KESHAVA SMARAKA TRUST,MANDYA vs. INCOME TAX OFFICER, EXEMPTIONS WARD, MYSORE

This appeal at the instance of assessee is directed against the order of ld. CIT(Exemptions) dated 25.07.2024 vide DIN & Notice No. ITBA/EXM/F/EXM45/2024-25/1067033105(1).The assessee has raised the following grounds of appeal:

Brief facts of the case are that the Assessee is a Public charitable trust established vide deed dated 29th of May 1995 for carrying out activities of education, rural development and social services including imparting health education, other formal or non- formal education to the public in general and rural masses etc. The Assessee trust made an application for registration in Form 10AB under section 12AB of the Income Tax Act,1961 on 08/01/2024. The assessee filed the necessary details such as financial statements, trust deed including the amended trust deed by incorporating the mandatory investment, utilization, irrevocable, dissolution, accounts and beneficiary clauses as claimed by the assessee, whereas the ld. CIT(E) while rejecting the application for registration had observed that assessee made partial submissions only and not submitted the amended trust deed. The ld. CIT(E) on Page 3 of 5 the one hand observed that no activities have been commenced towards the attainment of its objects and on the other hand also observed that assessee has expended very meagre amount towards objects of the trust and accordingly concluded that assessee has not commenced its activity. Based on this conclusion, the ld. CIT(E) denied the registration under section 12AB of the Income- tax Act, 1961.Aggrieved by the order of rejection dated 25.7.2024, the assessee has preferred an appeal before this Tribunal.

The ld. A.R. of the assessee vehemently submitted that ld. CIT(E) erred in rejecting the application in form 10AB without appreciating the fact that quantum of funds applied for charitable purposes is not a pre condition for the grant of registration u/s 12AB of the Act. Further, ld. A.R. of the assessee submitted that ld. CIT(E) has not made any adverse finding with regard to the genuineness or the object the trust and accordingly exceeded his jurisdiction in rejecting the application of the assessee.

The ld. D.R. on the other hand, supported the order of the authorities below.

We have heard the rival submissions and perused the materials available on record. On going through the order of cancellation/rejection passed by ld. CIT(E), we find that ld. CIT(E) rejected the application for registration with an observation that very meager amount was expended towards the object of the trust and accordingly concluded that assessee has not commenced its activity. We are unable to understand that even though meager amount was spent by the Assessee Trust, how the ld. CIT(E) concluded that assessee has not commenced its activity at all. Further, we are of considered opinion that for the purpose of granting registration u/s 12AB of the Act, the ld. CIT(E) should call Page 4 of 5 for all the relevant documents/information from the trust or make such enquiries in order to satisfy himself about the genuineness of the activity of the trust and the compliance of such requirement of any other law for time being in force by the trust as are material for the purpose of achieving its object and shall pass an order in writing either by granting the registration of the trust or cancelling its registration after affording a reasonable opportunity of being heard. The mere fact that the quantum of expenditure is meager does not render the trust non-genuine or its activity becomes ineligible for registration u/s 12AB of the Act. Further, we are of the opinion that ld. CIT(E) has not brought any material on record to demonstrate that the trust has violated any of the provisions of the section 12AB of the Act. In our Opinion, for granting registration, the ld. CIT (E) is required to verify whether the objects of the 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 line with the objects of the Trust.