant of registration under clause(aa) of sub section(1) of section 12A of the Act; the CIF(E) has to see whether the objects are charitable in nature, which has been well defined in the Act and also to see whether the activities are genuine or not. In the case of Ananda Social & Educational Trust vCommissioner of Income tax, [2020] 272 Taxman 7 (SC) the Hon'ble Supreme Court held as under:

Section_12AA undoubtedly requeireu the Commissioner to satisfy himself about the objects of trust or institution and genuineness %f its activities and grant a registration only if he is so satisfied: The said section requires the Commissioner to be so satisfied in order to ensure that the object of the trust and its activities are charitable since the consequence of such registration is that the trust is entitled to claim benefits under sections 11 and 12 of the Act: In other words; if it appears that the objects of the trust and its activities are not entitled%enuine that is to say not charitable the Commissioner is to refuse and in fact; boundto refuse such registration 12. Since section 12AA pertains to the registration of the Trust and not to assess of what a trust has actually done, we are of the view that the term 'activities in the.provision includes 'proposed activities'. That is to soY' the a Commissioner is bound to consider whether the objects Trust are , genuinely charitable in nature and whether the activities which the Trust proposed_ to carry on are genuine in the sense that they are in Iine with the objects of the Trust In contrast; the position would be different where the Commissioner (3ro38ectic to 'cancel the registration of a Trust under sub-section section 12AA of the Act. There the Commissioner would be bound to record the finding that an or activities actually carried on by the Trust are not genuine '8cie /8inge not in accordance with the ` objects of the Trust Similarly, situation would be different where the trust ITA 157/Asr/2020 13 has before applying for registration found to have undertaken activities contrary to the objects of the Trust 18. That in the case of Commissioner of Income-tax; (Exemption)v. Association of Third Party Administrators [2020] 114 taxmann com 534 (Delhi); the Hon'ble Delhi High Court observed the following, "

We have carefully examined the record and due Mr. dadafient dve consideration to the contentions urged by initial stage of registration; we have to examine whether the proposed activities of the assessee can be considered charitable within the meaning of section 2(15) of the Act On an application for registration 0f a trust or institution made under section 12AA, the Principal Commissioner or Commissioner shall call for such documents or information from the trust or institution as he thinks necessary in orderto satisfy himself about the genuineness of activities of the trust or institution; and the compliance of such requireruentoroinstituciorer &aw ace the time in force by trust or institution, feinge as are materials for purpose of achieving its objects, and he may also make such 'inquiries as he may deem necessary in this behalf: Once he is ' satisfied about the objects of the trust or institution, and genuineness of its activities, he shall pass an order under the said provision.

That in the case of Fateh Chand Trust & College Committee V. Commissioner of Income Tax (Exemption); Lucknow [2019] 101 taxmann com 364 (Agra Trib:), the Hon'ble ITAT, Agra Bench observed the following:

We find that learned CIT, while Pasaing impugned order seems to be under gross misconception that is his satisfaction and definition of 'charitable activities' dehors requirement of law would only enable an institution to be granted registration ITA 157/45/2020 14 under section 12AA of the Act as once registration is granted, the entire income of the institution would become exempt The said view, in the light of precedents referred above is wholly opposed to law: Under section 12AA of the Act; the Commissioner is entitled to see that whether the objects are charitable in nature, which term has been well defined in the Act and also to see whether the activities are Heauicen or not. The genuineness of activities would mean to see activities are not camouflage; artificial and whether these are in accordance with the 'objeogusor of the institution. The scope of enquiry does not extend beyond that pint: 20. That the Hon'ble Allahabad High Court in the case of CIT v Red Rose School [2007L 163 Taxman 19 (Allahabad) held that: "Section 12AA, which lays down the procedure for registration, does not speak anywhere that the Commissioner, while considering the application for registration, shall also see that the income derived by the trust or the institution is either not being spent for charitable purpose or such institution is earning profit: The language used in the section only requires that activities of the trust or the institution must be genuine; which accordingly would mean that they are in consonance with