AVADH BIHARI CHARITABLE TRUST,KOLKATA vs. CIT (EXEMPTION), KOLKATA, KOLKATA

Briefly stated facts are that the assessee charitable trust came into existence vide Deed of Trust dated 12.05.2016 and had applied for registration in form 10A for registration u/s. 12AA of the Act and made application for approval under 80G of the Act on 27.12.2016. The Ld. CIT(E) after perusal of the bank statement of the Trust noted that the Trust had donated Rs.5100/- by cheque no. 56752 (Union Bank of India) to Shree Kashi Biswanath Seva Samity. However, the cheque has been returned back to the Trust so, according to the Ld. CIT(E) no activity has been done by the Trust and no substantial proof of activity has been submitted before him. Taking note that the Trust is yet to start any activities or failed to furnish substantial proof, the Ld. CIT(E) refused to grant registration

2 & 1795/Kol/2017 Avadh Bihari Charitable Trust, u/s. 12A of the Act. Likewise, in respect of approval under 80G, the Ld. CIT(E) taking note that the assessee Trust did not get registration u/s. 12AA of the Act or provided notification issued u/s. 10(23) or 23C rejected the same. Aggrieved, the assessee Trust is before us.

We have heard rival submissions and carefully perused the material available on record. We note that the assessee Trust came into existence vide Deed of Trust dated 12.05.2016 and had applied for registration in form 10A on 27.12.2016 for registration u/s. 12AA of the Act. The objects of the Trust includes establishment for education, relief of the poor, medical relief, preservation of environment, preservation of monuments or places of historic and artistic interest etc. and to advance, promote and spread education, run and support of schools, colleges etc. and other objectives and also spelt out in pages 3 to 6 of the Deed of Trust which is placed in the paper book. From the reading of the objectives of the Trust, it is clear that these are charitable objects and are supported by other ancillary objects to which a detailed reference is not necessary.

Time and again we have been reiterating that at the time when the assessee applies for registration u/s. 12AA of the Act, the Ld. CIT(E)’s jurisdiction is only to verify the objects of the Institution/Trust and look into the genuineness of the activities, meaning thereby that he has to satisfy himself that the objects are charitable in nature and the activities being carried on or to be carried on are genuine, meaning thereby that they are in consonance for achieving the charitable object and nothing else. The Ld. CIT(E) while discharging his duty for grant of registration u/s. 12AA of the Act has to restrict himself in the field which we have stated above. We note that where a Trust is set up to achieve its objectives for establishing educational institution and is in the process of establishing such institutions, the registration u/s. 12AA of the Act cannot be refused on the ground that the Trust has not yet commenced the charitable activity. Any enquiry of this nature would amount to putting the cart before the horse. As stated above, when the application for registration under section 12AA of the Act is considered by the Ld. Commissioner only the genuineness of the objectives has to be tested and not the activities which have not commenced. The enquiry of the Commissioner of Income-tax as such is at a preliminary stage should be restricted to genuineness of the objectives and not the activities unless the 3 & 1795/Kol/2017 Avadh Bihari Charitable Trust, activities have commenced. Since the assessee Trust came into existence vide Deed of Trust dated 12.05.2016 and the Trust had applied for registration on 27.12.2016 it is at the initial stage only. It has to be noted that the Trust cannot claim exemption unless it is registered u/s. 12AA of the Act and thus at that initial stage the test of genuineness of the activities cannot be a ground on which the registration can be refused and for that we rely on the decision of the Hon’ble Allahabad High Court in the case of Hardayal Charitable & Educational Trust Vs. CIT-2, Agra (2013) 32 Taxman.com 341 (All). Therefore, the action of the Ld. CIT(E) cannot be countenanced for the reasons stated above and, therefore, we are inclined to set aside the order of the Ld. CIT(E) for both the appeals and remand the matter back to the file of the Ld. CIT(E) and direct him to pass a fresh order on the assessee’s application for registration u/s. 12AA and approval u/s. 80G of the Act keeping in view the law governing the subject and pass a speaking order after hearing the assessee trust.

In the result, both the appeals of assessee are allowed for statistical purposes.