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Issues involved: Registration of a public charitable trust under section 12A of the Income-tax Act, 1961 and rejection of the application by the respondent u/s 12AA(1)(b) on the grounds of not carrying out activities mentioned in the trust deed.
Summary: The petitioner, a public charitable trust, applied for registration under section 12A of the Income-tax Act to avail benefits under sections 11 and 12. The respondent rejected the application u/s 12AA(1)(b) stating that the trust was not carrying out activities mentioned in its trust deed, primarily running a school. The petitioner contended that the rejection was based on grounds not mentioned in the defect memo. The respondent's counter affidavit highlighted the trust's commercial activities, collecting fees from students, which were deemed non-charitable. The court found the decision-making process flawed, as the grounds for rejection were not communicated to the petitioner, violating principles of natural justice. The court quashed the rejection order and directed the respondent to reconsider the application, considering the objections raised in the counter affidavit. The petitioner was given an opportunity to respond, and fresh orders were to be passed after due consideration. The court did not express any opinion on the contentions regarding the relevance of charitable activities for registration, as the matter was remitted for reconsideration. The original petition was disposed of accordingly.
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