Charitable Trust The Registration Under Section 12AA Cannot be Cancelled on the Ground that the Trust has not yet Commenced the Charitable or Religious activity

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The Tax Publishers Charitable Trust The Registration Under Section 12AA Cannot be Cancelled on the Ground that the Trust has not yet Commenced the Charitable or Religious activity Akhilesh Kumar Sah In CITII v. R.s. Bajaj Society, (2014) 222 Taxman 111 (All), it was held that 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. Recently the High Court in CIT (Exemption) Lucknow v. Shreedhar Sewa Trust, Asharfi Bhawan, Ayodhya, Faizabad [ITA No. 33 of 2017, decided on 7-9-2017] followed the above ruling. 1. Introduction Section 12AA of the Income Tax Act, 1961 (hereinafter referred to as the 'Act') deals with the procedure for registration of a trust or an institution. Sub-section (3) of Section 12AA incorporates that where a trust or an institution has been granted registration under clause (b) of sub-section (1) or has obtained registration at any time under Section 12A [as it stood before its amendment by the Finance (No. 2) Act, 1996] and subsequently the Principal Commissioner or Commissioner of Income Tax is satisfied that the activities of such trust or institution are not genuine or are not being carried out in accordance with the objects of the trust or institution, as the case may be, he shall pass an order in writing cancelling the registration of such trust or institution. It has been provided that no order under this sub-section shall be passed unless such trust or institution has been given a reasonable opportunity of being heard. SUBSCRIBE FOR FULL CONTENT

The Tax Publishers

Charitable Trust

The Registration Under Section 12AA Cannot be Cancelled on the Ground that the Trust has not yet Commenced the Charitable or Religious activity

Akhilesh Kumar Sah

In CITII v. R.s. Bajaj Society, (2014) 222 Taxman 111 (All), it was held that 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. Recently the High Court in CIT (Exemption) Lucknow v. Shreedhar Sewa Trust, Asharfi Bhawan, Ayodhya, Faizabad [ITA No. 33 of 2017, decided on 7-9-2017] followed the above ruling.

1. Introduction

Section 12AA of the Income Tax Act, 1961 (hereinafter referred to as the 'Act') deals with the procedure for registration of a trust or an institution. Sub-section (3) of Section 12AA incorporates that where a trust or an institution has been granted registration under clause (b) of sub-section (1) or has obtained registration at any time under Section 12A [as it stood before its amendment by the Finance (No. 2) Act, 1996] and subsequently the Principal Commissioner or Commissioner of Income Tax is satisfied that the activities of such trust or institution are not genuine or are not being carried out in accordance with the objects of the trust or institution, as the case may be, he shall pass an order in writing cancelling the registration of such trust or institution. It has been provided that no order under this sub-section shall be passed unless such trust or institution has been given a reasonable opportunity of being heard.