TMI Blog2006 (3) TMI 91X X X X Extracts X X X X X X X X Extracts X X X X ..... nce with the objects of the trust or institution, as the case may be, he shall pass an order in writing cancelling the registration of such trust or institution. – authorities have not kept in mind these mandatory provisions. They have not applied their mind in the way they are expected to, before passing the impugned orders – impugned order is set aside - - - - - Dated:- 13-3-2006 - Judge(s) : P. VISHWANATHA SHETTY., N. KUMAR. JUDGMENT The judgment of the court was delivered by N. Kumar J.-The appeal is admitted to consider the following substantial question of law: "Whether the authorities were justified in denying registration to the petitioner under section 12AA of the Income-tax Act, 1961, on the ground that the activities ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s utilised, which should be the criteria to accord exemption or registration of the trust, and the authorities have completely misdirected their enquiry and, therefore, the impugned orders are liable to be set aside. Section 11 of the Act deals with exemptions available to income from property held for charitable or religious purposes. Exemption from tax will be allowed only in respect of the income actually applied to the purposes of the trust. Income derived from trust property must be determined on commercial principles. In order to be eligible for the aforesaid exemption the assessee has to get the trust registered under section 12A of the Act. The assessee has to make an application in the prescribed form and comply with the other le ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Act, what the authorities have to satisfy is the genuineness of the activities of the trust or institution and how the income derived from the trust property is applied to charitable or religious purpose and not the nature of the activity by which the income was derived by the trust. Sub-section (3) of section 12AA of the Act provides that where a trust or an institution has been granted registration under clause (b) of sub-section (1) and subsequently the Commissioner is satisfied that the activities of such trust or institution are not genuine or are not being carried out in accordance with the objects of the trust or institution, as the case may be, he shall pass an order in writing cancelling the registration of such trust or ins ..... X X X X Extracts X X X X X X X X Extracts X X X X
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