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Facts
The assessee, Raahat Humanitarian Foundation, filed an application for registration under Section 12AB of the Income Tax Act. The CIT(E) rejected the application, holding that the trust had not commenced its activities. The assessee contended that accepting donations constituted the commencement of activities.
Held
The Tribunal held that mere acceptance of donations does not amount to commencement of charitable activity. Activity commences when the trust starts applying funds for charitable purposes. If activities have not commenced, an application for provisional registration is required. The Tribunal set aside the CIT(E)'s order and restored the matter back to the CIT(E) with a direction to the assessee to apply in the appropriate form for registration.
Key Issues
Whether the acceptance of donations amounts to commencement of charitable activities for the purpose of Section 12AB registration?
Sections Cited
12AB, 12A(1)(ac)(viB), 11, 12
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Income Tax Appellate Tribunal, MUMBAI BENCH “D” MUMBAI
Before: SHRI OM PRAKASH KANT & SHRI SUNIL KUMAR SINGH
This appeal by the assessee is directed against order dated 16.07.2024 passed by the Ld. Commissioner of Income-tax (Exemptions), Mumbai [in short ‘the Ld. CIT(E)’] rejecting the registration of the assessee trust u/s 12AB of the Income-tax Act, 1961 (in short ‘the Act’). The grounds raised by the assessee are hort ‘the Act’). The grounds raised by the assessee are hort ‘the Act’). The grounds raised by the assessee are reproduced as under: reproduced as under:
On the facts and in law, the learned Commissioner of Income 1. On the facts and in law, the learned Commissioner of Income 1. On the facts and in law, the learned Commissioner of Income Tax - (Exemptions) [Herein referred as 'CIT (E)'] erred in rejecting (Exemptions) [Herein referred as 'CIT (E)'] erred in rejecting (Exemptions) [Herein referred as 'CIT (E)'] erred in rejecting the application for grant of registration under the application for grant of registration under Section 12AB of the Section 12AB of the Act, 1961.
On the facts and in law, Ld. CIT(E) erred in rejecting application 2. On the facts and in law, Ld. CIT(E) erred in rejecting application 2. On the facts and in law, Ld. CIT(E) erred in rejecting application for grant of registration by holding that Assessee Trust has not for grant of registration by holding that Assessee Trust has not for grant of registration by holding that Assessee Trust has not commenced activities whereas, on contrary, the Appellant Trust commenced activities whereas, on contrary, the Appellant Trust commenced activities whereas, on contrary, the Appellant Trust has started accepting dona has started accepting donations and is therefore deemed to have tions and is therefore deemed to have commenced activities and is therefore requested commenced activities and is therefore requested to be granted to be granted registration under Section 12AB of the Act for availing benefit registration under Section 12AB of the Act for availing benefit registration under Section 12AB of the Act for availing benefit under Section 11 of the Act. under Section 11 of the Act. 3. On the facts and in law, the Appellant Trust has fulfilled On the facts and in law, the Appellant Trust has fulfilled all the On the facts and in law, the Appellant Trust has fulfilled condition stipulated for registration under Section 12AB of the Act condition stipulated for registration under Section 12AB of the Act condition stipulated for registration under Section 12AB of the Act and is therefore liable to be granted registration under Section and is therefore liable to be granted registration under Section and is therefore liable to be granted registration under Section 12AB of the Act. 12AB of the Act. 2. Before us, the Ld. counsel for the assessee referred to the Before us, the Ld. counsel for the assessee referred to the Before us, the Ld. counsel for the assessee referred to the application for the condonation of application for the condonation of delay in filing the appeal and delay in filing the appeal and submitted that there was a bona fide delay of four days in filing the submitted that there was a bona fide delay of four days in filing the submitted that there was a bona fide delay of four days in filing the appeal for the reason that trustee who was authorized to sign the appeal for the reason that trustee who was authorized to sign the appeal for the reason that trustee who was authorized to sign the appeal was travelling to his native place between 12 to 18th appeal was travelling to his native place between 12 to 18 appeal was travelling to his native place between 12 to 18 September and therefore, the September and therefore, there was a delay of four days in filing the re was a delay of four days in filing the appeal before us. In view of the small delay of four days explained appeal before us. In view of the small delay of four days explained appeal before us. In view of the small delay of four days explained by way of a sufficient reason, we condoned the delay in filing the by way of a sufficient reason, we condoned the delay in filing the by way of a sufficient reason, we condoned the delay in filing the appeal and admitted the appeal for adjudication. appeal and admitted the appeal for adjudication.
