Facts of the Case

The assessee, a trust/institution seeking charitable status, applied for registration under Section 12A/12AA of the Income-tax Act to avail exemption under Section 11. During proceedings, the Commissioner of Income Tax (Exemptions) examined the objects and activities of the trust and was not satisfied regarding the genuineness of its operations. Consequently, registration was refused. The assessee challenged the order before the Income Tax Appellate Tribunal.

Issues Involved

  1. Whether the assessee was entitled to registration under Section 12A/12AA.
  2. Whether mere charitable objects without genuine activities are sufficient for registration.
  3. Whether the refusal of registration by the CIT (Exemptions) was justified.

Petitioner’s (Assessee’s) Arguments

  • The assessee contended that its objects were charitable in nature.
  • It was argued that the trust was established for public welfare purposes.
  • The refusal of registration was claimed to be unjustified.
  • The assessee sought grant of registration to enable exemption under Section 11.

Respondent’s (Revenue’s) Arguments

  • The Revenue submitted that the authority must examine both objects and genuineness of activities.
  • The assessee failed to demonstrate actual charitable activities.
  • Necessary evidence to establish genuine functioning was not produced.
  • Therefore, refusal of registration was justified.

Court Order / Findings (ITAT)

  • The charitable nature of objects, and
  • The genuineness of activities

Important Clarification

The Tribunal emphasized that registration is a gateway to tax exemption and must be granted only where real charitable activity exists. Authorities are empowered to scrutinize the conduct of the trust to prevent misuse of exemption provisions.

Link to download the order – https://itat.gov.in/public/files/upload/1574674663-SUBHASH-67(TE).pdf

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