M/S ANWAR SULTAN EDUCATIONAL TRUST,SRINAGAR vs. COMMISSIONER OF INCOME TAX, "(EXAMPTION), CHANDIGARH

As a perusal of the order u/s. 12AA(1)(b)(ii) shows, the denial of registration by the ld. CIT(E) is due to non-compliance before him by the assessee as well as 2 ITA Nos.682&683(Asr)/2017(A.Y.) Anwar Sultan Educational Trust v. CIT the report dated 14.08.2017 of the Income Tax Officer (Exemptions), Jammu (ITO (E), for short) called for by the ld. CIT(E). Vide the said report, the ITO(E); the assessee clarifying before him that its’ activities had not yet commenced, opined that the application for registration under section 12AA as well as for approval u/s. 80G, was premature. We are unable to agree with the same, and which clearly weighed with the ld. CIT (E) in denying the registration (refer para 9 of the impugned order). The reason is simple. The registration would be, where so, granted latest from the date of the application therefor. Any income or even voluntary contribution received by the applicant, which is uncertain as to its time, would, where not coverd by the period of registration, not qualify for exemption u/s.

How could then the application be regarded as premature? No doubt, the competent authority has to be satisfied about the genuineness of the activities of the assessee-trust. However, how could they be regarded as not genuine when the activities had not even commenced? It is only when they are that the assessee could possibly supply the details thereof. In fact, no inference either way could be drawn in the absence of any activity, so that there is no scope for drawing any adverse inference, particularly considering that the assessee, formed with the object of promotion of education, had explained that the building in which the activities of the trust are to start is under construction (refer para 7 of the impugned order). The building is thus being constructed, stated to be by the trustees, with a tacit understanding that it shall be used (on its completion) by the assessee-trust for its purposes. If the same results in attraction of section 13, and a denial of registration on that basis (s. 12AA(4)), the same could only be after affording an opportunity of hearing to the assessee in its respect. The same would in fact also cause denial of the claim for exemption u/s. 11 in assessment. That apart, considered broadly, it cannot, in view of the construction underway with the stated purpose to commence the applicant’s activities, be said that no activity had 3 ITA Nos.682&683(Asr)/2017(A.Y.) Anwar Sultan Educational Trust v. CIT commenced or, more importantly, is not likely to be. Rather, the very fact that registration is sought implies that activities are contemplated or planned, though may take time to fructify. We, therefore, regard this objection as not valid. Surely, the ld. CIT(E) is to be, equally, satisfied about the objects of the trust as well, even as noted by him at para 4 of his order, so that his non satisfaction in its respect would even independently disqualify an application for registration, making his order sustainable in law. This satisfaction, as we understand, is as to the objects constituting a ‘charitable purpose’ within the meaning of the term u/s. 2(15) of the Act, so that, when pursued, the assessee’s activity/s constitutes a charitable activity/s. And, without doubt, registration could validly be denied where it is not so. The ld. CIT(E) was in our opinion therefore required to issue a finding with respect to the objects of the trust, i.e., that they do not constitute a ‘charitable purpose’ under the Act. His order is sans any such finding. Apart from a mention that the objects are general in nature — without specifying those objects, at para 2 of his order, there is nothing to exhibit a proper consideration of, and adjudication (from the stand-point of satisfaction as contemplated u/s. 12AA), qua the assessee’s objects. Why couldn’t, we wonder, the objects be cast in general terms? That they must though guide and inform the trustees, and be capable of execution, goes without saying. The impugned order can, at best, be regarded as inchoate in the matter. We next visit the aspect of non-compliance by the assessee. The same cannot, without doubt and, at any rate, be countenanced, even as made abundantly clear to the ld. Authorized Representative (AR), the assessee’s counsel, during hearing, who promised full cooperation by the assessee if the matter to be set aside for fresh consideration by the ld. CIT(E). In fact, most of the requisitions listed at para 5 of the impugned order are rendered inapplicable (or nil) in view of the non- receipt of any voluntary contribution - for corpus or otherwise; rather, non

The impugned order, for the reasons afore-said, is thus not sustainable in law. We, accordingly, set aside the impugned order u/s. 12AA(1)(b)(ii), and direct the ld. CIT(E) to consider the assessee’s application for registration afresh on merits, in accordance with law. The assessee-appellant shall extend full cooperation in the matter, even as assured by the ld. AR, furnishing all the details and information as may be called for. The approval u/s. 80G is largely consequential, as also apparent from the impugned order denying the same. In any case, the same would require reconsideration in view of the assessee’s application for registration being, in consequence to this order, being required to be adjudicated afresh. The order denying approval u/s. 80G is accordingly also set aside on the same terms. We decide accordingly.

In the result, the assessee's appeals are allowed for statistical purposes. Order pronounced in the open Court on February 08, 2018 (N.K.Choudhry) Accountant Member Date: 08.02.2018 /GP/Sr.PS Copy of the order forwarded to: (1) The Assessee M/s. Anwar Sultan Educational Trust (2) The CIT (Exemptions), Chandigarh