Briefly stated, facts of th Briefly stated, facts of the case are that the assessee trust filed e case are that the assessee trust filed application in Form No. 10AB seeking registration u/s 12AB of the application in Form No. 10AB seeking registration u/s application in Form No. 10AB seeking registration u/s Act. The Ld. CIT(A) rejected the registration application of the Act. The Ld. CIT(A) rejected the registration application of the Act. The Ld. CIT(A) rejected the registration application of the assessee observing as under: assessee observing as under:
“2. Under the relevant section 12A(1)(ac)(vi)(B) of the 2. Under the relevant section 12A(1)(ac)(vi)(B) of the 2. Under the relevant section 12A(1)(ac)(vi)(B) of the Act, an applicant has to make an applicant has to make an application in the prescribed format and application in the prescribed format and manner in the following scenario: manner in the following scenario: "commenced and no income or part thereof of the said trust "commenced and no income or part thereof of the said trust "commenced and no income or part thereof of the said trust or institution has been excluded from the total income on or institution has been excluded from the total income on or institution has been excluded from the total income on account of applicability of su account of applicability of sub-clause (via) of clause (23C) of clause (via) of clause (23C) of section 10, or section, 11 or section 12, for any previous section 10, or section, 11 or section 12, for any previous section 10, or section, 11 or section 12, for any previous year ending on or before the date of such application, at year ending on or before the date of such application, at year ending on or before the date of such application, at any time after the commencement of such activities" any time after the commencement of such activities" any time after the commencement of such activities"
On verification of the facts and circumstances of On verification of the facts and circumstances of the case, I find the case, I find that the assessee has not commenced its activities before filing the that the assessee has not commenced its activities before filing the that the assessee has not commenced its activities before filing the Application in Form 10AB. Commencement of activities is Application in Form 10AB. Commencement of activities is Application in Form 10AB. Commencement of activities is necessary before filling of Application in Form 10AB u/s necessary before filling of Application in Form 10AB u/s necessary before filling of Application in Form 10AB u/s 12A(1)(ac)(vi)(B) to check the genuineness of activities 12A(1)(ac)(vi)(B) to check the genuineness of activities 12A(1)(ac)(vi)(B) to check the genuineness of activities of the trust or institution as mandated by the Procedure for fresh registration or institution as mandated by the Procedure for fresh registration or institution as mandated by the Procedure for fresh registration u/s 12AB. As such, the assessee is not fulfilling the stipulated u/s 12AB. As such, the assessee is not fulfilling the stipulated u/s 12AB. As such, the assessee is not fulfilling the stipulated conditions prescribed for filing application for approval in Form conditions prescribed for filing application for approval in Form conditions prescribed for filing application for approval in Form 10AB. In view of the same, this application f 10AB. In view of the same, this application for grant of registration or grant of registration is not maintainable and the same is rejected is not maintainable and the same is rejected.”
Before us, the Ld. counsel for the assessee submitted that the Before us, the Ld. counsel for the assessee submitted that the Before us, the Ld. counsel for the assessee submitted that the assessee had already accepted donations from the donors and assessee had already accepted donations from the donors and assessee had already accepted donations from the donors and therefore, the activity already stand therefore, the activity already stands commenced, therefor commenced, therefore, the assessee was not require assessee was not required to give detail of the activities or to to give detail of the activities or to establish genuineness of the activities. The ld. counsel referred to establish genuineness of the activities. The ld. counsel referred to establish genuineness of the activities. The ld. counsel referred to the Paper Book containing pages 1 to 19 including the details of the Paper Book containing pages 1 to 19 including the details of the Paper Book containing pages 1 to 19 including the details of donations received and the bank statement for the period from the donations received and the bank statement for the donations received and the bank statement for the 01.04.2023 to 31.03.2024. The Ld. counsel for the assessee relied 01.04.2023 to 31.03.2024. The Ld. counsel for the assessee relied 01.04.2023 to 31.03.2024. The Ld. counsel for the assessee relied on the decision of the Hon’ble Supreme Court in the case of Ananda on the decision of the Hon’ble Supreme Court in the case of on the decision of the Hon’ble Supreme Court in the case of Social & Educational Social & Educational Trust v. CIT [2020] 426 ITR 340 Trust v. CIT [2020] 426 ITR 340 and submitted that assessee was not required to support the submitted that assessee was not required to suppor submitted that assessee was not required to suppor genuineness of the activities for obtaining the registration in terms genuineness of the activities for obtaining the registration in terms genuineness of the activities for obtaining the registration in terms of section 12AB of the Act. of section 12AB of the Act.
