{"id":8066,"date":"2020-05-07T14:28:58","date_gmt":"2020-05-07T08:58:58","guid":{"rendered":"https:\/\/corpbiz.io\/learning\/?p=8066"},"modified":"2020-12-18T14:48:47","modified_gmt":"2020-12-18T09:18:47","slug":"registration-u-s-12aa-without-commencing-any-activity-itat","status":"publish","type":"post","link":"https:\/\/corpbiz.io\/learning\/registration-u-s-12aa-without-commencing-any-activity-itat\/","title":{"rendered":"Trust is allowed for registration U\/s 12AA even if it\u2019s activity has not commenced yet: ITAT 2020"},"content":{"rendered":"\n<p class=\"has-drop-cap\">Recently, the Income Tax Appellate\nTribunal (ITAT) apprehended that any <strong>registration\n\u2018under section 12AA\u2019<\/strong> of the Income-tax Act, 1961, <strong>cannot get rejected<\/strong> on the ground that trust hasn\u2019t commenced its\nanticipated activities as yet. <\/p>\n\n\n\n<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_82_2 counter-hierarchy ez-toc-counter ez-toc-grey ez-toc-container-direction\">\n<div class=\"ez-toc-title-container\">\n<p class=\"ez-toc-title ez-toc-toggle\" style=\"cursor:pointer\">Page Contents<\/p>\n<span class=\"ez-toc-title-toggle\"><a href=\"#\" class=\"ez-toc-pull-right ez-toc-btn ez-toc-btn-xs ez-toc-btn-default ez-toc-toggle\" aria-label=\"Toggle Table of Content\"><span class=\"ez-toc-js-icon-con\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #999;color:#999\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #999;color:#999\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/span><\/a><\/span><\/div>\n<nav><ul class='ez-toc-list ez-toc-list-level-1 eztoc-toggle-hide-by-default' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/corpbiz.io\/learning\/registration-u-s-12aa-without-commencing-any-activity-itat\/#What_is_the_Provisional_Interpretation_made_under_the_caption12AA_of_ITAT_Pronouncements_2020\" >What is\nthe Provisional Interpretation made under the caption12AA of ITAT\nPronouncements 2020?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/corpbiz.io\/learning\/registration-u-s-12aa-without-commencing-any-activity-itat\/#What_would_be_the_position_of_Commissioner_to_cancel_the_registrations\" >What would be the position of\nCommissioner to cancel the registrations?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/corpbiz.io\/learning\/registration-u-s-12aa-without-commencing-any-activity-itat\/#What_are_the_Considered_Facts_and_Issues_of_the_case\" >What are\nthe Considered Facts and Issues of the case?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/corpbiz.io\/learning\/registration-u-s-12aa-without-commencing-any-activity-itat\/#What_are_the_Considered_Arguments_of_the_case\" >What are\nthe Considered Arguments of the case?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/corpbiz.io\/learning\/registration-u-s-12aa-without-commencing-any-activity-itat\/#Conclusion_%E2%80%93_Brief_of_order_passed_by_Honble_Supreme_Court_of_India_in_the_matter_stated_above\" >Conclusion: &#8211; Brief of order\npassed by Hon\u2019ble\nSupreme Court of India in the matter stated above-<\/a><\/li><\/ul><\/nav><\/div>\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"What_is_the_Provisional_Interpretation_made_under_the_caption12AA_of_ITAT_Pronouncements_2020\"><\/span>What is\nthe Provisional Interpretation made under the caption12AA of ITAT\nPronouncements 2020?<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<ul><li><strong>Section 12AA<\/strong>:- It says that registration can get practiced for any newly proposed trust. <strong>There is no obligation<\/strong> that the trust should have already been in <strong>continuation<\/strong> and should have engaged any activities before requesting for registration. <\/li><li>Furthermore, the term \u2018<strong>activities,<\/strong>\u2019 according to S. 12AA, incorporates \u2018<strong>proposed activities<\/strong>.\u2019 The Commissioner of Income-tax must analyze whether the objects of the trust are <strong>charitable or not<\/strong>. Whether the activities which the trust proposed to carry on is <strong>genuine<\/strong> or not. It should Exhibit the sense that they are in line with the objects of the trust. Nevertheless, <strong>he cannot refuse registration<\/strong> on the ground that no activities have commenced out yet.<\/li><\/ul>\n\n\n\n<div class=\"wp-block-image\"><figure class=\"aligncenter is-resized\"><img decoding=\"async\" src=\"https:\/\/corpbiz.io\/learning\/wp-content\/uploads\/2020\/05\/image-29.png\" alt=\"Section 12aa activities\" class=\"wp-image-8067\" width=\"502\" height=\"324\" srcset=\"https:\/\/corpbiz.io\/learning\/wp-content\/uploads\/2020\/05\/image-29.png 668w, https:\/\/corpbiz.io\/learning\/wp-content\/uploads\/2020\/05\/image-29-300x194.png 300w\" sizes=\"(max-width: 502px) 100vw, 502px\" \/><\/figure><\/div>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"What_would_be_the_position_of_Commissioner_to_cancel_the_registrations\"><\/span>What would be the position of\nCommissioner to cancel the registrations?