TMI Blog2012 (10) TMI 116X X X X Extracts X X X X X X X X Extracts X X X X ..... rried out were found for promoting commercial activities of the group concern. Therefore, the assessee has failed to satisfy the requirements u/s. 12AA of the Act and as such, the ld. Commissioner was justified in refusing to grant registration and approval under the above provisions of the IT Act. Assessee has to make fresh application for registration as Trust and for grant of approval when it would actually start educational and charitable activities - IT Appeal Nos. 443 & 444 (Agra) of 2011 - - - Dated:- 7-3-2012 - Bhavnesh Saini And A.L. Gehlot, JJ. R.K. Agarwal for the Appellant. Sohail Akhtar for the Respondent. ORDER Bhavnesh Saini, Judicial Member - Both the appeals of the assessee are directed against the common order of ld. Commissioner of Income-tax-II, Agra dated 17/23rd August, 2011, refusing to grant registration u/s. 12AA of the Income-tax Act and approval u/s. 80G of the Income-tax Act. 2. According to the office, both the appeals are time barred by 37 days. The assessee explained in the application for condonation of delay that earlier the assessee preferred one appeal against the common order under both the sections, though the as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was not satisfied that the objects of the trust are chartable in nature. Accordingly, the registration u/s. 12AA was refused and approval u/s. 80G of the IT Act was also not granted. 4. The ld. counsel for the assessee referred to PB-4, which is copy of trust deed, to show that the assessee trust was created solely for the purpose of imparting education on different subjects. He has submitted that since the assessee exists only for the purpose of education and charitable activities, therefore, the ld. CIT should not have rejected the applications of the assessee. He has filed copy of the audit report ending 31st March, 2011 and admitted that the assessee is still at the stage of carrying out construction for schools and colleges. The construction is not complete and as such, no actual charitable or educational activities have been carried out by the assessee. He has, however, submitted that since the objects of the assessee trust are educational and charitable only, therefore, the ld. CIT should have granted registration u/s. 12AA of the IT Act and approval u/s. 80G of the IT Act. He has submitted that without raising construction, the assessee may not be able to get corpus/donat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nity of being heard. (1A) All applications, pending before the Chief Commissioner on which no order has been passed under clause (b) of sub-section (1) before the 1st day of June, 1999, shall stand transferred on that day to the Commissioner and the Commissioner may proceed with such applications under that sub-section from the stage at which they were on that day. (2) Every order granting or refusing registration under clause (b) of sub-section (1) shall be passed before the expiry of six months from the end of the month in which the application was received under clause (a) section 12A. (3) Where a trust or an institution has been granted registration under clause (b) of sub-section (1) and subsequently the Commissioner is satisfied that the activities of such trust or institution are not genuine or are not being carried out in accordance with the objects of the trust or institution, as the case may be, he shall pass an order in writing cancelling the registration of such trust or institution: Provided that no order under this sub-section shall be passed unless such trust or institution has been given a reasonable opportunity of being heard." 8. Section 12AA of the IT A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the applicant before the order of refusal to grant registration is passed by the Commissioner. The appellant, a charitable society, registered under the Travancore-Cochin Literary Scientific and Charitable Societies Registration Act, 1955, made an application for registration under section 12A of the Income-tax Act, 1961. The application was rejected. The order was challenged in a writ petition and a single judge disposed of the petition leaving the society at liberty to file a fresh application and directing the Commissioner to hear it in accordance with law. On appeal : Held, that a reference to the bye-laws of the society would show that though several charitable activities were included in the objects of the society, the society was not able to do any of the charitable activities during the first year of its functioning. The proposal to start a technical educational intuition itself was taken only on June 14, 1999, after the rejection of the application by the Commissioner. Since the society had not done any charitable work and the activities which it had carried on were only for the purpose of generating income for its members, the rejection of the application was justifie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ncern by showing their logo on the prospectus of the assessee trust, would clearly prove that even at the initial stage, the assessee trust had carried out such activities which were meant for the purpose of generating or enhancing income of the family group concern. In such an event, burden would be very heavy upon the assessee to prove that it intended to carry out educational and charitable activities. In the absence of any details which could rebut the finding of the ld. Commissioner, we are of the view that sole objects of the assessee could not have been considered at this stage for the purpose of granting registration/approval to the assessee. The assessee shall have to satisfy both the conditions before grant of registration/approval that its objects were educational and charitable and that it had carried out genuine activities. No genuine activities had been carried out, admittedly, for the purpose of achieving the objects of the assessee trust, i.e., educational or charitable. Therefore, the ld. Commissioner was rightly not satisfied about the genuineness of the activities of the assessee trust. Though apparently on consideration of objects of the assessee trust, we find ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f 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 the society, as given in its bye-laws, it has to be satisfied that the society has established the school, where education is being imparted as per rules and the factum of establishment and running school is a genuine activity. The enquiry regarding genuineness of the activities cannot be stretched beyond this." (iii) Order of ITAT, Lucknow Bench in the case of Baijnath Charitable Educational Trust v. CIT [2009] 125 TTJ 255, in which the assessee had written to the CIT clearly indica ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee in initial stage, assessee trust itself has tried to promote the business of group concern. Therefore, the decision of Kerala High Court in the case of Self Employers Service Society (supra) would squarely apply to the assessee's case. The orders of different Benches of the Tribunal and of Rajkot (SMC) Bench, thus, cannot be given preference against the decision of Hon'ble Kerala High Court. Considering the totality of the facts and circumstances, we are of the view that the assessee failed to establish that it has carried out genuine activities towards the objects of the assessee trust. Whatever other activities were carried out were found for promoting commercial activities of the group concern. Therefore, the assessee has failed to satisfy the requirements u/s. 12AA of the Act and as such, the ld. Commissioner was justified in refusing to grant registration and approval under the above provisions of the IT Act. We are, therefore, of the view that there is no irregularity or illegality in the impugned order. The decisions cited by the ld. counsel for the assessee would not support its case. We, therefore, maintain the order of the ld. Commissioner and dismiss both the a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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