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2022 (4) TMI 534 - AT - Income TaxExemption u/s 11 - not granting the Registration u/s 12A - CIT(E) rejected the application on the ground that the society has not incurred any expenditure on objects of the trust, appellant has earned surplus which explains that activities are not charitable in nature and the society has not utilized the surplus towards the objects of the society - HELD THAT:- The plain reading of Section 12AA explains that the Pr.CIT or Commissioner has to satisfy himself regarding genuineness of the activities of the trust. He has also to satisfy himself about genuineness of the object of the trust. Thus, there will be two situations, first situation is that a trust has applied for registration U/s 12AA, within a short period of formation of the trust. Therefore, naturally, in such newly formed trust, there will not be any activity. In such situation, the CIT(E) has to verify the objects of the trust vis a vis Section 2(15) of the Act. The second situation will be a trust which is in existence for a long time. In this situation, the CIT(E) has to verify whether activities of the trust are charitable or not, he has to also verify the objects of the trust. The appellant before us is existing since 2001. However, as demonstrated in earlier paragraphs that though the appellant has earned substantial income, not a rupee has been spent on objects of the society. Rather, appellant is generating income with an intention to earn profit as is visible from the income & expenditure account. Though the appellant claimed that it had carried out charitable activities like blood donation etc, no evidence has been filed to substantiate the claim. Also, the CIT(E) has not mentioned anything about the objects of the society. Further he has not given any reasoned findings whether the objects are charitable or not. During the registration proceedings u/s 12AA, the CIT(E) has to decide whether the objects are charitable or not as defined u/s 2(15) - we remand the matter back to the file of CIT(E) for reconsideration of the application filed by the assessee society U/s 12AA and pass an order afresh. The Appellant is also directed to file/produce all necessary documents as desired by CIT(E). CIT(E) shall afford reasonable opportunity of hearing to the assessee before passing the order. Thus, this case is set aside and remanded back to the CIT(E). Appeal of the appellant is allowed for statistical purpose.
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