Enquiry bu CIT for registration u/s 12AA should be restricted to the genuineness of the objects and not the activities unless such activities have commenced.


Enquiry bu CIT for registration u/s 12AA should be restricted to the genuineness of the objects and not the activities unless such activities have commenced.


Case :­ INCOME TAX APPEAL No. ­ 33 of 2017 Appellant :­ Commissioner Of Income Tax (Exemption) Lucknow Respondent :­

M/S Shreedhar Sewa Trust Asharfi Bhawan,Ayodhya,  Faizabad Counsel for Appellant :­ Alok Mathur Hon’ble Sudhir Agarwal,J. Hon’ble Ravindra Nath Mishra­II,J.

  1. Heard   Sri   Alok   Mathur,   learned   counsel   for   appellant   and perused the record.



  1. This   appeal   under   Section   260­A   of   Income   Tax   Act,   1961 (hereinafter referred to as the “Act, 1961”) has arisen from judgment and order   dated  12.04.2017  passed   by   Income   Tax   Appellate   Tribunal, Lucknow Bench ‘A’, Lucknow (hereinafter referred to as the “Tribunal”)


in ITA No. 492/LKW/2016.


  1. Learned counsel for appellant could not dispute that issue raised in this appeal  is  squarely covered by Division Bench judgment of this Court   in  Commissioner   of   Income   Tax­II   Vs.   R.S.   Bajaj   Society, (201 2 The preponderance of the judicial opinion of all the High Courts including this court is that at the time of registration under section 12AA of the Income­tax Act, which is necessary for claiming exemption under sections 11 and 12 of the Act, the Commissioner of Income­tax is not required to look into the activities, where such activities have not or are in the process of its initiation. Where a trust, set up to achieve its objects of establishing educational institution, is in the process of establishing such institutions, and receives donations, the registration under section 12AA cannot be refused,   on   the   ground   that   the   trust   has   not   yet   commenced   the charitable or religious activity. Any enquiry of the nature 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   of  Income­tax   at   such preliminary stage should be restricted to the 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 of the Act and thus at that such initial stage the test of the genuineness of the activity cannot be a ground on which the registration may be refused. 2. The ITAT has held that in view of the judgment of the Division Bench of this Court in Hardayal Charitable & Educational Trust case (supra), the order of rejection by the Commissioner was contrary to the law as laid down. Moreover, the Commissioner did not raise any issue about the objects of the trust which the Tribunal found are clearly charitable in nature. Thus, the only ground which weighed with the Commissioner in declining to grant registration has been found to be contrary to law. The Tribunal has in the circumstance while allowing the appeal directed the Commissioner to grant registration under Section 12AA. The view of the Tribunal is based on the judgment of a Division Bench of this Court which follows the consistent body of law.


  1. The learned counsel appearing on behalf of the revenue has also relied upon a judgment of the Kerala High Court in the case of Self Employers Service Society v. CIT: [2001] 247 ITR 18/[2000] 113 Taxman 703. The facts in that case are clearly distinguishable. The proposal to start a technical educational institution was made only after the rejection of the application by the Commissioner. Moreover, it was held by the Kerala High Court that the society had not done any charitable work and its activities on the contrary had been carried out only for the purpose of generating incomes for its members. 4. Similarly, the judgment of the Punjab and Haryana High Court in Aman   Shiv   Mandir   Trust   v.   C/r:   [2008]   296   ITR   415/[2007]   162 Taxman 412 is also distinguishable because in that case, it was found that the application filed by the assessee was delayed by more than four years. Nothing had been spent during the previous five years on any charitable purpose. Moreover, huge amounts of fixed deposits were found in   the   name   of   a   trustee   who   had   later   approached   the   Settlement Commission   admitting   his   guilt.   Hence,   it   is   clear   that   both   these judgments   are   on   the   peculiar   facts   as   slated   hereinabove   and   are distinguishable.   The   appeal   would,   therefore,   not   give   rise   to   any http://www.itatonline.org3 substantial question of law and it is, accordingly, dismissed. There shall be no order as to costs.” 4. For   the   reasons   stated   in   aforesaid   judgment   and   in   view   of exposition of law laid down therein, we do not find that any substantial question of law has arisen in this appeal.  5. Appeal is accordingly dismissed. Order Date :­ 07.09.2017 AK