TMI Blog2014 (3) TMI 976X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee-trust and determine whether the object would fall within the preview of section 2(15) of the Act and if so under which limp of the provision, i.e., "relief to the poor, education, medical relief, preservation of environment (including watersheds, forest and wildlife), preservation of monuments or places or objects of artistic or historical interest, or advancement of any other object of general public utility - Decided in favour of assessee for statistical purposes. - I.T.A.No.2087/Mds. /2012 - - - Dated:- 7-3-2014 - SHRI A.MOHAN ALANKAMONY AND SHRI CHALLA NAGENDRA PRASAD, JJ. For the Appellant : Shri V.D.Gopal, Advocate For the Respondent : Shri N.Madhavan, JCIT D.R. ORDER A. Mohan Alankamony (Accountant Member).- This appeal is filed by the assessee-trust, against the order of the Director of Income-tax (Exemptions), Chennai dated September 21, 2012 in DIT(E) No. 2(982)/11-12 wherein the learned Director of Income-tax (Exemptions) denied registration to the assessee-trust under section 12AA of the Act. 2. The brief facts of the case as submitted by the learned authorised representative are that the assessee is a trust constituted by a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... : (i) Hardayal Charitable and Educational Trust v. CIT [2013] 355 ITR 534 (All) At the time of registration under section 12AA which is necessary for claiming exemption under sections 11 and 12, the Commissioner is not required to look into the activities, where such activities have not commenced or are in the process of its initiation. Where a trust, set up to achieve its objects of establishing educational institution, is in the process of establishing such institutions, and receives donations, the registration under section 12AA cannot be refused on the ground that the trust has not yet commenced the charitable or religious activity. Any enquiry of the nature would amount to putting the cart before the horse. At this stage only the genuineness of the objects has to be tested and not the activities, which have not commenced. The enquiry of the Commissioner at such preliminary stage should be restricted to genuineness of the objects and not the activities unless such activities have commenced. The trust or society cannot claim exemption, unless it is registered under section 12AA and, thus, at such initial stage the test of the genuineness of the activity cannot be a grou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch registration is sought much later than the formation of the trust or after expiry of the earlier registration granted in favour of the trust. Therefore, in a case of this nature where the trust has approached the authority for registration under section 12A within a span of eight months of its formation, the abovementioned criteria, namely, the objects of the trust for which it was formed will have to be examined to be satisfied about its genuineness and the activities of the trust cannot be the criterion, since it is yet to commence its activities. (para 6) (iii) Sanjeevamma Hanumanthe Gowda Charitable Trust v. DIT (Exemptions) [2006] 285 ITR 327 (Karn) (page 328) : Section 11 of the Act deal with exemptions available to income from property held for charitable or religious purposes. Exemption from tax will be allowed only in respect of the income actually applied to the purposes of the trust. Income derived for trust property must be determined on commercial principles. In order to be eligible for the aforesaid exemption the assessee has to get the trust registered under section 12A of the Act. The assessee has to make an application in the prescribed form and compl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essee, in the event of its misusing those provisions. (para 7) In the instant case the authorities have not kept in mind these mandatory provisions. They have not applied their mind in the way they are expected to, before passing the impugned orders. Therefore, both the orders cannot be sustained. (para 8) 5.1. Further on perusing the trust deed of the assessee-trust we find that objects of the trust are as follows : The trust has been established with the following objects : (a) To provide credit counselling services to persons for the purposes of, amongst others, facilitating efficient debt management and promoting and assisting better credit management ; (b) To set up of centres across the country for providing credit counselling services or use any other channel, including internet, phone or television, for the purposes of providing the credit coun selling services ; (c) To purchase property, movable or immovable, in the name of the trust for the purposes of establishing the centres and/or infrastructure for providing credit and counselling services ; (d) To form, constitute, promote, subsidise, organise or aid in forming, constituting, promoting, organi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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