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2016 (3) TMI 51 - ITAT DELHI

2016 (3) TMI 51 - ITAT DELHI - TMI - Grant of registration u/s 12A denied - both the objects as well as the genuineness of the activities could not be established - Held that:- The Hon’ble Rajasthan High Court in case of CIT Vs. Digambar Jain Mandir [2008 (2) TMI 882 - RAJASTHAN HIGH COURT] 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 t .....

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ated:- 18-2-2016 - Shri G. D. Agrawal, Vice President And Shri Sudhanshu Srivastava, Judicial Member For the Appellant : 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) .....

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s 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. That the learned Commissioner of Income Tax (Exemptions), Lucknow has grossly erred both on facts and in law in refusing to grant registration to the appellant society under section 12AA(1)(b)(ii) of the Income Tax .....

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he assessee is an educational welfare society and was also duly registered under the Societies Registration Act. 4. That the finding of the learned Commissioner of Income Tax (Exemptions) in the order that, the assessee has not filed all the requisite details as called for, are contrary to the written submissions filed before him dated 19.03.2015, 27.03.2015 and which were duly supported by all documents as directed to be furnished. 5. That the findings of the learned Commissioner of Income Tax .....

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ere charitable in nature. 7. That the learned Commissioner of Income Tax (Exemptions) has erred in failing to appreciate that for the grant of registration, only objects of the appellant society is required to be examined and thus in the absence of any adverse material that the society was not engaged in any charitable activities, he has erred in rejecting the application. In fact, there is not any whisper that the objects of the appellant society were not charitable or it did not carry any othe .....

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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) .....

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issions made before the Ld. CIT(E), the society, since its inception, was in the process of establishing an educational institution in the backward city of Bilsi under the name and style of Baba International School . He also submitted that the society had also organised a program to distribute blankets to the poor in winters which is duly evidenced by photographs and newspaper cuttings. He also submitted that the society had organised workshops in Sahaswan, Wazirganj & Ughaiti of Budaun Dis .....

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lding. He submitted that these facts were also brought to the notice of the Ld. CIT(Exemptions) along with relevant supporting evidences. Thus, the society had begun pursuing its charitable object in right earnest and the denial of benefit of registration was not justified. The Ld. AR also relied on the judgment of the Hon'ble Delhi High Court in the case of Ram Piyari Devi Charitable Trust & Anr. vs Director General of Income Tax, Delhi & Anr. in WP(C) 4725/2012 and CM No. 9795/2012 .....

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d/2012. 6. The Ld. DR, on the other hand, relied on the order of the Ld. CIT(Exemptions) and submitted that the assessee had failed to establish the genuineness of the activities and hence the grant of registration was rightly refused. 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 su .....

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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 application for registration of trust or institution, to call for such documents or information from the trust o .....

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ion under section 12AA, the scope of enquiry of the Commissioner would be limited to the aforesaid extent. On the facts of the case, it is seen that this is the first year of the assessee society and at the time of filing of application for registration, there were no substantial activities. The Ld. CIT (Exemptions) drew adverse inference on inactivity which was not germane at the time of filing of application for registration of trust u/s 12AA. In our considered opinion, merely not carrying of .....

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owards the setting up of a school and the Department has not controverted the same. Reference can be made to the decision of the Hon'ble Allahabad High Court in the case of Hardayal Charitable & Educational Trust vs. Commissioner of Income Tax reported in 355 ITR 534 (All) wherein the Hon'ble High Court has held as under: at the time of registration u/s 12AA of the Income Tax Act, which is necessary for claiming exemption u/s 11 & 12 of the Act, the Commissioner of Income Tax is .....

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e 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 registrat .....

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stitution and genuineness of the activities. He is not required to look into the utilization of fund, commercial nature of activity etc. at this stage. These aspects can be looked into by the AO at the time of assessment. As per the scheme of the Act, registration u/s 12A of the Act does not, ipso-facto, entitle an assessee to avail exemption u/s 11 of the Act. For availing exemption u/s 11, the assessee has to fulfill the conditions laid down u/s 11 to 13 of the Act. Therefore, whether the asse .....

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e or its activities are not genuine. That being the case, the denial of exemption cannot be upheld. In case of CIT Vs. Red Rose School (supra), the Hon ble Allahabad High Court held as under: 33. In regard to the genuineness of the activities of the trust or the institution, whose objects do not run contrary to public policy and are, in fact, related to charitable purposes, the Commissioner is again empowered to make enquiries as he thinks fit. In case the activities are not genuine and they are .....

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