Facts of the Case

Shiv Shanti Trust, Allahabad, applied for registration as a charitable trust to avail tax exemption benefits under the Income-tax Act, 1961. The Commissioner of Income Tax (Exemption), Lucknow examined the trust’s application, objects, and details of activities.

The registration was denied or disputed on the ground that the authority was not satisfied regarding the charitable nature of the objects or the genuineness of the activities. Aggrieved by the decision, the trust filed an appeal before the Income Tax Appellate Tribunal.

Issues Involved

Whether the trust was entitled to registration under Sections 12A/12AA, specifically:

  • Whether the objects of the trust were charitable
  • Whether the activities carried out were genuine
  • Scope of examination permissible at the registration stage

Petitioner’s (Assessee-Trust’s) Arguments

The trust contended that it was established exclusively for charitable purposes and that its objects fell squarely within the definition of “charitable purpose” under the Act. It was argued that the Commissioner had exceeded jurisdiction by evaluating matters beyond the limited scope of registration proceedings and by failing to properly appreciate the trust’s objectives and activities.

 

Respondent’s (Revenue’s) Arguments

The Revenue supported the decision of the Commissioner, contending that registration is not automatic and requires satisfaction regarding the genuineness of activities and charitable nature of objects. It was argued that the authority had valid reasons to question the eligibility of the trust for registration.

Court Order / Findings (ITAT)

The Tribunal examined the statutory framework governing registration of charitable trusts. It reiterated that at the stage of registration under Sections 12A/12AA, the Commissioner is required to verify primarily:

  1. The charitable nature of the objects of the trust
  2. The genuineness of its activities

Detailed examination of application of income or eligibility for exemption is not within the scope of registration proceedings and is to be considered during assessment. The Tribunal adjudicated the matter based on these settled legal principles.

Important Clarification

The ruling emphasizes that registration proceedings are preliminary in nature and focus on foundational eligibility. Once the objects are charitable and activities are genuine, registration should ordinarily be granted. Issues relating to income utilization, violations, or exemption eligibility are to be examined separately during assessment proceedings.

Link to download the order –https://itat.gov.in/public/files/upload/1582539888-SHIV-154(12A).pdf

Disclaimer

This content is shared strictly for general information and knowledge purposes only. Readers should independently verify the information from reliable sources. It is not intended to provide legal, professional, or advisory guidance. The author and the organisation disclaim all liability arising from the use of this content. The material has been prepared with the assistance of AI tools.