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2023 (11) TMI 1098 - AT - Income TaxExemption u/s 11 - rejection of registration u/s 12AA as applicant trust has been formed to implement the CSR activities and not amenable to public charity - charitable activity u/s 2(15) or not? - HELD THAT:- Main aim and object was of course to implement the CSR activities of the Financing/ parental company, but surely per se to the benefit of general public at large. The observations given by Worthy CIT(E) are vague in the view of the judgment of Nanak Chand Jain Charitable Trust (2018 (2) TMI 874 - ITAT DELHI) that at the time of granting the registration u/s 12AA CIT (exemption) need not go beyond two parameters that the object being charitable in nature and activities being genuine. All other activities are the matters to be taken care of by the Assessing Officer at the time of assessment for granted exemption under section 11 r.w.s 13 of the Act. Social enterprises cannot be a direct recipients of money from corporate as it is a profit making Company - This reason by the CIT (E) is not in conformity with any of the provisions of the Income Tax Act. A profit-making Company can grant certain donation to the charitable trust, how can the activities of the trust become not charitable with this act. In our view, the fact that the CSR expenditure are not allowable expenditure under section 37 of the Act is relevant only for the taxability of the company incurring such expenditure. From the perception of the assessee trust the amount received as donation whether will be eligible for exemption under section 11 depends on the application of such fund for the charitable activities by the trust only. CIT(E) is empowered to satisfy himself only about two factors i.e. the objects of the trust and the genuineness of the activities of the trust or institution and such powers does not extend to the eligibility of the trust/institution for exemption u/s 11 r.w.s 13 of the Income Tax Act, 1961 which falls in the domain of the AO. In our view, in the present case the Ld. CIT(E) has neither pointed out any defect in the objects of the trust nor doubted the activities carried out to achieve these objects, and therefore, the application for registration cannot be rejected. Our view gets support from the decision in the cases of CIT vs. IILM Foundation Academy [2016 (9) TMI 920 - PUNJAB AND HARYANA HIGH COURT] and Cyberstar Educational Society vs. CIT (Exemptions) . [2019 (6) TMI 1628 - ITAT AMRITSAR] CIT(E) is directed to grant registration to the appellant Trust u/s 12AA of the Act from the date of application. Appeal of the assessee is allowed.
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