TMI Blog2016 (3) TMI 51X X X X Extracts X X X X X X X X Extracts X X X X ..... t : Shri C.S. Aggarwal, Sr. Adv., R.P. Malik, Adv For the Respondent : Smt. Nandita Kanchan, CIT DR ORDER Per Sudhanshu Srivastava, JM The present appeal has been preferred by the assessee against the order dated 31.03.2015 passed by the ld. CIT(Exemption), Lucknow. 2. The assessee is a society created on 23.7.2014. The society had filed an application for registration u/s 12A(a) of the Income Tax Act, 1961 (Hereinafter called the Act). On a perusal of the records before him, the ld. CIT (Exemptions) came to the conclusion that as per the income and expenditure account on 29.8.2014, the society had not carried out any charitable activity. He has also given a finding that a perusal of income and expenditure account drawn for the period 10.7.2014 to 9.3.2015 could not reveal carrying out of any charitable or religious activity. He was of the opinion that both the objects as well as the genuineness of the activities could not be established. He, accordingly, denied the benefit of registration to the assessee society. 3. Aggrieved, the assessee society is in appeal before us. The assessee has taken as many as 10 grounds of appeal which are as under:- 1. Tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oner of Income Tax (Exemptions) has completely ignored that the society had organized a programme to distribute woolen blankets to the poor and needy in the winters and that it has held workshops in the remote area of Sahaswan, Wazirganj Ughaiti of Budaun District to develop singing, dance and fine arts among kids, which all have been completely ignored. 9. That the learned Commissioner of Income Tax (Exemptions) has failed to appreciate that his finding that no charitable activities have so far been started, is factually incorrect, and is contrary to material on record. 10. That in any case and without prejudice, the mere allegation that no charitable activity has yet been started could not be a valid ground to deny the claim of registration. It is thus prayed that the order of Commissioner of Income Tax (Exemptions) passed u/s 12AA(1)(b)(ii) of the Act be set aside and learned Commissioner of Income Tax (Exemptions) be directed to grant registration as there was no material to establish that the objects of the appellant society were not charitable. 4. The Ld. AR submitted that the Ld. CIT(E) had failed to appreciate that the objects of the society were c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fused. 7. Before adjudicating on the issue, it will be worthwhile to reproduce section 12AA of the Act at this juncture:- 12.AA (1) The Commissioner, on receipt of an application for registration of a trust or institution made under clause (a) [or clause (aa) of sub-section (1)] of section 12A, shall- (a) call for such documents 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 (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. 8. It is seen that Section 12AA confers power on the CIT, while considering the app ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... u/s 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 of Income Tax at such preliminary stage should be restricted to genuineness of the objects and not the activities unless such activities have commenced. The Trust of society cannot claim exemption, unless it is registered u/s 12AA of the Act and thus at that such initial stage the test of the genuineness of the activity cannot be a ground on which the registration may be refused. 9. So far as the allegation of the DIT(E) that the assessee has not conducted any charitable activity of its own is concerned, we find that such finding of the DIT(E) is without any basis. The material placed on record clearly indicates that the assessee has undertaken activities in furtherance of its object as per the Memorandum of Association. Furthermore, at the stage of granting registration u/s 12A of the Act, the DIT(E) has to satisfy himself about the objec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... would mean, they are in consonance with the objects of the trust/institution, and are not mere camouflage but are real, pure and sincere, nor against the proposed objects. The profit 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. 10. The Hon ble Rajasthan High Court in case of CIT Vs. Digambar Jain Mandir vide ITA No. 106 of 2001 dated 25/02/2008 held that in order to get registration u/s 12A of the Act, the institution need not first establish its claim to exemption u/s 11 and 12. The question of exemption under section 11 and 12 would only come at the time when the trust/institution is assessed to tax. The aforesaid decision of the Hon ble Rajasthan High Court was affirmed by the Hon ble Supreme Court while dismissing the SLP filed by the Department (310 ITR 2 (St.). Therefore, considering the facts of the present case in the light of the judicial precedents and also relevant statutory provisions, the only conclusion one can reach is th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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