the objects of the trustlnstitution, and are not mere camouflage but are real; pure and sincere and not against the proposed objects; The profit earning or misuse of the income derived by charitable institution from its charitable activities may be a ground for refusing exemption only with respect to that part of the income but cannot be taken to be a synonym to the genuineness of the activities of the trust or the institution. [Para 34]" That Juri ictional High Court in the case of CIT V. Babu Ram csigolarlyociei Education [2018] 96 taxmann com 606_(AILJ wherein at the instance of the Department order passed by the Agra Bench %f the ITAT was put up for judicial scrutiny before the Hon'ble Allahabad High Court: The Hon'ble Court held as under: "Section 12A of the Income-tax Act; 1961 Charitable or religious trust Registration of (General) Whether registration of trust does not involve enquiry into actual activities or application of funds, etc. and at that stage , only enquiry required to be conducted is with respect to object %f trust alone and if assessee is found to have been actually engaged in ITA 157/Asr/2020 15 any non-charitable activity: benefit of exemption may be denied in manner provided by Act Held, yes [Para 7] [In favour of assessee] (Head Note)' That In the case of CIT V. Spring Dale Educational Society [2011] 16 taxmanncom 282/[2012] 204 Taxman 11 (Mag:) the Hon'ble Punjab & Haryana High Court held as under: "Section 12AA of the Income-tax Act; 1961 Charitable or religious trust Registration procedure Assessment year 201011 Whether while examining application seeking registration under section 12AA, manner of application of funds of trust do not fall within purview of Commissioner; Commissioner should only satisfy himself about genuineness of aims and objects of trust/nstitution and genuineness of its activities as enumerated in clause (b) of sub-section (1) of section 12AA Held, yes That in thecase of VigyadayaniShikshSamiti V. CIT (Exemption) [IT Appeal No. 309 (Delhi) of 2016 _ dated 14-12-20171 wherein while addressing_the identical objection raised by the Id. CIT(E), the Hon'ble Lucknow ITAT held as under: "Now, coming to the powers of the Commissioner as to whether while granting registration uls 12A he is required to examine the books of account etc: or he is only to satisfy himself regarding the objects of the trust and genuineness of the activities of the trust; we find various courts have held that while granting registration Uls 12A the Id, CIT_is required to see only the objects of the assessee trustlsociety and nof To examine the application of income. He is not required to examine whether the income derived by the trust is being spent for charitable purposes or the trust is earning profit while granting registration: He is only required to examine the objects of the trust: We find identical issue had come up before the Tribunal in the case of Bhartiya Kisan Sangh Sewa Niketan (supra): In the said case also the assessee trust did not produce_the books of account, bills and vouchers etc: for verification of the Id. CIT for which the Id. CIT held that the assessee society is not carrying out any charitable activities. Due to non-compliance of assessee society, the genuineness of the activities could not be verified. The Id. CIT, therefore, relying on various ITA 157/Asr/2020 16 decisions including the decisions which have been relied on by the Id CIT in the present case, rejected the claim of registration Uls 12A(1) of the I.T. Act: When the matter travelled to the Tribunal, the Tribunal allowed the claim of registration by holding that at this stage. on granting registration uls 12A the Id. CIT is required to see the objects of the society and not required to examine the application of income which will have to be undertaken by the Assessing Officer on a year to year basis after the assessee files the return of income claiming exemption Uls 11 of the i.T. Act: The said view has also been adopted by this Bench in the_case of Rasee Educational Institute V. CIT (Exemption) Lucknow in [IT Appeal No_ 462/Agra/2017 wherein vide order dated 30.07.2008] similar view was adopted where identical objections were raised by the Id.CIT(E ) That in the case of CIT Vs Mls. Reham Foundation Kandhari Lane Lal Bagh Lucknow (High Court Allahabad, Lucknow Bench); Income Tax No. 37 of 2017, dated 26.09.2019, the Hon'ble Full Bench of Allahabad adRigh Court; held that, "

In view of the above the answer to questions referred are answered as under - The income tax Appellate Tribunal while hearing an Appeal under Section 254(1) in a matter where registration under Section 12(AA) has been denied by Commissioner income tax can itself pass an order drteotia? _ commissioner to grant registration in case the income tax Appellate disagrees with the satisfaction of the Commissioner on the basis of material already on record before the Commissioner The power of the Appellate Tribunal are.CO-extensive with the power of the Commissioner under Section 12 (AA) of the Act; 1961 subject to what has been indicated herein above In view of the aforesaid the reference is answered"

