- Registration u/s 12AA of the Income Tax Act, 1961 nowhere stipulates that the trust should carry on certain charitable activities. The object of the “proposed” activities which is meant to be taken is sufficient for grant of registration u/s 12AA to the newly registered trust.
- Since section 12AA pertains to the registration of the Trust and not to assess of what a trust has actually done, we are of the view that the term ‘activities’ in the provision includes ‘proposed activities’.
Sections Involved: Section 12AA of the Income Tax Act, 1961 (Procedure for registration)
|Civil appeal no(S). 5437-5438 of 2012 dated 19.02.2020|
|Ananda Social & Educational Trust v. Commissioner of Income tax
|Facts of the Case||1. The trust is the newly registered trust formed as a society on 30.05.2008.
2. They applied for registration u/s 12AA on 10.07.2008.
3. No activities had been undertaken by the respondent Trust before the application was made.
|Consideration by the Commissioner of Income Tax (Exemption)
(In favour of Dept.)
|4. The Commissioner rejected the application on the sole ground that since no activities have been undertaken by the trust , it was not possible to be satisfied about the genuineness of the activities undertaken.|
|Held by the ITAT
(In favour of Assessee)
|5. The Income Tax Appellate Tribunal, Delhi (for short, the ‘Tribunal’) reversed the orders of the Commissioner.|
|High Court of Karnataka
(In favour of Assessee)
|6. The Revenue Department approached the High Court by way of filing an appeal.
7. The High Court upheld the order of the Tribunal and came to the conclusion that in case of a newly registered trust even though there was no activities, it was possible to consider whether the trust can be registered under section 12AA of the Act
- Section 12AA of the Income Tax Act, 1961 deals with the procedure for registration of a trust. Such registration can be applied for by a trust which has been in existence for some time and also by a newly registered trust. There is no stipulation that the trust should have already been in existence and should have undertaken any activities before making the application for registration.
- The purpose of section 12AA of the Act is to enable registration only of such trust or institution whose objects and activities are genuine.
- In other words, the Commissioner is bound to satisfy himself that the objects of the Trust are genuine and that its activities are in furtherance of the objects of the Trust that is equally genuine.
- There the Commissioner would be bound to record the finding that an activity or activities actually carried on by the Trust are not genuine being not in accordance with the objects of the Trust.
- Similarly, the situation would be different where the trust has before applying for registration found to have undertaken activities contrary to the objects of the Trust.
- Following Citations are considered while passing the order:
|IT Appeal No.36 of 2013 titled as “Commissioner of Income Tax-II vs. R.S. Bajaj Society”||The same view as that of the Delhi High Court in the impugned judgment. The Allahabad High Court has also referred to a similar view taken by the High Courts of Karnataka and Punjab & Haryana.|
|Kerala High Court in the case of Self Employers Service Society vs. Commissioner of Income Tax – (2001) Vol.247 ITR 18.||The facts in Self Employers Service Society (Supra) suggest that the Commissioner of Income Tax had observed that the applicant for registration as a Trust had undertaken activities which were contrary to the objects of the Trust.|
Thus, the Supreme Court of India, after considering the facts and circumstances on record, held that there is no reason to interfere with the impugned judgment of the High Court of Delhi. The appeal is, accordingly, dismissed.
Wherein the trust has not carried out any activity or has not spent any money on the proposed activities, the same cannot be the sole reason for the rejection of registration u/s 12AA of the Income Tax Act, 1961. The Commissioner is required to satisfy himself of the genuineness of the activities proposed to be undertaken by the trust.
For complete order Ananda Social & Educational Trust – SC