2010 (8) TMI 1010 - AT - Income Tax

Summary

Issues Involved:
1. Refusal to grant registration u/s 12A of the Income-tax Act, 1961.
2. Validity of the reasons provided by the CIT for refusal.
3. Effective date of registration.

Summary:

Issue 1: Refusal to grant registration u/s 12A of the Income-tax Act, 1961

The assessee trust appealed against the order u/s 12AA dated 29.12.2006 by the CIT, Rohtak, which refused registration to the trust. The CIT observed that the trust's administration was left to a single person, the Chairman, and raised concerns about the trust being a private discretionary trust rather than one for public utility. The CIT also noted discrepancies in the trust's financial records and the handling of donations.

Issue 2: Validity of the reasons provided by the CIT for refusal

The CIT's refusal was based on several grounds, including the lack of clear definition of beneficiaries, discrepancies in donation records, and misleading provisions in the trust deed. The assessee argued that the trust was formed for charitable purposes, and all conditions for registration were met. The Tribunal found that the CIT's concerns were based on suspicions without material evidence. The Tribunal noted that the AO and Addl. CIT had recommended registration, confirming the charitable nature and genuineness of the trust's activities.

Issue 3: Effective date of registration

The Tribunal considered whether the registration should be granted from the date of the trust's creation (26.8.2004) or from the first day of the financial year in which the application was made (20.6.2006). The Tribunal found that the delay in filing was due to the trustees being preoccupied with initial activities and was not intentional. Taking a liberal view, the Tribunal directed the CIT to grant registration from the date of the trust's creation.

Conclusion:

The Tribunal set aside the CIT's order and directed the CIT to grant registration to the assessee trust u/s 12A with effect from the creation of the trust. The matter of compliance with Sections 11 to 13 in any particular assessment year would be examined by the AO during the assessment. The appeal filed by the assessee trust was allowed.