On the contrary, the Ld. Departmental Representative (DR) On the contrary, the Ld. Departmental Representative (DR) On the contrary, the Ld. Departmental Representative (DR) relied on the order of the Ld. CIT(E). relied on the order of the Ld. CIT(E).
We have heard rival submission of the parties and perused the We have heard rival submission of the parties and perused the We have heard rival submission of the parties and perused the relevant material on record. relevant material on record. For registration of the Trusts, new For registration of the Trusts, new procedure has been prescribed u/s 12AB of the Act with effect from procedure has been prescribed u/s 12AB of the Act w procedure has been prescribed u/s 12AB of the Act w 01.04.2021 by way of taxation and other laws (relaxation and 01.04.2021 by way of taxation and other laws (relaxation and 01.04.2021 by way of taxation and other laws (relaxation and amendment) of certain provisions mendment) of certain provisions Act 2020. The section prescribe . The section prescribe for provisional registration where activities of the trust are not for provisional registration where activities of the trust for provisional registration where activities of the trust commenced and in other cases where the activities other cases where the activities are already commenced, in such cases w.e.f. 01.10.2023 there is no in such cases w.e.f. 01.10.2023 there is no in such cases w.e.f. 01.10.2023 there is no requirement of applying applying for provisional registration and trust can provisional registration and trust can apply for regular registration in prescribed Form No. 10AB of the apply for regular registration in prescribed Form No. 10AB of the apply for regular registration in prescribed Form No. 10AB of the Income-tax Rules,1962 ,1962. Where the activities are commenced, Where the activities are commenced, various type of categories for application in case of trusts, have various type of categories for application in case of trusts, have various type of categories for application in case of trusts, have been provided in section 12A(1)(ac)(i) to (v) and provided in section 12A(1)(ac)(i) to (v) and (viB) of the Act B) of the Act and in case of non commencement of activity case of non commencement of activity, category , category has been provided in section 12A(1)(ac)(viA) of the Act. provided in section 12A(1)(ac)(viA) of the Act.
6.1 Further the Sub he Sub-sections (a) and (b) of section 12AB(1) of the section 12AB(1) of the Act deal with procedure of registration for procedure of registration for applications where applications where activities of the trust stands of the trust stands already commenced. The assessee enced. The assessee applied for registration in Form No. 10AB specify applied for registration in Form No. 10AB specifying ing the application under sub-clause (viB) of clause clause (viB) of clause (ac) of sub-section section (1) of section 12A of the Act. For ready reference the relevant sub the Act. For ready reference the relevant sub-clause (viB) of the Act. For ready reference the relevant sub clause (ac) of section 12AB of section 12AB(1) is reproduced as under reproduced as under :
“12A. [(1)] The provisions of section 11 and section 12 shall not apply in 12A. [(1)] The provisions of section 11 and section 12 shall not apply in 12A. [(1)] The provisions of section 11 and section 12 shall not apply in relation to the income of any trust or institution unless the following relation to the income of any trust or institution unless the relation to the income of any trust or institution unless the conditions are fulfilled, namely: conditions are fulfilled, namely:— (a) …………….. …………….. : (i) …………………. …………………. (ii) ………………. ………………. [(aa) ………………… ………………… [(ab) ………………. ………………. [(ac) notwithstanding anything contained in clauses (a) to (ab), the notwithstanding anything contained in clauses (a) to (ab), the notwithstanding anything contained in clauses (a) to (ab), the person in receipt of the income has made an person in receipt of the income has made an application in the prescribed application in the prescribed form and manner to the Principal Commissioner or Commissioner, for form and manner to the Principal Commissioner or Commissioner, for form and manner to the Principal Commissioner or Commissioner, for registration of the trust or institution, registration of the trust or institution,— (i) where the trust or institution is registered under section 12A where the trust or institution is registered under section 12A where the trust or institution is registered under section 12A [as it stood immediately before its amendment [as it stood immediately before its amendment by the Finance (No. 2) Act, by the Finance (No. 2) Act, 1996 (33 of 1996)] or under section 12AA [as it stood immediately before 1996 (33 of 1996)] or under section 12AA [as it stood immediately before 1996 (33 of 1996)] or under section 12AA [as it stood immediately before its amendment by the Taxation and Other Laws (Relaxation and its amendment by the Taxation and Other Laws (Relaxation and its amendment by the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 (38 of 2020)], within three Amendment of Certain Provisions) Act, 2020 (38 of 2020)], within three Amendment of Certain Provisions) Act, 2020 (38 of 2020)], within three months from the first months from the first day of April, 2021; (ii) where the trust or institution is registered under section 12AB where the trust or institution is registered under section 12AB where the trust or institution is registered under section 12AB 3a[or approved under sub 3a[or approved under sub-clause (iv) or sub-clause (v) or sub clause (v) or sub-clause (vi) or sub-clause (via) of clause (23C) of section 10] and the period of the said clause (via) of clause (23C) of section 10] and the period of the said clause (via) of clause (23C) of section 10] and the period of the said registration 3a[or approval, as the case may be,] is due to expire, at least n 3a[or approval, as the case may be,] is due to expire, at least n 3a[or approval, as the case may be,] is due to expire, at least six months prior to expiry of the said period; six months prior to expiry of the said period; (iii) where the trust or institution has been provisionally registered where the trust or institution has been provisionally registered where the trust or institution has been provisionally registered under section 12AB 3a[or provisionally approved under sub-clause (iv) or under section 12AB 3a[or provisionally approved under sub under section 12AB 3a[or provisionally approved under sub sub-clause (v) or sub clause (v) or sub-clause (vi) or sub-clause (via) of clause (23C) of clause (via) of clause (23C) of section 10], at least six months prior to expiry of period of the provisional section 10], at least six months prior to expiry of period of the provisional section 10], at least six months prior to expiry of period of the provisional registration 3a[or provisional approval, as the case may be,] or within six registration 3a[or provisional approval, as the case may be,] or within six registration 3a[or provisional approval, as the case may be,] or within six months of commencement o months of commencement of its activities, whichever is earlier; f its activities, whichever is earlier;
(iv) where registration of the trust or institution has become where registration of the trust or institution has become where registration of the trust or institution has become inoperative due to the first proviso to sub inoperative due to the first proviso to sub-section (7) of section 11, at least section (7) of section 11, at least six months prior to the commencement of the assessment year from which six months prior to the commencement of the assessment year from whic six months prior to the commencement of the assessment year from whic the said registration is sought to be made operative; the said registration is sought to be made operative; (v) where the trust or institution has adopted or undertaken where the trust or institution has adopted or undertaken where the trust or institution has adopted or undertaken modifications of the objects which do not conform to the conditions of modifications of the objects which do not conform to the conditions of modifications of the objects which do not conform to the conditions of registration, within a period of thirty days from the date of the said registration, within a period of thirty days from the date of th registration, within a period of thirty days from the date of th adoption or modification; adoption or modification; [(vi) in any other case, where activities of the trust or in any other case, where activities of the trust or in any other case, where activities of the trust or institution have— — (A) not not not commenced, commenced, commenced, at at at least least least one one one month month month prior prior prior to to to the the the commencement of the previous year relevant to the assessment year from commencement of the previous year relevant to the assessment year from commencement of the previous year relevant to the assessment year from which the said registration is sought; gistration is sought; (B) commenced and no income or part thereof of the said commenced and no income or part thereof of the said commenced and no income or part thereof of the said trust or institution has been excluded from the total income on trust or institution has been excluded from the total income on trust or institution has been excluded from the total income on account of applicability of sub account of applicability of sub-clause (iv) or sub-clause (v) or sub clause (v) or sub- clause (vi) or sub clause (vi) or sub-clause (via) of clause (23C) of section 10, or (23C) of section 10, or sections 11 or section 12, for any previous year ending on or before sections 11 or section 12, for any previous year ending on or before sections 11 or section 12, for any previous year ending on or before the date of such application, at any time after the commencement the date of such application, at any time after the commencement the date