TMI Blog2016 (2) TMI 563X X X X Extracts X X X X X X X X Extracts X X X X ..... in the name of the entity in which he was interested as a shareholder or director and not in the name of the trust proposed to be used for the purpose of the appellant-trust. This, does not, in any way militate against the charitable character of the objects of the appellant-trust. It is not the case of the ld.CIT(Exemptions) that the funds of the appellant-trust were used for the construction of the building in the name of that entity. This, neither infringes the provisions of sec.13 nor can be examined at the stage of granting registration. The genuineness of the activities of the trust can be examined only after commencement of the activities of the appellant-trust. Thus we direct the ld.CIT(Exemptions) to grant registration u/s 12A of the IT Act. Following the same parity of reasoning give by us in the appeal filed against denial of registration u/s 12A, we direct the ld.CIT(Exemptions) to grant the approval u/s 80G. - Decided in favour of assessee. - ITA Nos.1256 & 1257/Bang/2015 - - - Dated:- 13-1-2016 - SHRI VIJAYPAL RAO, JUDICIAL MEMBER and SHRI INTURI RAMA RAO, ACCOUNTANT MEMBER For The Appellant by : Shri Padamchand Khincha, CA For The Revenue by : Smt Nee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er any gift donation or contribution in kind or money, whether upon trust or otherwise and to undertake and execute any trust or obligations which may be deemed conducive to any of the objects of the trust. k) To manage, improve, develop alter, repair, demolish, sell, alienate lease, mortgage charge, pledge, hypothecate, dispose of or otherwise deal with the all or any of the property funds, assets, rights and privileges of the trust. l) To open and operate current, saving or over draft or fixed deposit accounts with any bank or banks. m) To carry on any activities which may seem beneficial or conducive to any of the objects of the trust and either alone or in conjunction with others or as factors trustees, or agents and upon such terms as the governing body may deem fit. n) To enter into and carry out arrangements for joint working or for amalgamation with any other association, society or institution having objects within the objects of the trust. o) Generally to do all other things as are deemed incidental or conducive to the attainment of all or any of the aforesaid objects. p)To engage teachers, professors, instructors, research workers, fellowship holders st ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appellant trust made an application in form no.10A dated 30-12-2014 to the ld. CIT(Exemptions) for registration of the Trust u/s 12A of the Act, 1961 and for approval u/s 80G of the IT Act, 1961 in form No.10G vide application dated 20-02-2015 for grant of approval u/s 80G of the IT Act, 1961. The ld. CIT(Exemptions) vide his letter dated 16-04-2015 sought certain information which had been duly complied with by the appellant-trust vide letter dated 19-06-2015. After perusing the information filed by the appellant-trust, the ld.CIT(Exemptions) vide his impugned order dated 07-08-2015 had denied the registration u/s 12A and approval u/s 80G of the Act. The ld.CIT(Exemptions) noticed that the son of the settler of trust had come forward to construct the building in the name of entity called Ozone Orbana Infra Pvt. Ltd., but not in the name of the trust. Therefore, the ld.CIT(Exemptions) inferred that it is only a business venture and further held that it was a case of violation of sec.13(2)(g) of the Act. The ld.CIT(Exemptions) observed that in the absence of relevant details, it was not possible to verify the genuineness of the objects and the activities of the trust. The ld.CIT(Exe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (g) of the Act. One more reason assigned by the ld.CIT(Exemptions) is that in the absence of commencement of activities the genuineness of the activities cannot be examined. In our considered opinion, the approach of the ld.CIT(Exemptions) is totally erroneous and cannot stand the test of the law laid down by the Hon ble jurisdictional High Court in the cases referred herein below: (i) The Hon ble jurisdictional High Court in the case of Sri Gururaja Seva Samithi had clearly held that the question of verifying the activities of the trust can be considered only after it is registered and carries on activities subsequently. The Hon ble High Court after referring to the its earlier decision in the case of Sanjeevamma Hanumanthe Gowda Charitable Trust Vs DIT(Exemptions) held as follows; 4. It is an undisputed fact that at the time of application for registration the respondent society had not commenced its activities and had not received the income. The question of verifying the genuineness of the activities of a trust can be considered only after it is registered and carries on the activities. It is settled law that in the first year when the trust is sought to be registered, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... from the provisions of the Income Tax Act in particular sections 11 and 12 is not automatic. It is only when the assessee satisfies the requirement of section 13, he would be eligible for exemption. That is a matter to be gone into by the Assessing Authority in respect of the returns filed every year and if according to them there is misappropriation of funds and it is hit by section 13 of the Act, certainly, they can deny the benefit of exemption. But that is not a ground to deny the registration in the instant case under Section 12AA, when admittedly the trust has been established to run schools and colleges for imparting education, which is a charitable purpose. In that view of the matter, we do not see any merit in this appeal. The substantial question of law framed in this appeal is answered in favour of the assessee and against the revenue. Accordingly, the appeal is dismissed. (iii) Again, the Hon ble jurisdictional High Court in the case of Meenakshi Ammal Endowment Trust (supra) held that once the objects of the trust are found to be charitable, registration has to be granted by the CIT and if it is found subsequently that the trust has not carried out any charitable ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 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. (iv) Again, in the case of Garden City Educational Trust (supra), the Hon ble High Court held that once the objects of the trust are found to be charitable and fulfilled the required procedural requirements, registration u/s 12A has to be granted and the benefit of exemption in terms of sec.11 and 12 is to be examined during the course of assessment proceedings by the Assessing Officer. The relevant paras 16 17 are extracted hereunder: 16. We are of the view that the applicant before the Commissioner did impart education in terms of section 12A, as it is not in dispute that one of the objects or even the main object of the trust is imparting education. It is also not in dispute that the trust is imparting education and it is not as though some other activity which is not in the nature of education is sought to be passed off in the name of education. So long as the trust has education as one of its objects which is one of the enu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ions are found to be charitable, the Commissioner has no option, but to grant registration. In the present case the Commissioner has not found that any objects of the trust are not charitable in nature. The objections raised by the CIT that the appellant had failed to comply with the direction of the Commissioner of Income, Rohtak to file the details of donors of corpus funds and the institution was collecting the fees from the students are not relevant considerations at the time of grant of registration under Section 12AA of the Act. These are the issues to be examined during the assessment proceedings after grant of the registration under section 12AA of the Act. Therefore, we direct the Commissioner of Income Tax, Rohtak, to grant registration to the appellant society within a period of 30 days from the date of receipt of this order. Accordingly, the grounds of appeal filed by the appellant society are allowed in full. 8. Thus the law is fairly well settled that at the time of granting registration u/s 12A of the Act, the CIT is only empowered to look at the objects of the trust whether charitable or not. Once the objects of the trust are found to be charitable, the CIT has ..... X X X X Extracts X X X X X X X X Extracts X X X X
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