Carrying of Charitable Activity at the Stage of Commencement of Trust is not Relevant to Grant Registration: ITAT Kolkata [Read Order]


In a recent ruling, the Income Tax Appellate Tribunal, Kolkata bench has observed that, under the relevant provisions of the Income Tax Act, 1961, the Commissioner of Income Tax has limited power to examine that whether or not the objects of trust are charitable in nature, while granting the registration to the Trust, which is at the commencement stage.

Coming to the facts of the case, the assessee-trust was formed with the object of carrying out educational activities in the field of medical, engineering and such other streams. The assessee filed an application before the CIT (Exemptions), Kolkata seeking registration under 12AA of the Income Tax Act. The application was rejected by the authority on ground that the activities of the Trust were found to be bare minimum to justify the claim of Registration under section 12AA of the Income Tax Act.

The assessee could not secure any relief from the Commissioner of income Tax (Appeals) and therefore, the matter was brought before the Tribunal on second appeal.

While directing the authority to grant exemption to the assessee, the Tribunal relied upon the decision of the Delhi bench in the case of Dharma Sansthapak Sangh (Nivas) –vs. – CIT. in which it was observed that “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.A similar view was taken by the other benches of ITAT following the above decision.

Read the full text of the order below.