TMI Blog2016 (1) TMI 1304X X X X Extracts X X X X X X X X Extracts X X X X ..... im the benefits u/s 11 & 12 of the Act. The fulfillment of conditions of section 11 is a separate issue which is to be considered when return is filed by the assessee and examined by the AO. CIT could not have refused registration to the assessee u/s 12A for not complying with the condition of application / accumulation of income as specified in section 11 of the Act. Further we find that the Ld. CIT has refused registration on the recommendation of the AO, without disclosing the complete contents of the report and without confronting the same to the assessee. This we hold is against the principle of natural justice. Thus we direct the Commissioner of Income Tax to grant Registration to the assessee society u/s 12AA - Decided in favour of assessee. - ITA No. 309/Chd/2015 - - - Dated:- 7-1-2016 - SHRI H.L. KARWA, VICE PRESIDENT AND MS. ANNAPURNA MEHROTRA, ACCOUNTANT MEMBER For The Appellant : Sh. K.R. Chhabra For The Respondent : Sh. Manoj Mishra ORDER PER ANNAPURNA MEHROTRA A.M. This appeal has been filed by the assessee against the order passed by CIT (Exemptions), Chandigarh dated 16.02.2015, refusing to grant registration to the assessee u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d that registration u/s 12A could not be refused for not carrying out the stated objects of the trust. Ld. AR again placed reliance on the order of Surya Educational Trust (Supra) in this regard. Further Ld. AR stated that examination of the fulfillment of the condition of section 11 was the prerogative of the A.O. to check during assessment proceedings and could not be a considered by the CIT while granting registration u/s 12A. The Ld. AR also stated that registration could not be refused on the recommendation of the Assessing Officer without disclosing the contents of the report confronting the same to the assessee. Thus the Ld. AR stated that the Ld. CIT had erred in not granting registration to the assessee trust. 4. Ld. DR on the other hand relied upon the order of the Ld. CIT and stated that since no activities in pursuance to the stated objects of the assessee trust had been carried out and further since the assessee had failed to comply with the condition regarding application of income to the extent of 85% or accumulation of the same as per section 11(2), the Registration u/s 12A had been rightly refused by the Ld. CIT. 5. We have heard the rival submissions and per ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ness of the activities of the Trust on such inquiries as he may deem necessary. Sub-section (1A) and (2) of Section 12AA of the Act, are procedural in nature, whereas Sub-section (3) of Section 12AA of the Act, empowers the Commissioner to cancel the registration of the Trust or Institution, if he is satisfied that the activities of such Trust or Institution are not genuine or are not carried out in accordance with the objects of the Trust or Institution. Section 11 of the Act contemplates that the income as specified therein shall not be included in the total income of the previous year of the person in receipt of the income derived from the property held under the Trust wholly for charitable or religious purposes, whereas Section 12 of the Act, deals with the contributions received by the Trust or an Institution, established for charitable and religious purposes, receiving contribution, shall not be an income in terms of Section 11 of the Act. The benefit of Sections 11 and 12 of the Act, are available only if such Trust or Institution is registered under Section 12AA of the Act. On the other hand, Section 10(23C) of the Act are the provisions of the Act in substituti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ove facts and circumstances, it would be clear that respondent-society which was admittedly running a Polytechnic College and the activities were interwoven for furthering the projects and activities pertaining to education, the Tribunal rightly directed that registration should be granted to the respondent-society with the rider that the same could always be cancelled if it came to the notice of the CIT that the society was not carrying on the activities as per its objects. The Commissioner while processing the application under Section 12AA of the Act was not to act as an Assessing Authority and thus, the Tribunal has rightly allowed the appeal filed by the society in the facts and circumstances of the present case. 8. Accordingly, in view of the aforesaid pronouncements of this Court which are fully applicable in the present case, the submission of the counsel for the revenue that the Trust was not set up for charitable purposes and it was utilizing its income not for the said purpose cannot be examined at this stage as only objects of the Trust had to be considered by the Commissioner. The Trust was in nascent stage and was yet to work towards its objects. No error could ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the claim of the assessee in the return filed, and could not be a consideration for granting/refusing to grant registration u/s 12AA. The Hon ble High Court held at para 22 of its order as follows: 22. The question of the exemption of the application of income received by way of donation, is a separate issue and which may be required to be considered, when the return is filed by the trust and is examined by the Income-tax Officer. The question as to whether the donations by the societies was the expenditure of the trust for charitable and religious purposes will be examined at the time of examining the return. Similar view has also been held by the Rajasthan High Court in the case of CIT Vs. Vijay Vargiya Vani Charitable Trust (2014) 369 ITR 360 (Raj) wherein it held as follows: 8. In our view, the object of Section 12AA is to examine genuineness of the objects of the trust but not the income of the trust for charitable or religious purpose. The Commissioner cannot sit in the chair of Assessing Officer to look into amount spent on charitable activities at the time of creation of the Trust. The stage for reviewing the application of income has not arrived when such ..... 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