The Kolkata bench of the Income Tax Appellate Tribunal, recently ruled that a Trust is entitled to get registration under section 12AA of the Income Tax Act, 1961 even before it start its activities. The decision was based on the decision of the coordinate bench of Delhi ITAT in Dharma Sansthapak Sangh (Nivas) vs. CIT.
The assessee is a Trust formed with the objects of promoting, establishing, equipping, erecting, maintain and /or granting all or other financial assistance for advancement of education, music, dancing, literature, culture and other similar pursuits, dispensaries, hospitals, laboratories, hostels etc. It came into existence through a Certificate of Registration of Societies, West Bengal Act. The assessee was aggrieved by the order of the CIT(E)in which registration under section 12AA and approval under section 80G(5)(vi)of the Income Tax Act was denied to them on ground that no activities of the Trust were started and there is no means to verify the genuineness of the activities.
On appeal, the Commissioner of Income Tax (Appeals)sustained the order. Aggrieved with these orders, the assessee approached the ITAT for relief.
The Tribunal found that the CIT has no objections as to the charitable nature and objects of the assessee. The Tribunal further noticed the decision of the Coordinate Bench of Delhi Tribunal in the case of Dharma Sansthapak Sangh (Nivas) –vs. – CIT, in which the Tribunal observed the following “The law is now well-settled that while granting the registration to the charitable institution or trust, if it is at the commencement stage, the powers of CIT, with whom the application is filed by such trust/institution, are limited to the aspect of examining that whether or not the objects of trust are charitable in nature and this well established law is supported by the decisions relied upon the learned Authorised Representative and referred to in the earlier part of the order. It has already been observed that objects of trust, which are religious, are charitable in nature. Thus, assessee also fulfils such condition. The carrying of charitable activity at the stage of commencement of institution is not relevant to decide that whether such trust/ institution is entitled for registration. So long the objects of the trust are charitable in nature, registration cannot be refused, if the trust is genuine. Therefore, we find no material on record to justify the action of the CIT vide which the assessee trust has been refused for grant of registration. We direct CIT to grant registration to the CIT (sic-assessee-trust). The appeal filed by the assessee is allowed.”[Emphasis supplied] While deciding the appeal in the above case, the Tribunal took into consideration the decisions of Tribunal in the cases of Acharya Sewa Niyas Uttaranchal vs. CIT [(2006) 105 TTJ (Del) 761] and Modern Defence Shikshan Sansthan vs. C.I.T. [(2007) 108 TTJ (Jd) 732].”
Following the above decision, it was held that the assessee is entitled to get registration under section 12AA of the Act.
Read the full text of the order below.
