By TIOL News Service

KOLKATA, OCT 10, 2017: THE ISSUE BEFORE THE TRIBUNAL IS - Whether the powers of CIT(E), with whom the application is filed, are limited to the aspect of examining that whether or not the objects of trust are charitable in nature, if the trust is in its nascent state. YES is the answer.

Facts of the case:

The Assessee is a Trust formed with the objects to carry out, undertake, promote, encourage, support, assist and aid for promoting education, enhancing vocational skills and livelihood projects, preventive healthcare and sanitation, reducing inequalities faced by socially and economically backward groups, sustainable development, relief and rehabilitation, clean India, sports etc. It came into existence through a Certificate of Incorporation pursuant to Section 7(2) of the Companies Act & Rule 8 of Companies (Incorporation) Rules. The Trust during the subject year, filed an application in Form 10A for registration u/s 12A and Form 10G for granting approval u/s 80G before the CIT(E), who however rejected such application for registration, on the reason that since no activities of the Trust had commenced as according to him, there was no means to verify the genuineness of such activities, registration u/s 12A could not be granted.

Tribunal held that,

++ 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. A perusal of the objectives sought to be achieved by the assessee Trust is undisputedly carrying of charitable activity. It should be kept in mind that at the stage of commencement of institution/ assessee Trust, it is not relevant to decide whether the Trust has actually carried out the charitable activities because in this case it is in the nascent state only ie, within four months of its incorporation the relevant applications were moved by the Assessee;

++ so long the objects of the trust are charitable in nature; registration cannot be refused, if the trust is genuine. Therefore, per-se we find no material on record to justify the action of the CIT vide which the assessee trust has been refused grant of registration. The Assessee's case needs to be granted registration as prayed for. However, we are not inclined to direct CIT(E) to grant registration which power he enjoys, so we direct CIT(E) to consider afresh granting registration to the assessee trust u/s 12AA and also to consider granting exemption certificate u/s 80G taking into consideration the binding decisions of the Tribunal and pass a speaking order within three months of receipt of this order.