TMI Blog2008 (5) TMI 350X X X X Extracts X X X X X X X X Extracts X X X X ..... the learned CIT has misread this object. From the perusal of the trust deed it becomes clear that it is a charitable trust which is created to pursue the objects mentioned therein. None of the objects is for earning profit which can remove the trust from the definition of charitable trust under s. 12AA. The issue regarding exemption allowed by the CIT at the stage of granting or refusing the registration under s. 12A r/w s. 12AA of the Act the law is almost settled. While refusing application under s. 12A the CIT has to examine only two aspects i.e. genuineness of the activities of the trust/institution, and object of the trust/institution. Once there is no dispute about the genuineness of the activities the learned CIT cannot take shelter of any other outer source for refusing registration under s. 12A. It was held in the case of U.P. Awas Evam Vikas Parishad vs. ITO [ 2005 (7) TMI 668 - ITAT LUCKNOW] that while disposing application u/s. 12A, CIT has to examine only two aspects viz., the genuineness of the activities of the trust and 'object of the trust'. Once there is no dispute about genuineness of activities, CIT cannot take shelter of any other outer source for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sheet for the last three years. The learned CIT required the assessee vide letter dt. 24th June, 2005 to file the income and expenditure account and balance sheet for the financial years 1998-99 to 2004-05 along with copy of Form No. 10A/10G and copy of acknowledgement slips for filing IT return for these assessment years along with documentary evidences of charity work done by the trust in the last seven years. A copy of meetings register, copy of certified trust deed and list of trustees and office-bearers with their complete addresses were also asked for. All the required informations were supplied by the assessee vide covering letter dt. 26th Nov., 2005. But the learned CIT has mentioned in the order that the perusal of trust deed included as one of its objects 'to do milk business' which did not fall under the definition of charitable purpose. A part of the land of the trust was sold to one Shri Madan Gopal, s/o Shri Niranjan Lal, r/o Gyan Gudri, Vrindaban in which at p. 3 the reason for sale has been mentioned as improvement of Gaushala or Mandir of Thakur Shri Haridevji Maharaj. This was construed by the CIT as an object beyond the scope of the trust deed. On the basis of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and not income. 4. On the contrary, learned Departmental Representative has relied on the order of learned CIT. 5. We have carefully considered the rival claims. From the plain reading of this object there is nothing which can be said to be relating to earning profit by the trust. In our considered opinion the learned CIT has misread this object. From the perusal of the trust deed it becomes clear that it is a charitable trust which is created to pursue the objects mentioned therein. None of the objects is for earning profit which can remove the trust from the definition of charitable trust under s. 12AA. A trust or institution can claim exemption under ss. 11 and 12, if an application for registration of trust or institution in the prescribed form and in the prescribed manner is made to the CIT before the first day of 1973 or before the expiry of period of one year from the date of a creation of the trust/institution, whichever is later, and such trust or institution is registered under s. 12AA provided when an application for registration of trust or institution is made after expiry of the period under the provisions of ss. 11 and 12 and for institution from the date of creat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... given a reasonable opportunity of being heard." 6. From the above section it is envisaged that the CIT on receipt of an application for registration of a trust or institution made under cl. (a) or cl. (aa) of sub-s. (1) of s. 12A shall call for such document or information from the trust or institution as he thinks necessary in order to satisfy himself about the genuineness of activities of the trust or institution and may also make such inquiries as he may deem necessary in this behalf and after satisfying himself about the objects of the trust or institution and the genuineness of the its activities, he shall pass an order in writing registering the trust or institution, and if he is not so satisfied, pass an order in writing refusing to register the trust or institution and a copy of such order shall be sent to the applicant. The issue regarding exemption allowed by the CIT at the stage of granting or refusing the registration under s. 12A r/w s. 12AA of the Act the law is almost settled. While refusing application under s. 12A the CIT has to examine only two aspects i.e. genuineness of the activities of the trust/institution, and object of the trust/institution. Once there is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e the mental, social and other developments of the students. The Hon'ble High Court went even up to mentioning that even if the institution has defaulted in the matter of depositing contributions of the employees' provident fund, the Act concerned shall take care of such default but in no case it can be a ground for refusal of registration. To further elaborate the ratio of this decision, we extract the relevant held portion of the decision: "Sec. 12A prescribed conditions for registration of trusts and obligates the trust or the institution to seek registration under s. 12AA, if such trust or institution intends to have the benefit of the provisions of s. 11 and s. 12. These provisions thus make it clear that if the trust or the institution is not registered under s. 12AA, it would not be able to claim any exemption or exclusion of its income from the total income of the previous year, even if such income is otherwise liable to be excluded under any of the clauses of s. 11 or s. 12. Thus, in a case where registration is refused, the trust or the institution would not be allowed to claim any such exemption or exclusion of its income from the total income of the previous year. A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t earning or misuse of the income derived by charitable institution from its charitable activities, may be a ground for refusing exemption only with respect to that part of the income but cannot be taken to be a synonym to the genuineness of the activities of the trust or the institution. It is significant to mention that registration under s. 12AA does not necessarily entitle the assessee to get the income excluded from the income of the previous year for the purpose of determination of tax liability but it only entitles the assessee to claim such exemption, which otherwise could not be claimed in the absence of registration. The enquiry by the CIT shall remain restricted to the examination, as to whether the assessee, who has moved the application for registration under s. 12A, is actually in the activities which are genuine. Genuineness of the activities of the trust-or the institution has to be seen, keeping in mind the objects thereof which necessarily means that the CIT shall satisfy himself about the fact that the activities are genuine and in consonance with the objects of the trust or the institution. In other words, if establishing and running a school is the object of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . State of Uttar Pradesh Ors. (1979) 118 ITR 326 (SC). In a Third Member case, the Hon'ble Bench in the case of People Education Economic Development Society (PEEDS) vs. ITO (2006) 104 TTJ (Chennai)(TM) 467 : (2006) 100 ITD 87 (Chennai)(TM) has held that in case a delay is caused in filing of appeal due to prosecution of remedy under wrong belief there existed a reasonable cause requiring condonation of delay. (As regards) belated filing of application for registration, the Hon'ble Allahabad High Court has gone to the extent of saying that at the registration stage the CIT can examine only whether the application has been made in accordance with the requirement of s. 12AA r/w r. 17A and whether Form No. 10A has been properly filled up along with stating whether the objects of the trust are charitable or not. It has been further held that at that stage it is not proper to examine the application of income. It has been further observed that s. 80G is also not relevant at this stage. It was so decided in the case of Fifth Generation Education Society vs. CIT (1990) 87 CTR (All) 169 : (1990) 185 ITR 634 (All). The abovementioned overwhelming judicial view is paramount in this regar ..... X X X X Extracts X X X X X X X X Extracts X X X X
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