of such application, at any time after the commencement of such activities,] of such activities,] and such trust or institution is registered under section 12AB:] and such trust or institution is registered under section 12AB:] and such trust or institution is registered under section 12AB:] [Provided that where the application is filed beyond the time allowed in that where the application is filed beyond the time allowed in that where the application is filed beyond the time allowed in sub-clauses (i) to (vi), the Principal Commissioner or Commissioner may, if clauses (i) to (vi), the Principal Commissioner or Commissioner may, if clauses (i) to (vi), the Principal Commissioner or Commissioner may, if he considers that there is a reasonable cause for delay in filing the he considers that there is a reasonable cause for delay in filing the he considers that there is a reasonable cause for delay in filing the application, condone such delay and such applic application, condone such delay and such application shall be deemed to ation shall be deemed to have been filed within time;] have been filed within time;]” 6.2 The process of granting registration process of granting registration for application of the for application of the category under section 12A(1)(ac)(viB) has category under section 12A(1)(ac)(viB) has been provided u/s been provided u/s 12AB(1)(b) of the Act. For ready reference section 12AB(1) is 12AB(1)(b) of the Act. For ready reference section 12AB(1) is 12AB(1)(b) of the Act. For ready reference section 12AB(1) is reproduced as under: under:
“12AB. (1) The Principal Commissioner or Commissioner, on receipt of an (1) The Principal Commissioner or Commissioner, on receipt of an (1) The Principal Commissioner or Commissioner, on receipt of an application made under clause (ac) of sub application made under clause (ac) of sub-section (1) of section 12A section 12A, shall,— (a) where the application is made under sub where the application is made under sub-clause (i) of the said clause, clause (i) of the said clause, pass an order in writing registering the trust or institution for a period of pass an order in writing registering the trust or institution for a period of pass an order in writing registering the trust or institution for a period of five years; (b) where the application is made under sub where the application is made under sub-clause (ii) or sub clause (ii) or sub-clause (iii) or sub-clause (iv) or sub iv) or sub-clause (v) 36[or item (B) of sub- -clause (vi)] of the said clause,— (i) call for such documents or information from the trust or call for such documents or information from the trust or call for such documents or information from the trust or institution or make such inquiries as he thinks necessary institution or make such inquiries as he thinks necessary institution or make such inquiries as he thinks necessary in order to satisfy himself about— in order to satisfy (A) the genuineness of activities of the trust or the genuineness of activities of the trust or the genuineness of activities of the trust or institution; and institution; and (B) the compliance of such requirements of any other the compliance of such requirements of any other the compliance of such requirements of any other law for the time being in force by the trust or law for the time being in force by the trust or law for the time being in force by the trust or institution as are material for the purpose of institution as are material for the purpose of institution as are material for the purpose of achieving its achieving its objects; (ii) after satisfying himself about the objects of the trust or after satisfying himself about the objects of the trust or after satisfying himself about the objects of the trust or institution and the genuineness of its activities under item institution and the genuineness of its activities under item institution and the genuineness of its activities under item (A) and compliance of the requirements under item (B), of (A) and compliance of the requirements under item (B), of (A) and compliance of the requirements under item (B), of sub-clause (i), clause (i),— (A) pass an order in writing pass an order in writing registering the trust or registering the trust or institution for a period of five years; or institution for a period of five years; or institution for a period of five years; or 37[(B) if he is not so satisfied, pass an order in writing, if he is not so satisfied, pass an order in writing,— if he is not so satisfied, pass an order in writing, (I) in a case referred to in sub-clause (ii) or sub clause (ii) or sub- clause (iii) or sub-clause (v) of clause (ac) of clause (v) of clause (ac) of sub-section (1) of section 12A section 12A rejecting such application application and and also also cancelling cancelling its its registration; (II) in a case referred to in sub in a case referred to in sub-clause (iv) or in item (B) of sub-clause (vi) of sub clause (vi) of sub-section (1) of section 12A, rejecting such application, , rejecting such application, after