In rebuttal the Id AR for the assessee had submitted that the assessee is having the aifiliation from Central Board of dcalioaRcl Education and is also with the requirement 0f Right to Education It was submitted that 24883484,87 the of Commissioner exemption that the assessee is not having @Pprivted various statutory authorities is factually incorrect; Further it was that once the Central Board of' Secondary Education, grants the ITA 157/Asr/2020 17 necessary affiliation to_the assessee, then the CBSE, had taken care of the compliance of norms of other statutory authorities. abhorges the hearing We had asked the AR to file the documents from various mentioned by the Commissioner exemption in paragraph 8. 26. We ,have considered the rival contention of the parties and perused the material available on record; including the judgments cited at bar iising the course of hearing by both the parties Before we deal with the facts the present it would be for uS to aRR8ngatet reproduce the relevant provision of 'caseincomev tax act; with the fegsseasiee of the charitable societyltrust which were applicabie on the case of Trust'_ "12AA (1) The Principal Commissioner or_Commissioner; on receipt of an application for registration of a trust or institution made under clause (a) or clause (aa) or clause (ab) of sub-section (1) of section 12A , shall [(a) call for such,documents or information from the trust or institution as he thinks necessary in order to satisfy himself about; the genuineness of activities of the trust or institution; and (ii) the compliance of such requirements of any other Iaw for the time being in force by the trust or institution as are material for the purpose Of achieving its objects; and may also make such inquiries as he may deem necessary in this behalf; and] (b) after satisfying himself about the objects of the trust or,institution and the genuineness %f its activities 1 as required under sub-clause () of clause (a) and compliance of the requirements under sub-clause (i) of the said clause], he shall pass an order in writing registering the trust or institution; 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 : ITA 157/Asr/2020 18 Provided that no order under sub-clause oppoilushay shall be passed unless the applicant has been given a reasonable of being heard (1A) AIl applications; snendiog_ before the Principal Chief Commissioner or Chief Commissioner on no order has been passed under clause section (T) before the Jst day of June, 1999, shall stand transferred Oh tat ay that day to the Principal Commissioner or Commissioner_and the Principal Commissioner or Commissioner Whch Rreceeerz with' such applications under ihat sub-section from the stage at were on that day: (2) shall sFzerbeorder gcaperg erhefesig registrationthnderclaesen8)otruboection Whichalhbeappicadotetozs treceiery %aer dautts {891 passed before the expiry of six months from the end of the month in or clause (aa) or clause (ab) of sub-section (1) of section 12A. Where a trust or an institution has been granted registration under clause (b) of sub-section (1) or has obtained registration at "an2) E time under section 12A as it stood before its amendment by the Finance (No: Act; 1996 (33 of 1996) and subsequently the 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 Ichayrbet/ he shall an order in writing cancelling the 'registration of such {haltukass or Provided that no order under this sub-section shall be oaeieg _ unless such trust or institution has been given a reasonable opportunity being heard. Without prejudice to the provisions ,of sub-section 88) where a trust Or an institution has been granted registration under clause 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 of 1996)] and subsequently it is noticed that S0[(a) the activities of the trust or the institution are being carried out in a manner that the provisions 0f sections 11 and 12 do not apply to exclude either whole or 4 pant of the income of such trust or institution due to operation of sub-section of section 13,; or (b) the trust or institution has not complied with the requirement of an8 other law; as referred t0 in sub-clause (ii) of clause (a" of sub-section (1), the order;, direction or decree, either whatever name called_ halatgined that such non-compliance has occurred, has not been disputed or has finality, then, the Principal Commissioner or the Commissioner may, by an order in writing, cancei the registration of such trust or institution:] ITA 157/Asr/2020 19 Provided that the registration shall not be cancelled under this sub-section if the trust or institution proves that there was a reasonable cause for the activities to be carried out in the said manner: Nothing contained in this section shall apply on or after the Ist day of June, 2020 27. If we look into the amended provision of section 12AA which was inserted