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2022 (6) TMI 1117 - AT - Income TaxExemption u/s 11 - registration under Section 12A rejected - assessee is a society registered with Registrar of Societies claiming that the objects of the society are of charitable and religious nature, assessee applied for registration u/s 12A - HELD THAT:- What is required to be examined at the time of grant of registration, as per the provisions existing at the relevant point of time, is the genuineness of the activities of the trust or institution and the objects of the trust. In so far as the objects are concerned, as discussed by us earlier, the very nature of objects for which the society was created, as appearing in the bye laws, clearly demonstrate that it is for charitable and religious purpose. There cannot be any doubt regarding the objects of the trust. As regards, genuineness of the society, materials on record reveal that it is carrying out activities to advance its objects. Therefore, there cannot be any serious doubt regarding the genuineness of the society. The so called infraction pointed out by CIT(Exemption), such as, claim of exemption under Section 10(23BBA) and section 10(23C)(v) in our view, neither impinge on genuineness of the Trust nor its charitable/religious nature. In case, assessee claims wrong exemption, it can be dealt with appropriately under the relevant provisions of the Act - a wrong claim of exemption, by itself, cannot debar assessee from getting exemption u/s 12AA - As per settled legal principles, though, assessee may be enjoying registration under Section 12A/12AA of the Act, however, its claim of exemption under Section 11 is not automatic. In case of violation of any of the conditions of sections 11 and 13 of the Act, the claim of exemption can be denied. However, that by itself does not affect the grant of registration under Section 12A/12AA of the Act. Allegations of CIT(Exemption) that the source of investment in construction of building was not properly explained, it is observed, in response to the query raised, assessee has furnished supporting evidence to explain such source. In fact, Learned CIT(Exemption) also accepted the aforesaid factual position - alleging that the return of income only shows the donations to have been utilized for day to day affairs and payments were made to other societies from the donations, he has persuaded himself not to grant registration u/s 12AA. One more allegation of the Learned CIT(Exemption) is regarding the receipt of corpus donation in absence of registration under Section 12AA - In our view, these issues should not cloud the vision of Learned CIT(Exemption) at the stage of granting registration under Section 12AA. At the stage of granting registration under Section 12A of the Act, authority concerned should not assume the role of assessing officer to examine whether the conditions for availing exemptions u/s 11 are fulfilled or not. These aspects certainly can be looked into at the stage of assessment. In any case of the matter, even after grant of registration u/s 12AA if in future, it is found that the activities of the trust are ingenuine and the trust is deviating from the objects based on which registration was granted, the authority concerned can proceed to cancel the registration. In the facts of the present case, there is nothing on record to suggest that either the activities of the trust are ingenuine or the objects are not of charitable or religious nature. We set aside the impugned order of Learned CIT(Exemption) and direct him to grant registration to assessee under Section 12AA - Appeal of assessee allowed.
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