<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>In contradiction, the position would be inconsistent where the Commissioner proposes to discontinue the <a href=\"https:\/\/corpbiz.io\/trust-registration\"><strong>Registration of Trust<\/strong><\/a> under <strong>sub-section (3) of section 12AA<\/strong> of the Act. In those cases, Commissioner would oblige to record the finding that the &#8216;<strong>activities carried<\/strong>&#8216; by the trust are not genuinely being obeying the objects of the trust. Similarly, the situation would get <strong>altered<\/strong> where the trust has before practicing for registration found to have initiated activities contrary to the purposes of the trust. <\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"What_are_the_Considered_Facts_and_Issues_of_the_case\"><\/span>What are\nthe Considered Facts and Issues of the case?<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p><strong>Considered Facts: &#8211;<\/strong><\/p>\n\n\n\n<ul><li>According to facts of the case, the assessee registered under\nthe society of the <strong>Registrar, Uttar\nPradesh<\/strong>. The said registration was renewed for five years by way of <strong>renewal Certificate<\/strong>. Society declared\nits objectives comprising the opening of &#8216;paramedical management,&#8217; &#8216;computer\nengineering,&#8217; &#8216;medicine\/Ayurvedic science&#8217; educational institution, etc. for\nthe <strong>development of education<\/strong>.<\/li><li>The society applied the CIT\nfor <strong>Registration under section 12AA <\/strong>of\nthe Act and got asked in return to file <strong>essential\ndocuments<\/strong> before him. After examining the documents filed by the society\nand after carrying out necessary inquiries, the Learned CIT\n <strong>rejected the\napplication<\/strong> of the assessee for registration under section 12A (1) of the\nAct. <\/li><\/ul>\n\n\n\n<p><strong>Considered\nIssues:<\/strong><\/p>\n\n\n\n<ul><li>Whether a newly formed trust entitled to registration U\/s 12AA of the IT Act, 1961, even if any activity has not undertaken yet<\/li><\/ul>\n\n\n\n<p class=\"text-left\"><b>Read our article<\/b>:<mark style=\"background: #fffd03 !important;\"><a href=\"https:\/\/corpbiz.io\/learning\/medical-relief-under-income-tax\/\">Medical Relief under Income Tax: An Updated Overview\n<\/a><\/mark><\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"What_are_the_Considered_Arguments_of_the_case\"><\/span>What are\nthe Considered Arguments of the case?<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<ul><li>The <strong>Commissioner of Income-tax<\/strong> contested that the documents on record\ndo <strong>not satisfy to establish the\ngenuineness<\/strong> of the activities of the society and present sufficient\nmaterial to develop the charitable nature of the objectives. However, The\nTribunal held that the registration under <strong>&#8216;section\n12AA&#8217; could not get rejected<\/strong> on the ground that trust has not initiated the\ncharitable or religious activity. <\/li><\/ul>\n\n\n\n<ul><li>Considering all the deliberations, the <strong>Income Tax Appellate Tribunal, Delhi<\/strong> (&#8220;ITAT, Delhi&#8221;) <strong>reversed<\/strong> the order and commands of the Commissioner of Income-Tax. The Appellant addressed the High Court by way of filing an appeal. The <strong>High Court<\/strong> also confirmed and <strong>upheld the orders<\/strong> of the Tribunal. At last, it has decided that in case of a newly registered trust, even though there were no activities, it was reasonable to consider the trust getting registered under section 12AA of the <strong>IT Act, 1961<\/strong><sup><a href=\"https:\/\/www.incometaxindia.gov.in\/_layouts\/15\/dit\/pages\/viewer.aspx?grp=act&amp;cname=cmsid&amp;cval=102120000000071025&amp;searchfilter=%5B%7B%22crawledpropertykey%22:1,%22value%22:%22act%22,%22searchoperand%22:2%7D,%7B%22crawledpropertykey%22:0,%22value%22:%22income-tax+act,+1961%22,%22searchoperand%22:2%7D,%7B%22crawledpropertykey%22:29,%22value%22:%222018%22,%22searchoperand%22:2%7D%5D&amp;k=&amp;isdlg=0\"><strong>[1]<\/strong><\/a><\/sup>.