in the Act on 1.9.2019, it is clear that the lower authority shali call for such documents or information from the trust or institution as he thinks necessary in order to satisfy himself about; a the genuineness of activities of the trust or institution; and b. the compliance of such requirements of any other law for the time being in force by the trust or institution as are material for the eyrpese Of achieving its objects and may also make such inquiries as may deem necessaryin this behalf; andj 28. So far as the first respect of satisfaction of the lower authoriaiRerteine9 to {enjeceson _ of the activities of the trust is concerned, the law is decision ofthe Honble Supreme Court in the matter %f Anand social which requires the lower authorities to examine the Denscadgry of Associationlor objects of the trust for the Egepasre: of to the conclusion whether the activities of the assessee are or not coingu ?dotbedler in the present case the activities %f the assessee are genuine as is clear from chart of the activities reproduced herein above Further the assessee is also claiming exemption under Section J192 of the Act from the respondent for the last three years ie 2017-18 to 2012 which were granted to the assessee for the 07 imparting the education OzAAPageg 36 to 40 PB) Thus the first Bonzoior as stipulated under section regarding the 9eeuicenesst of the activity have duly been proved by the assessee before Commissioner exemption; ; We have no doubt about the genuineness of the activities of the assessee i.e the assessee waslis imparting, education and ivpartieghoid of education is a charitable activities under section 'ZiRin; of the Act: Thus we that the activities of, the assessee are charitable the meaning of section 12AA (1) () read with 2(15) ITA 157/Asr/2020 20 22.Similarly in CIT vs. Surya Education Charitable Trust in ITA No. 701/2010 the Hon'ble Juri ictional High Court in paragraph 10 & 11 had held as under: 10. On the other hand, Section 10(23C) of the Act are the provisions of the Act in substitution of the earlier provisions of Section 10(22) of the Act as to which income shall not be included in computing the total income of any person: Therefore, the provisions of Sections 11, 12 or Section 10(23C) of the Act; deal with the income of' a Trust or of the Institution and the circumstances aS to when such income is to be excluded for computing the total income; but the basis of such benefit is the registration under Section I2AA of the Act: Unless a Trust or Institution is registered under Section 12AA of' the Act;, such Trust or Institution shall not be entitled t0 exclude from its total income, deductions or contributions or from other sources. Therefore, the principles laid down for excluding the income from consideration under Section 10(22) now 10(23)(C) or Sections 11 and 12 are not applicable while considering the application for registration under Section I2AA of the Act: The application for registration is required to be made within one year of the creation of the Trust. Section I2AA of the Act; requires satisfaction in respect of the genuineness of the activities of the Trust, which includes the activities which the Trust is undertaking at present and also which it may contemplate to undertake. The insertion of sub-section (3) to Section 12AA of the Act; clarifies the said fact, when it empowers the Commissioner to cancel the registration if the activities of the Trust are not carried out in accordance with such objects: 11. Therefore, the object of Section 12AA of the Act; is to examine the genuineness of the objects of the Trust; but not the income of the Trust for charitable or religious purposes. The stage for application of income is yet to arrive i.e. when such Trust or Institution files its return. Therefore, we find that the judgments referred to by the learned counsel for the appellant are not applicable to the facts of the present case arising out of the question of registration of the Trust and not of assessment: 23. Similarly in paragraph 4 the juri ictional High Court'Shirdi Sai Darbar Charitable (Dharamshala) Trust; Barnala; in ITA No. 38 of 2017'.[2017] 81 taxmann com 49 (Punjab & Haryana) wherein it was held as under 4. The matter has been examined by the Tribunal after perusing the relevant statutory provisions. It has been categorically recorded by the Tribunal that the CIT (E) has to satisfy two conditions while granting registration under Section I2AA of the Act: Firstly, whether the objects of the assessee are charitable in nature and thus, the activities are genuine: It cannot be concluded on the basis that the assessee has not filed its income tax returns in earlier years that the activities of the assessee are not genuine. It has been further recorded that Section 13 of the Act comes into play at the time of granting ITA 157/Asr/2020 21 exemption under Section H of the Act and not at the time of granting registration under Section 12AA of the Act: No adverse remarks have been recorded