TMI Blog2017 (5) TMI 1169X X X X Extracts X X X X X X X X Extracts X X X X ..... unning of the societies is not sufficient to infer that the societies are actually carrying activities of charitable purposes in consonance with their objects. The activities of the societies have to be examined independently before coming to the conclusion that they are actually and genuinely for charitable purposes. In the absence of any such finding, we are of the opinion that this aspect of the matter was required to be considered by the tribunal before directing for the registration of the society. The profit earning or misuse of income derived by charitable institution from its activities may be a ground for refusing exemption under the Act which is a matter to be considered and decided at the time of assessment but at the ti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eties under Section 12A/12AA of the Income Tax Act, 1961 (hereinafter referred to as the Act). The respondent societies applied separately for registration under Section 12A/12AA of the Act in March, 2008. The applications for registration were rejected by the Commissioner of Income Tax pointing out certain irregularities and that the societies are being run by the family members as a camouflage of charity. The tribunal has set aside the order of Commissioner of Income Tax and has directed for the registration of the societies. The only question of law which has been raised in these appeals is whether the tribunal is justified in directing for the registration of the society under Section 12A/12AA even without recording satisfactio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... manded the matter to the Commissioner for consideration of the above aspects. The tribunal on the basis of the objects of the societies and the fact that those objects were not disputed recorded satisfaction that the societies were for charitable purposes. However, regarding the second aspect it only records that as no financial irregularity has been found, the genuineness of the activities of the societies also stand established. The mere fact that there were no financial irregularities in running of the societies is not sufficient to infer that the societies are actually carrying activities of charitable purposes in consonance with their objects. The activities of the societies have to be examined independently before coming to t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he language used in the section only requires that activities of the trust or the institution must be genuine, which accordingly 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. This is more evident if we see the provisions of Section 11, which, while exempting the income given in its various sub-clauses from being incl ..... X X X X Extracts X X X X X X X X Extracts X X X X
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