Sec. 12AA Registration Can’t Be Denied Merely on Ground That Trust Was Formed to Comply With CSR Requirements | ITAT

Case Details: Santosh Foundation v. Commissioner of Income-tax (Exemptions) - [2023] 157 taxmann.com 388 (Amritsar-Trib.)

Judiciary and Counsel Details

• • Anikesh Banerjee, Judicial Member & Dr. M.l. Meena, Accountant Member
  • Sudhir Sehgal & P.N. Arora, Advs. for the Appellant.
  • Hitendra Bhauraoji Ninawe, CIT DR for the Respondent.

Facts of the Case

The assessee-society was formed to implement the CSR activities of parental company. The assessee-society filed an application for registration under section 12AA.

The Commissioner (Exemption) denied the application, stating that the society was created solely to carry out CSR activities for the parent company and, due to its limited composition, did not serve the general public or qualify as a public charitable company.

The matter reached before the Tribunal.

ITAT Held

The Tribunal held that the assessee’s primary goal was to carry out CSR activities for the parent company, with a broader benefit to the public. The CIT(Exemption) remarks are considered vague, as the focus during 12AA registration should be on the charitable nature and genuine activities, leaving other assessments to the Assessing Officer during the exemption process under section 11, read with section 13.

The Commissioner (Exemption) has neither pointed out any defect in the objects of the trust nor doubted the activities carried out to achieve these objects. Therefore, the application for registration cannot be rejected.

The grievance of the assessee was genuine as the order of the Commissioner (Exemption) was infirm and perverse to the facts on record and, as such, is bad in law. Accordingly, the Commissioner (Exemption) is directed to grant registration to the appellant Trust under section 12AA from the date of application.

List of Cases Reviewed

• • Nanak Chand Jain Charitable Trust v. CIT (Exemption) (2018) 91 taxmann.com 197 (Delhi – Trib.) (para 9)
  • CIT v. IILM Foundation Academy [2016] 389 ITR 148 (Delhi)
  • Cyberstar Educational Society v. CIT (Exemptions) (para 11) – followed.
  • Goenka Charitable Trust v. CIT(E) [2018] 80 taxmann.com 311 (Amritsar – Trib.) (Para 8) – Distinguished.