M/S. HARI BHAKTA SAMPRADAY,SILIGURI vs. CIT (EXEMPTIONS), KOLKATA , KOLKATA

It transpires from the CIT(Exemption) is under challenge that the assessee trust came to be set up vide Trust Deed dated 30.11.2016. It thereafter filed application under section 12A for registration in Form No.10A before CIT(Exemption). We notice that the same has been declined vide his order under challenge for the sole reason that the assessee is yet to commence any of its charitable activities so as to eligible for impugned registration. Learned DR vehemently contended during the course of hearing that Learned CIT(Exemption) has rightly declined assessee’s impugned registration as it is yet to start its charitable activities. We find the instant issue to be not more res integra. This Tribunal’s decision in the case of Maa Kamakhya Narmedashwar Educational Charitable Trust vs CIT(Exemption), Kolkata in & 356/Kol/2017 dated 22.09.2017 holds that commencement of charitable activities for section 12A registration is not a mandatory condition as follows:- 3. “We have heard the arguments of both the sides and also perused the relevant material available on record. The learned counsel for the assessee has relied on the decision of Hon’ble Delhi High Court in the case Director of Income Tax vs Foundation of Opthalmic & Optometry Research Education Centre (ITA 1687/2010 dated 16.12.2010) in support of the assessee’s case. In the said case, the application of the assessee for registration u/s 12AA was rejected by the DIT (Exemption) on the ground that no charitable activity had in fact taken place since the society was a newly established one by relying on the decision of Hon’ble Kerala High Court in the case of Self Employer Service Society (supra). The Tribunal however set aside the order of the Ld. DIT (Exemption) and directed him to grant the registration u/s 12A to the assessee by relying on the decision of Hon’ble Allahabad High Court in the case of 5th Generation Education Society (supra) wherein it was held that the non commencement of charitable activity could not be a ground for rejection of application for registration u/s 12A. When the matter travelled to the Hon’ble Delhi High Court on appeal by the department, the decision of Karnataka High Court in the case of DIT (Exemptions) vs Meenakshi Amma Endowment Trust 50 DTR (Kar) 243 was relied upon by the assessee in support of his case while the revenue relied on the decision of Hon’ble Kerala High Court in the case of Self Employer Service Society (supra) in support of its case. After considering the relevant provisions of section 12AA of the Act, Hon’ble Delhi High Court preferred to follow the view taken by Hon’ble Karnataka High Court in the case of Meenakshi Amma Endowment Trust (supra) and upheld the decision of Tribunal vide paragraph no 9 to 11 of its order which read as under: “9. The provision in this case i.e. Section 12A states that when a Trust is desirous of getting itself registered as charitable, it has to approach the Commissioner under Section 12AA. The powers of the Commissioner to register or refuse the application are expressly ITA 1687/2010 page 8 spelt out in Section 12AA itself. Rule 12AA (b) reads as follows: Section 12AA, PROCEDURE FOR REGISTRATION (1) The Commissioner on receipt of an application for registration of a trust or institution made under clause (a) 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 may also make such a inquiries as he may deem necessary in this behalf; and (b) After satisfying himself about the objects of the trust or institution genuineness of its activities, he (i) 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 appellant has been given a reasonable opportunity of being heard. (1A) All applications pending before the 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 Commissioner and the Commissioner may proceed with such applications under that sub-section from the stage at which they were on that day.

ITA No.2538/KOL/2017 (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) of section 12A. “10. Facially, the above provision would suggest that there are no restrictions of the kind which the Revenue is reading into in this case. In other words, the statute does not prohibit or enjoin the Commissioner from registering Trust solely based on its objects, without any activity, in the case of a newly registered Trust. The statute does not prescribe a waiting period, for a trust to qualify itself for registration.

If the Revenue’s contentions are correct then, necessarily, a condition would have to be read in to the provision that the Commissioner should be satisfied that the Trust is in fact engaged in charitable activities which would in turn inject considerable deal of subjectivity. It is quite possible that if such flexibility is introduced, it would be susceptible to varied interpretation by the different authorities, in that some would be satisfied with activity of few months, while others may wish to examine the activities of the organization for longer time. In this view of the matter, this court is persuaded to follow the interpretation given to Section 12AA by the Karnataka High Court in Direction of Income Tax (Exemptions) v Meenakshi Amma Endowment Trust (supra).

In our opinion, the issue involved in the present case thus is squarely covered in favour of the assessee by the decision of Hon’ble Delhi High Court in the case of Foundation of Opthalmic & Optometry Research Education Centre (supra) and respectfully following the same, we set aside the impugned order of the CIT (Exemptions) and direct him to grant the registration to the assessee u/s 12A of the Act. Consequently we also direct the Ld. CIT (Exemptions) to give approval to the assessee u/s 80G of the Act.”

We adopt the above detailed reasoning mutatis mutanda to hold the assessee to be entitled for 12A registration under the general public utility limit of section 2(15) since the Ld.CIT(Exemption) is fair enough in not setting out any other reason for refusing the impugned relief.