<\/li><\/ul>\n\n\n\n<div class=\"wp-block-image\"><figure class=\"aligncenter is-resized\"><img decoding=\"async\" src=\"https:\/\/corpbiz.io\/learning\/wp-content\/uploads\/2020\/05\/image-30.png\" alt=\"Income Tax Appellate Tribunal\" class=\"wp-image-8069\" width=\"485\" height=\"436\" srcset=\"https:\/\/corpbiz.io\/learning\/wp-content\/uploads\/2020\/05\/image-30.png 633w, https:\/\/corpbiz.io\/learning\/wp-content\/uploads\/2020\/05\/image-30-300x270.png 300w\" sizes=\"(max-width: 485px) 100vw, 485px\" \/><\/figure><\/div>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Conclusion_%E2%80%93_Brief_of_order_passed_by_Honble_Supreme_Court_of_India_in_the_matter_stated_above\"><\/span>Conclusion: &#8211; Brief of order\npassed by Hon\u2019ble\nSupreme Court of India in the matter stated above-<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<h3 class=\"wp-block-heading\">Supreme Court Matter: &#8211;\u00a0Civil\u00a0Appeal No. 4702\/2014 dated February 19th, 2020<\/h3>\n\n\n\n<ul><li>According to the&nbsp;<strong>Section 12AA of the Income Tax Act, 1961<\/strong>, it empowers the Principal Commissioner\/Commissioner of the Income Tax on receipt of an application for registration of a trust. They need to request for such documents as may be essential to&nbsp;<strong>satisfy concerning the genuineness<\/strong> of activities of the trust or institution and make inquiries in that behalf. <\/li><li>The same section&nbsp;<strong>necessitates the Commissioner<\/strong> to be so satisfied to confirm that the object of the trust and its on-going activities are charitable. It is a mandate since the significance of such registration is that the <strong>trust is allowable to claim benefits<\/strong>&nbsp;under <strong>sections 11 and 12<\/strong> of the Income Tax Act, 1961.<\/li><li>Moreover, it got contended by the&nbsp;<strong>Senior Counsel<\/strong>&nbsp;for the Appellant that the Commissioner of Income Tax is obligatory to be fulfilled with two specific things \u2013 (a) the&nbsp;<strong>objects<\/strong> of the trust (b) its <strong>genuine<\/strong> activities. The Commissioner cannot evaluate whether such activities are legitimate if there have been no activities undertaken by the trust. Therefore, the Commissioner is obliged to reject the registration of such a trust. <\/li><li>The Hon\u2019ble SC categorically held that the view of the Hon\u2019ble Delhi HC in the <strong>challenged judgment is correct<\/strong>. Moreover, considering the case of&nbsp;<strong>\u2018Allahabad High Court in IT Appeal No.<\/strong>&nbsp;36\u2019 of 2013 titled as \u201cCommissioner of Income Tax-II vs. R.S.  Bajaj Society,\u201d It is liable to be upheld given the precedents set herewith as well as various other judgments. <\/li><\/ul>\n\n\n\n<p class=\"text-left\"><b>Read our article<\/b>:<mark style=\"background: #fffd03 !important;\"><a href=\"https:\/\/corpbiz.io\/learning\/setting-off-excess-expenditure-against-income-of-next-year-by-trust-and-ngo\/\">Setting off Excess Expenditure against Income of next year by Trust and NGO\n<\/a><\/mark><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Recently, the Income Tax Appellate Tribunal (ITAT) apprehended that any registration \u2018under section 12AA\u2019 of the Income-tax Act, 1961, cannot get rejected on the ground that trust hasn\u2019t commenced its anticipated activities as yet. What is the Provisional Interpretation made under the caption12AA of ITAT Pronouncements 2020? Section 12AA:- It says that registration can get [&hellip;]<\/p>\n","protected":false},"author":20,"featured_media":8084,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":[],"categories":[3,324],"tags":[549],"acf":{"service_id":"10"},"authorName":"Archita Bhattacharjee","authorImageUrl":"https:\/\/corpbiz.io\/learning\/wp-content\/uploads\/2020\/03\/WhatsApp-Image-2020-03-18-at-11.26.19-AM-1.jpeg","authorDescription":"Archita Bhattacharjee is working as Legal Analyst (Team Lead, Research &amp; Development) at Corpbiz and has proving experience about 2 years as Corporate Legal Researcher in law firms as well as Rajya Sabha and authors in diverse publications. She has refined her skills by representing India in Paris, France and the University of Leiden over implications of International Humanitarian and Criminal Law being certified member of many Legal Centers.","postViews":4031,"readingTime":3,"_links":{"self":[{"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts\/8066"}],"collection":[{"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/users\/20"}],"replies":[{"embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/comments?post=8066"}],"version-history":[{"count":21,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts\/8066\/revisions"}],"predecessor-version":[{"id":22322,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts\/8066\/revisions\/22322"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/media\/8084"}],"wp:attachment":[{"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/media?parent=8066"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/categories?post=8066"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/tags?post=8066"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}