TMI Blog2018 (3) TMI 1181X X X X Extracts X X X X X X X X Extracts X X X X ..... ineness of the activity cannot be the ground for the rejection of the registration of the assessee trust. In view above, we accept the grievance of the assessee is justified. Therefore, reverse the findings recorded by the CIT(E) and direct to issue Certificate granting registration under section 12AA in the name of the applicant society, forthwith from the financial year in which application was filed. - Decided in favour of assessee. - ITA No. 436 /AGR/2017 - - - Dated:- 20-3-2018 - SHRI A.D. JAIN, JUDICIAL MEMBER AND DR. MITHA LAL MEENA, ACCOUNTANT MEMBER For The Appellant : ShriShashank Agarwal, Advocate For The Respondent : ShriInderjeet Singh, CIT DR ORDER PER, DR. MITHA LAL MEENA, AM: This appeal, by the assessee is directed against the order dated 20.09 2017 of Commissioner of Income Tax (Exemptions), Lucknow [hereinafter refer to as ( the CIT )], challenging rejection of its application for registration under section 12AA (1)(b)(ii) of the Income Tax Act, 1961( The Act in short). 2. Facts as per record are thatthe assessee society has applied an application for registration u/s12A(a) of the Act, on 29-03-2017 with the Ld. CIT (Ex ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be refused on the ground that the trust has not yet commenced the charitable or religious activity. Any enquiry of thisnature 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 at such preliminary stage should be restricted to genuineness of the objects and not the activities unless such activities have commenced. The trust or society cannot claim exemption, unless it is registered under section 12AA and, thus, at such initial stage the test of the genuineness of the activity cannot be a ground on which the registration may be refused. For this purpose, he relied on the decisions of the High Courtand ITAT s as enumerated hereunder: 5.1 The Jurisdictional Hon ble Allahabad High Court in the case of CIT(E) vs. SheedharSewa Trust Asharfi Bhawan, Ayodhya Faizabad , ITA No. 33 of 2017, dated 07-09-2017 whereinit is held that at such initial stage when the trust has not yet commenced the charitable activity, the test of the genuineness of the activity cannot be the ground to reject the registration. 5.2 In the case of The CIT vs.R. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 309/Del/2016, 2018) 51 CCH 0645 (Del.Trib) date of order 14.12.2017, where the registration was refused by Ld. CIT(E) on similar ground that due to non-production of books of accounts and vouchers, the genuineness of activities could not be verified. The contention of the revenue that, the Ld. CIT has got ample power u/s 12AA to examine the books of account of the assesse. By not allowing him to examine the books of account and thereby restricting his powers is contrary to the provisions of the Act. was rejected by Hon ble ITAT as under: 16. Now, coming to the powers of the Commissioner as to whether while granting registration u/s 12A he is required to examine the books of account etc. or he is only to satisfy himself regarding the objects of the trust and genuineness of the activities of the trust, we find various courts have held that while granting registration u/s 12A the ld. CIT is required to see only the objects of the assessee trust/society and not to examine the application of income. He is not required to examine whether the income derived by the trust is being spent for charitable purposes or the trust is earning profit while granting registration. He is o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sustained as this is in direct conflict with the law laid down by Hon ble jurisdictional High Court and various Benches of Hon ble ITAT. 6. Per contra, the ld CIT-DR, vehemently supported the orders passed by the ld CIT(E) by stating that the application was rejected when there was no information forthcoming from the side of the assessee who had applied for registration and in view of no evidence the ld CIT(E) was quite justified in refusing to grant registration under section 12AA(1)(b)(ii) of the Act. 7. We have considered the rival submissions, facts on recordsand the impugned orders. It is undisputed fact that the assessee trust has not conducted any activities during the year relevant and therefore the enquiry conducted by the CIT(E) to examination of genuineness of activities of the assessee is misdirected. The only question before CIT(E) to decide was that whether the objectives of the assessee society/Trust were charitable in nature? 8. The ld Counsel contended that enough material was brought on records by the assessee before the ld CIT(E) to his satisfaction that the society qualifies for grant of registration; that the objects of the society arecharitable i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... respect of various assertions challenging the claim made in the impugned order rejecting application u/s 12AA, it cannot be assumed that assessee has not filed sufficient material as required by the CIT(E) to form satisfaction regarding charitable purpose of the trust. 13. From the facts, as noted above, it is self evident that the observation of the ld CIT (E) is certainly contrary to the facts and evidences on records as the assessee has sufficiently proved with corroborative evidence that the object of Society are charitable in nature and in pursuance of the said objects it has instituted the society for imparting education in a systematic manner from the primary level of education. 14. The ld CIT(E) has placed reliance to few judgements in its order, none of which has any application to the case on hands. In CIT Vs. Jamna Lal Bajaj Seva trust 171 ITR 568 it was held by the Hon ble Bombay High Court that where the capital gain arisen was claimed exempt under section 13(4) of the Income Tax Act. The Hon ble Court has held that the assessee is not entitled for exemption under section 11 in respect for it. In CIT Vs National Institute of Aeronautical Education Society, 181 Ta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cted to the ld CIT(E) observation as regards his non-satisfaction about genuineness of activities as no activities were started by the assessee trust since, it was incepted on 01/07/2016 and being the first year of the trust no activities could be conducted during the year. On fact, in the absence of activities, any enquiry of the nature would amount 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. We find that on the facts, the findings of the Ld. CIT(E) regarding the genuineness of activities isin direct conflict with the law laid down by Hon ble jurisdictional High Court. Thus, at the initial stage when the trust has not yet commenced, the test of the genuineness of the activity cannot be the ground for the rejection of the registration of the assessee trust. 17. In view above, we accept the grievance of the assessee is justified. Therefore, reverse the findings recorded by the CIT(E) and direct to issue Certificate granting registration under section 12AA in the name of the applicant society, forthwith from the financial year in which application was filed. 18. In th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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