TMI Blog2011 (10) TMI 623X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Act. No fruitful purpose will be served by restoring the issue to the file of ld. DIT(E). Consequently, we set aside the finding of the DIT(E) and direct him to grant registration u/s 12AA and also to grant approval u/s 80G to the assessee-Trust. - I.T.A. Nos. 2073 and 2074/Mds/2010 - - - Dated:- 19-10-2011 - Hari Om Maratha (Judicial Member) And Abraham P. George (Accountant Member) For the Petitioner : Dr. Anita Sumanth For the Respondent : Anirudh Rai ORDER Hari Om Maratha (Judicial Member) These are the appeals filed by the assessee-Trust who has been denied registration u/s 12AA and also not approved u/s 80G of the Act vide common order dated 30.08.2010, passed by DIT(Exemptions), Chennai. Since their issues are interlinked, we proceed to decide them by a common order for the sake of convenience and brevity. 2. The Assessee-Trust was constituted by a Trust-deed dated 27.11.2009. The Trust had filed application in Form 10A for registration u/s 12AA, and also filed application for grant of approval in Form 10G of the Act, on 08.02.2010. 3. The ld.DIT(E) declined to register the Trust u/s 12AA and consequently refused to grant approval u/s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... isfy 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 (b) after satisfying himself about the objects of the trust or institution and the genuineness of its activities, he- (i) shall pass an order in writing registering the trust or institution; (ii) shall, 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 : Provided that no order under sub-clause (ii) shall be passed unless the applicant has been given a reasonable opportunity of being heard. 5. He has gone word by word of this provision and has concluded that the Commissioner, on receipt of application for registration of Trust or institution has to satisfy himself about the objects of the Trust and also the genuineness of its activities. And that only after that, the Commissioner can pass an order in writing either registering the Trust or refusing registration of the Trust. So, according to the DIT(E), he has to satisfy himself about both i.e(i) about charitability of the objects of the Trust; and (i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y in this regard. He has to satisfy himself about the objects of the Trust or institution and the genuineness of its activities and only thereafter he has to take his decision either to grant or refuse registration. In such a scenario it becomes imperative to examine this legal tangle very minutely. The DIT(E) has, in a way, come to the conclusion that in case the Trust has not commenced its activities, the genuineness of its activities with respect to its objects cannot be examined and consequently the Trust cannot be registered u/s 12AA. Hence, he has laid down a legal position that a Trust (or institution) can be registered under the Act only after it has started its activities; or to put it in other words that no Trust (or institution) can be registered u/s 12AA before it starts its activities. A Trust can apply for registration only after it has done sufficient activities. That is why we have examined this issue in detail. It is not that this issue has arisen for the first time, rater it has arisen in past in many forms and facets. The Courts/Tribunal has discussed and decided the same in umpteen cases. We are analyzing them in the following paragraphs. 8. Almost similar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot doubted the objects of the trust and only on the basis of application of the funds of the trust he has come to the conclusion that the activities carried on by the trust are not genuinely charitable. We differ from his finding and conclude that the activities of helping the cause of education is definitely a charitable activity and once there is no dispute about the genuineness of the activities of the trust, the ld. CIT cannot take shelter of any irrelevant reasoning for refusing registration as he cannot look into the application of funds at the time of dealing with the subject of registration u/s 12AA of the Act. In this regard, support can be drawn from the decision in the case of Shri Haridevji Gaushala Trust vs CIT, (2008) 119 TTJ (Agra) 981 [or (2008) 24 SOT 14], a copy of which was filed by ld. AR and in deciding that case one of us (JM) was a party. It has been categorically held in that case that application of income at the stage of Section 12AA is not relevant till its objects are charitable. The ld. CIT has not made out the case of refusal of registration and in view of these facts of the case, keeping in view the objects of the trust, the assessee-trust is entitled ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... could not establish with documentary evidence its charitable activities. There is no finding by the CIT that objects of the assessee-Trust were non-charitable in nature. We are, therefore, of the opinion that the matter requires re-visit by the CIT. We, therefore, set aside the orders of ld. CIT refusing registration under Section 12AA and refusing approval under Section 80G of the Act and remit the issues back to his file for disposal de novo. Assessee has to coITA operate and furnish the documents called for by ld. CIT and prove genuineness of its activities. Ld. CIT shall pass orders in accordance with law. The very reading of the above paragraph makes it clear that in a way starting of activities by Trust is not relevant for deciding the impugned issue. 