Registration under section 12AA cannot be denied solely because the trust had not started its charitable activities: HC

Citation - Commissioner of Income-tax (Exemption) v. Harnarayan Rajdulari Devi Taparia Charitable Trust

HC: Calcutta

ITA No: 111 OF 2019

Assessment Year: 2017-18

Date of Order- July 1, 2024

Brief Facts:

• The assessee trust filed an application in Form No. 10A for grant of registration under section 12AA and approval under section 80G

• However, the CIT(E) rejected the same on the ground that the assessee had not begun its charitable activities.

• Aggrieved, the assessee filed an appeal with the Tribunal, which held that at the time of application, the CIT(E) was only required to verify the genuineness of objectives of the assessee. Consequently, it remanded the matter back to the CIT(E) directing his enquiry to be restricted to genuineness of objectives of the assessee.

Observations of the High Court:

1. It was evident from a bare reading of section 12AA(1) that when an application for registration is made, the PCIT/CIT has to call for documentation and information to satisfy himself about the genuineness of activities and compliance with other laws which are material for fulfilling the object of the assessee.

2. At the time when trust came into existence and applied for registration, the CIT has to satisfy himself that objects of the Trust are genuine.

Hence, it held that application for registration under section 12AA could not be refused by PCIT/CIT solely on ground that trust or institution has not yet started its activities.

[Editorial Note: The caselaw may be distinguishable in cases pertaining to application for final registration after obtaining provisional registration under the amended section 12A / 12AB.]