affording a reasonable opportunity of being heard;] after affording a reasonable opportunity of being heard;] after affording a reasonable opportunity of being heard;] 38[(c) where the application is made under item (A) of sub where the application is made under item (A) of sub where the application is made under item (A) of sub-clause (vi) of the said clause or the application is made under sub said clause or the application is made under sub-clause (vi) of the said clause (vi) of the said clause, as it stood immediately before its amendment vide the Finance clause, as it stood immediately before its amendment vide the Finance clause, as it stood immediately before its amendment vide the Finance Act, 2023, pass an order in writing provisionally registering the trust or Act, 2023, pass an order in writing provisionally registering the trust or Act, 2023, pass an order in writing provisionally registering the trust or institution for a period of three years from the assessment year from institution for a period of three years from the assessment year from institution for a period of three years from the assessment year from which the registration is sought,] which the registration is sought,] and send a copy of such order to the trust or institution. and send a copy of such order to the trust or institution.” ”
6.3 The Ld. CIT(E) has also referred the relevant clause The Ld. CIT(E) has also referred the relevant clause The Ld. CIT(E) has also referred the relevant clause 12A(1)(ac)(viB) in the impugned order in the impugned order under which the assessee under which the assessee applied for registration registration. Under the provisions of section 12AB(1)(b) . Under the provisions of section 12AB(1)(b) of the Act the Ld. CIT(E) was requi of the Act the Ld. CIT(E) was required to call for such documents red to call for such documents or information from the trust or make such inquiry as he think formation from the trust or make such inquiry as he think formation from the trust or make such inquiry as he think necessary about the genuineness of the activity of the trust before necessary about the genuineness of the activity of the trust before necessary about the genuineness of the activity of the trust before granting registration for a period of five years. The Ld. CIT(E) has granting registration for a period of five years. The Ld. CIT(E) has granting registration for a period of five years. The Ld. CIT(E) has noted in the impugned order that the assessee had not commenced noted in the impugned order that the assessee had not commenc noted in the impugned order that the assessee had not commenc its activities which was required for filing application in Form 10AB its activities which was required for filing application in Form 10AB its activities which was required for filing application in Form 10AB u/s 12A(1)(c)(viB) of the Act to check the genuineness of the u/s 12A(1)(c)(viB) of the Act to check the genuineness of the u/s 12A(1)(c)(viB) of the Act to check the genuineness of the activity. Before us, the Ld. counsel for the assessee submitted that activity. Before us, the Ld. counsel for the assessee submitted that activity. Before us, the Ld. counsel for the assessee submitted that assessee received only donation assessee received only donations and no actual chari actual charitable activities were commenced. The Ld. counsel submitted that assessee in its The Ld. counsel submitted that assessee in its The Ld. counsel submitted that assessee in its objects has mentioned imparting education and all other activities , objects has mentioned imparting education and all other activities , objects has mentioned imparting education and all other activities , which are charitable in nature and therefore, assessee was not which are charitable in nature and therefore, assessee was not which are charitable in nature and therefore, assessee was not required to specify its activities or to exp required to specify its activities or to explain the genuineness of the lain the genuineness of the activities and the activities were commenced in view of donations activities and the activities were commenced in view of donations activities and the activities were commenced in view of donations received. In view of the above facts In view of the above facts and circumstances, and circumstances, we are of the opinion that merely for the reason the assessee received donation merely for the reason the assessee received donation merely for the reason the assessee received donation from few persons, cannot a from few persons, cannot amount to commencement of charitable mount to commencement of charitable activity. Receiving of donation may be activity. Receiving of donation may be collection of fund for collection of fund for commencing charitable activity but activity will commencing charitable activity but activity will commence commence when the trust start application of fund for charitable activity trust start application of fund for charitable activity. . If the assessee had not commenced had not commenced its