12. Similar view has been taken by another Co-ordinate Bench (constituted by Shri N.S.Naini, Hon'ble AM and Shri George Mathan, Hon'ble JM) in the case of Adhyapana Trust vs ITO, in I.T.A.Nos.1575 1576/Mds/2010, vide order dated 21.7.2011. Para 7 of this order is relevant and the same is being extracted verbatim, as under :- We have heard the rival submissions and perused the orders of the lower authoritie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... adjudicating afresh in light of the discussion made hereinbefore after allowing proper opportunity of hearing to the assessee as per law. 13. From the above finding, it becomes manifest that although the CIT has power to examine the activities of the Trust, but he can examine the activities only if the activities have been started so that he can satisfy himself about the genuineness of its objects, since the Assessing Officer has to look into these aspects while making regular assessment. In case we uphold the view that registration u/s 12AA of the Act has to be granted only after examining the activities of the Trust, then in that case once a Trust is registered u/s 12AA, its activities cannot be again looked into at the time of regular assessment, and the certificate for registration would be enough to claim benefits of Sections 11, 12 13, etc. But this is actually not a correct preposition as the Assessing Officer has to examine the entire facts relating to the activities of the Trust which were carried out in a given relevant year, to come to a conclusion if it is eligible for this exemption or not. 14. While deciding similar issue another Co-ordinate Bench (in which ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y even after insertion of section 12AA because it is only a procedural section. 16. Another decision rendered by the Co-ordinate Bench is in the case of Madurayelerukkum Virudhunagar Hindu Nadargal Maruthuvamanai vs ITO, in I.T.A.No. 1623/Mds/2010, order dated 10.10.2010, in which one of us [JM] was a party. In similar circumstances, this very issue has been clearly churned while passing the order. Paragraph 4 of this order is relevant and is being extracted herein below, verbatim: It is noted that the assessee had complied with the directions of the ld. CIT and has also produced the books of account pertaining to financial year 2008-09. The ld. CIT has also perused the cash book, ledger, vouchers etc. which were produced before him. The assessee has also furnished copy of the documents filed before the Registrar of Companies as directed by the ld. CIT. Copy of the auditors reports for the years ending 31.3.2007, 31.3.2008 and 31.3.2009 are also placed before us for our perusal. We have perused all these documents. It is true that the ld. CIT has got the power to examine the objects of the assessee-society for registration purposes, but the overwhelming judicial pronounceme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... st was formed on 23rd Jan., 2008, and within a period of nine months they had filed an application under s. 12A for issuance of the registration claiming exemption. The fact that the corpus of the trust is nothing but the contribution of ₹ 1,000 by each of the trustees as corpus fund goes to show that the trustees were contributing the funds by themselves in a humble way and were intending to commence charitable activities. It is not even the case of the Revenue that by the time the application of the assessee came to be considered by them, the assessee had collected lots of donations for the activities of the trust. On the other hand the grievance of the concerned authorities seems to be that there was no activity which could be termed as charitable as per the details furnished by the assessee, therefore, such registration could not be granted. When the trust itself was formed in January 2008 with the money available with the trust, one cannot expect them to do activity of charity immediately and because of that situation the authority cannot come to a conclusion that trust was not intending to do any activity of charity. In such a situation the objects of the trust have to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ka High Court, application for registration was filed after eight months of formation of the Trust. In that case also the registration was refused because the assessee had not started its charitable activities although objects of the Trust were found to be charitable in nature. In the given case, the objects of the Trust are found to be verily charitable in nature, but only because it has not started/commenced its activities, the registration was refused. 22. In such a case, the question arises as to whether a decision of another High Court, not being directly of the Jurisdictional High Court, albeit in this case, the decision of Hon'ble Jurisdictional High Court is available by implication, which has been followed by us in the case of JITO Chennai Chapter as discussed above, is a binding precedent or not. It has been well accepted that though legally, judgment of another High Court is not a binding precedent yet a decision of another High Court should be followed. It is also a well settled dictum of law now. When there is no contrary decision, a decision of another High Court has to be followed by the Tribunal. The income-tax is a Central Act and therefore, the Tribunal s ..... X X X X Extracts X X X X X X X X Extracts X X X X
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