‘No Activity’ can not be the ground for cancellation of registration u/s 12AA

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HIGH COURT OF KARNATAKADirector of Income Tax, Exemption. v.D.R. Ranka Charitable Trust
IT APPEAL NO. 44 OF 2014†NOVEMBER  20, 2018 

There are various instances where the authority are beyond the delegates authority and the only option left with the taxpayer is to approach the court for seeking the relief. One such instance recently came before Karnataka Hugh Court where it was held that if assessee trust did not carry any charitable activity during any relevant period, it could not be a ground to cancel registration granted earlier under section 12AA

Section 12AA of the Income-tax Act, 1961 – Charitable or religious trust – Registration procedure (Cancellation of) – Assessee-trust was granted registration under section 12AA – Subsequently, Commissioner cancelled assessee’s registration on ground that assessee had not carried out charitable activities during relevant period – Tribunal set aside order passed by Commissioner on ground that whether assessee was involved in a charitable activity or not, could be considered in assessment proceeding – Whether so far as factum of assessee being involved in any charitable activities or not and whether income so derived has been apportioned towards any other purpose, can be considered only during course of assessment proceedings and not at time of considering application for registration under section 12A – Held, yes – Whether, therefore, impugned order passed by Tribunal did not require any interference – 
Held, yes [Para 4] 
[In favour of assessee]

CASES REFERRED TO
1. DIT v. Garden City Educational Trust [2010] 191 Taxman 238/330 ITR 480 (Kar.) (para 4) and 
2. DIT v. Venkatesha Education Society 2012-TIOL-561-HC-KA-IT (para 4).

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