activities then assessee was required to its activities then assessee was required to make application under item make application under item (A) of sub-clause (vi) of clause clause (vi) of clause (ac) of sub-section (1) of section 12A of section 12A for seeking provisional registration as seeking provisional registration as provided u/s 12AB(1)(c) of the Act. But contention of the assessee provided u/s 12AB(1)(c) of the Act. But contention of the assessee provided u/s 12AB(1)(c) of the Act. But contention of the assessee that by way of accepting donation t by way of accepting donations, it is deemed to deemed to have commenced activities cannot be accepted. activities cannot be accepted. The Ld. counsel relied The Ld. counsel relied on the decision of the Hon’ble Supreme Court in the case of on the decision of the Hon’ble Supreme Court in the case of on the decision of the Hon’ble Supreme Court in the case of Ananda Social & Educational Trust (supra). In the said decision Ananda Social & Educational Trust (supra). In the said decision Ananda Social & Educational Trust (supra). In the said decision also Hon’ble Supreme Court has held that Commissioner is bound Supreme Court has held that Commissioner is bound Supreme Court has held that Commissioner is bound to consider whether the object of the trust are genuinely charitable to consider whether the object of the trust are genuinely charitable to consider whether the object of the trust are genuinely charitable in nature and whether in nature and whether the activities which the Trust proposed to the activities which the Trust proposed to carry on are genuine in the sense that they are in line with the carry on are genuine in the sense that they are in line with the carry on are genuine in the sense that they are in line with the objects of the Trust. The relevant finding of the Hon’ble Supreme s of the Trust. The relevant finding of the Hon’ble Supreme s of the Trust. The relevant finding of the Hon’ble Supreme Court is reproduced as under: Court is reproduced as under: “9. Section 12AA undoubtedly requires the Commissioner to Section 12AA undoubtedly requires the Commissioner to Section 12AA undoubtedly requires the Commissioner to satisfy himself about the objects of the trust or institution and satisfy himself about the objects of the trust or institution and satisfy himself about the objects of the trust or institution and genuineness of its activities and grant a registration only if he genuineness of its activities and grant a registration only if he genuineness of its activities and grant a registration only if he is so satisfied. The said section requires the Commissioner to is so satisfied. The said section requires the Commissioner to is so satisfied. The said section requires the Commissioner to be so satisfied in order to ensure that the object of the trust satisfied in order to ensure that the object of the trust satisfied in order to ensure that the object of the trust and its activities are charitable since the consequence of such and its activities are charitable since the consequence of such and its activities are charitable since the consequence of such registration is that the trust is entitled to claim benefits under registration is that the trust is entitled to claim benefits under registration is that the trust is entitled to claim benefits under sections 11 and 12 of the Act. In other words, if it appears sections 11 and 12 of the Act. In other words, if it appears sections 11 and 12 of the Act. In other words, if it appears that the objects of the trust and its activities are not genuine he objects of the trust and its activities are not genuine he objects of the trust and its activities are not genuine that is to say not charitable the Commissioner is entitled to that is to say not charitable the Commissioner is entitled to that is to say not charitable the Commissioner is entitled to refuse and in fact, bound to refuse such registration. refuse and in fact, bound to refuse such registration. refuse and in fact, bound to refuse such registration.
It was argued before us that the Commissioner is required 10. It was argued before us that the Commissioner is required 10. It was argued before us that the Commissioner is required to be satisfied ab to be satisfied about two things - firstly that the objects of the firstly that the objects of the trust and secondly, its activities are genuine. If there have trust and secondly, its activities are genuine. If there have trust and secondly, its activities are genuine. If there have been no activities undertaken by the trust then the been no activities undertaken by the trust then the been no activities undertaken by the trust then the Commissioner cannot assess whether such activities are Commissioner cannot assess whether such activities are Commissioner cannot assess whether such activities are genuine and therefore, the Commissione genuine and therefore, the Commissioner is bound to refuse r is bound to refuse the registration of such a trust. the registration of such a trust.