by the CIT (E) with regard to the objects contained in the memorandum of the assessee-trust to come to the conclusion that its activities are not genuine. Thus, it has been rightly directed by the Tribunal to the CIT (E) to grant registration under Section I2AA of the Act: The relevant observations recorded by the Tribunal read thus: "We have heard the learned representatives of both the parties, perused the findings of the authorities below and considered the material available on record. The firet reason on the basis of which the Commissioner of' Income Tax (Exemptions) has refused to grant registration to the assessee is that the assessee has not been filing its income-tax returns in the earlier years. We do not find that it is a good reason to reject the application for registration since the two conditions which the Commissioner of Income Tax (Exemptions) has to satisfy while granting the registration under Section 12A of the Act; are that the objects of the assessee are charitable in nature and the activities are genuine. Just because the assessee has not filed its income tax returns in earlier years, it cannot be said that the activities of the assessee are not genuine. Reliance placed by the learned counsel for the assessee on the judgment of the Allahabad High Court as well as the order of the Chennai Bench of the Tribunal are not out of place, whereby it has been held that non-filing of return cannot be one of the reasons for denying registration under Section 12A of' the Act. With regard to the second objection raised by the Commissioner of Income Tax (Exemptions) that as per clause-12 of the Memorandum of trust; the trustees have been given absolute powers to manage the property. We have perused the clause-12 of' the Memorandum of the trust, whereby the trustees are authorized to demise the immovable property or properties of the trust either from year to year or for any fixed term or for any term of years or" on monthly basis at such rent and subject to such conditions as they deem fit and proper and also accept surrender of lease and may manage the property as they think proper. From the perusal of this clause, we observe that the trustees have been given powers to give property of the trust on lease or on rent: We do not find anything wrong in this clause so as to deny the assessee the registration under Section 12A of the Act: As regards the apprehension of the Commissioner of Income Tax (Exemptions) that his clause may attract the provisions of Section 13 (1)(c) of the Act; we are of the view that the conditions as provided in Section 13 or elsewhere are to be seen by the Assessing Officer at the time of assessment proceedings on yearly basis and not by the CIT (Appeals) while granting registration under Section 12A of the Act. 8 Sections 13 comes into play at the time of granting exemption under Section 11 of the Act and not at the time of granting registration under Section 12A of the Act; The only two requirements as stated hereinabove while granting registration under Section 12A of the Act, are with respect to the charitable nature of the objects of the assessee and genuineness of the activities. Since we observe that no adverse remarks have been made by the Commissioner of Income Tax (Exemptions) with regard to the objects contained in Memorandum and as stated hereinabove that the observations of the Commissioner of Income Tax (Exemptions) do not lead to the conclusion that the activities of the assessee are not genuine, we hereby direct the Commissioner of Income Tax (Exemptions) to grant registration under Section 12A ofthe Act to the assessee_ ITA 157/Asr/2020 22 5. Learned counsel for the appellant-revenue has not been able to show that the findings recorded by the Tribunal are in any way illegal or perverse warranting interference by this Court Consequently, no substantial question of law arises and the appeal stands dismissed. 24.Respectfully, the following decision of the Hon'b'le High Court and the Coordinate Bench in the case of Dr. Madan Lal Atri and SanatanDharm Charitable Education Society we are of the opinion that the assessee is entitled registration accordingly we direct the CIT(E) to grant registration to the society from the date of 'application: 25.In the result; the appeal of the assessee is allowed. (Dr: Mitha Lal Meena) Accountant Member (Laliet Kumar) Judicial member Copy of order forwarded to: (1) The appellant (3) Commissioner (5) Departmental Representative (2) The respondent CIT(A) (6) Guard File By order Sr. Private Secretary Income Tax Appellate Tribunal Agra Bench; Agra ITA 157/Asr/2020 23 Date 1. 2. 3_ Draft dictated (DNS Draft _placed before author Draft proposed & placed before the second member 4 Draft discussed/approved by Second Member.

Approved Draft comes to the Sr PS/PS 6. Kept for_pronouncement on 7. File sent to the Bench Clerk 8. Date on which file goes to the AR 9_ Date on which file_goes to the Head Clerk: 10. Date of dispatch of Order: PS PS JMAM JMIAM PSPPS PS PS