We have given our anxious consideration to the above 11. We have given our anxious consideration to the above 11. We have given our anxious consideration to the above submissions made by Ms. Aishwarya Bhati, learned Senior submissions made by Ms. Aishwarya Bhati, learned Senior submissions made by Ms. Aishwarya Bhati, learned Senior Counsel appearing for the appellant Counsel appearing for the appellant - Director of Income Director of Income-tax and find that it is not pos and find that it is not possible to agree with the same. The sible to agree with the same. The purpose of section 12AA of the Act is to enable registration purpose of section 12AA of the Act is to enable registration purpose of section 12AA of the Act is to enable registration only of such trust or institution whose objects and activities only of such trust or institution whose objects and activities only of such trust or institution whose objects and activities are genuine. In other words, the Commissioner is bound to are genuine. In other words, the Commissioner is bound to are genuine. In other words, the Commissioner is bound to satisfy himself that the object of the T satisfy himself that the object of the Trust are genuine and rust are genuine and that its activities are in furtherance of the objects of the Trust, that its activities are in furtherance of the objects of the Trust, that its activities are in furtherance of the objects of the Trust, that is equally genuine. that is equally genuine.
Since section 12AA pertains to the registration of the Trust 12. Since section 12AA pertains to the registration of the Trust 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 and not to assess of what a trust has actually done, we are of and not to assess of what a trust has actually done, we are of the view that the view that the term 'activities' in the provision includes the term 'activities' in the provision includes 'proposed activities'. That is to say, a Commissioner is bound 'proposed activities'. That is to say, a Commissioner is bound 'proposed activities'. That is to say, a Commissioner is bound to consider whether the objects of the Trust are genuinely to consider whether the objects of the Trust are genuinely to consider whether the objects of the Trust are genuinely charitable in nature and whether the activities which the Trust charitable in nature and whether the activities which the Trust charitable in nature and whether the activities which the Trust proposed to carry on a proposed to carry on are genuine in the sense that they are in re genuine in the sense that they are in line with the objects of the Trust. In contrast, the position line with the objects of the Trust. In contrast, the position line with the objects of the Trust. In contrast, the position would be different where the Commissioner proposes to cancel would be different where the Commissioner proposes to cancel would be different where the Commissioner proposes to cancel the registration of a Trust under sub the registration of a Trust under sub-section (3) of section section (3) of section 12AA of the Act. There the Comm 12AA of the Act. There the Commissioner would be bound to issioner would be bound to record the finding that an activity or activities actually carried record the finding that an activity or activities actually carried record the finding that an activity or activities actually carried on by the Trust are not genuine being not in accordance with on by the Trust are not genuine being not in accordance with on by the Trust are not genuine being not in accordance with the objects of the Trust. Similarly, the situation would be the objects of the Trust. Similarly, the situation would be the objects of the Trust. Similarly, the situation would be different where the trust has before appl different where the trust has before applying for registration ying for registration found to have undertaken activities contrary to the objects of found to have undertaken activities contrary to the objects of found to have undertaken activities contrary to the objects of the Trust.” 6.4 We are of the opinion that if the assessee had commenced its We are of the opinion that if the assessee had commenced its We are of the opinion that if the assessee had commenced its charitable activity, then activity, then in such case the assessee was required to in such case the assessee was required to explain the genuineness of explain the genuineness of the activities before the Ld. CIT(E) and if the activities before the Ld. CIT(E) and if activity not commenced, activity not commenced, then the assessee was required to file assessee was required to file application for provisional registration of the Act. In view of the application for provisional registration of the Act. In view of the application for provisional registration of the Act. In view of the above, we feel it appropriate to set aside the order of the Ld. CIT(E) above, we feel it appropriate to set aside the order of the Ld. CIT(E) above, we feel it appropriate to set aside the order of the Ld. CIT(E) and restore the matter back to him with the direction to the re the matter back to him with the direction to the re the matter back to him with the direction to the assessee to apply in appropriate form for registration of the trust. assessee to apply in appropriate form for registration of the trust. assessee to apply in appropriate form for registration of the trust. The grounds of appeal of the assessee are accordingly allowed for The grounds of appeal of the assessee are accordingly allowed for The grounds of appeal of the assessee are accordingly allowed for statistical purposes.
In the result, the appeal of the assessee i In the result, the appeal of the assessee i In the result, the appeal of the assessee is allowed for statistical purposes. statistical purposes.
Order pronounced in the open Court on nounced in the open Court on 20/12/2024. /12/2024.