The Commissioner Of Income Tax (Exemption), Room v. Swayam Sidhha Foundation Society, Hn-A-502, Ward

(Tax Case No.176/2024) Digitally 2025:CGHC:40696-DBsigned bySISTASISTASOMAYAJULUSOMAYAJULUDate:2025.08.1410:49:59+0530HIGH COURT OF CHHATTISGARH AT BILASPUR 2025:CGHC:40696-DB NAFR TAXC No. 176 of 2024 {Arising out of order dated 22-1-2024 passed by the Income TaxAppellate Tribunal, Raipur Bench, Raipur in ITA No.312/RPR/2023} The Commissioner of Income Tax (Exemption), Room No. 201, II Floor,Metro Walk Building, REAC, Bhopal, Madhya Pradesh. ... Appellant versus Swayam Sidhha Foundation Society, HN-A-502, Ward No. 68, BMTAnupama Tripathi, Near Brahmavid School, Gokul Dham Residency,Mahadev Ghat, Raipur, Chhattisgarh. ... Respondent For Appellant : Mr. Ajay Kumrani, Advocate, on behalf of Mr. AmitChaudhari, Standing Counsel for the Income TaxDepartment.Chaudhari, Standing Counsel for the Income TaxDepartment. For Respondent: None present. -Division Bench: Hon'ble Shri Sanjay K. Agrawal and Hon'ble Shri Sachin Singh Rajput, JJ. Judgment on Board(13/08/2025) Sanjay K. Agrawal, J. 1. Office objection is overruled and the appeal is heard finally. 2. The substantial question of law involved, formulated and to beanswered in this tax appeal preferred under Section 260A of theIncome Tax Act, 1961 (for short, ‘the IT Act’) states as under: -answered in this tax appeal preferred under Section 260A of theIncome Tax Act, 1961 (for short, ‘the IT Act’) states as under: - (Tax Case No.176/2024) “Whether the ITAT is justified in reversing the order ofCIT(Exemption) holding that the assessee is entitled forregistration under Section 12AB of the Income Tax Act byrecording a finding perverse to the record?” 3. The aforesaid substantial question of law has to be answered in the following factual backdrop: - 4. The assessee Trust was granted provisional registrations underSections 12AB & 80G(5) of the IT Act by the Centralised ProcessingCentre (CPC) on 10-3-2022 and thereafter, the assessee Trustfurther applied for regular registration under Section 12AB readwith Section 80G(5) of the IT Act. The Commissioner of IncomeTax (Exemption) by order dated 21-2-2023, denied the registrationunder Sections 12AB & 80G(5) of the IT Act and cancelled therespective provisional registrations dated 10-3-2022 holding thatthe assessee Trust is not entitled for registration. However,aggrieved against that order, the assessee Trust preferred an appealbefore the ITAT and the ITAT by the impugned order, allowed theappeal against which the present tax appeal has been preferred bythe Revenue. Sections 12AB & 80G(5) of the IT Act by the Centralised ProcessingCentre (CPC) on 10-3-2022 and thereafter, the assessee Trustfurther applied for regular registration under Section 12AB readwith Section 80G(5) of the IT Act. The Commissioner of IncomeTax (Exemption) by order dated 21-2-2023, denied the registrationunder Sections 12AB & 80G(5) of the IT Act and cancelled therespective provisional registrations dated 10-3-2022 holding thatthe assessee Trust is not entitled for registration. However,aggrieved against that order, the assessee Trust preferred an appealbefore the ITAT and the ITAT by the impugned order, allowed theappeal against which the present tax appeal has been preferred bythe Revenue. 5. Mr. Ajay Kumrani, learned counsel appearing on behalf of theappellant herein/Revenue, would submit that the ITAT haswrongly relied upon the decision of the Supreme Court in thematter of Ananda Social and Educational Trust v.Commissioner of Income Tax and another1 while grantingrelief to the assessee and ignored the fact that the assessee isappellant herein/Revenue, would submit that the ITAT haswrongly relied upon the decision of the Supreme Court in thematter of Ananda Social and Educational Trust v.Commissioner of Income Tax and another1 while grantingrelief to the assessee and ignored the fact that the assessee is 1(2020) 17 SCC 254 (Tax Case No.176/2024) 5. Mr. Ajay Kumrani, learned counsel appearing on behalf of theappellant herein/Revenue, would submit that the ITAT haswrongly relied upon the decision of the Supreme Court in thematter of Ananda Social and Educational Trust v.Commissioner of Income Tax and another1 while grantingrelief to the assessee and ignored the fact that the assessee isappellant herein/Revenue, would submit that the ITAT haswrongly relied upon the decision of the Supreme Court in thematter of Ananda Social and Educational Trust v.Commissioner of Income Tax and another1 while grantingrelief to the assessee and ignored the fact that the assessee is 1(2020) 17 SCC 254 (Tax Case No.176/2024) involved in General Public Utility and engaged in commercial activities, as such, the order impugned deserves to be set-aside by allowing the appeal. 6. None present for the respondent. 7. We have heard learned counsel for the appellant herein/Revenue and considered his submissions and also went through the material available on record with utmost circumspection. 8. Section 12AA(1)(b)(i) of the IT Act states as under: - “12AA. Procedure for registration.—(1) The PrincipalCommissioner or Commissioner, on receipt of anapplication for registration of a trust or institution madeunder clause (a) or clause (aa) or clause (ab) of sub-section(1) of section 12A, shall— (a) xxxxxxxxx (b) after satisfying himself about the objects of the trustor institution and the genuineness of its activities asrequired under sub-clause (i) of clause (a) andcompliance of the requirements under sub-clause (ii) ofthe said clause, he— (i) shall pass an order in writing registering the trustor institution;or institution; (ii) xxxxxxxxx and a copy of such order shall be sent to the applicant:” 9. A careful perusal of the aforesaid provision would show that thePrincipal Commissioner or the Commissioner has to satisfy himselfabout the objects of the trust or institution and the genuineness ofits activities as required under sub-clause (i) of clause (a) andcompliance of the requirements under sub-clause (ii) of the saidPrincipal Commissioner or the Commissioner has to satisfy himselfabout the objects of the trust or institution and the genuineness ofits activities as required under sub-clause (i) of clause (a) andcompliance of the requirements under sub-clause (ii) of the said (Tax Case No.176/2024) clause, and has to pass an order in writing registering the trust orinstitution and a copy of the order so passed will be sent to theapplicant. 10.The Supreme Court in Ananda Social and Educational Trust (supra) held that newly registered trust on basis of itsobjects, without any activity having been undertaken, is entitled forregistration under Section 12AA of the IT Act, and observed asunder: - “9.Section 12-AA undoubtedly requires the Commissionerto satisfy himself about the objects of the trust or institutionand genuineness of its activities and grant a registration onlyif he is so satisfied. The said section requires theCommissioner to be so satisfied in order to ensure that theobjects of the trust and its activities are charitable since theconsequence of such registration is that the trust is entitled toclaim benefits under Sections 11 and 12 of the Act. In otherwords, if it appears that the objects of the trust and itsactivities are not genuine that is to say not charitable theCommissioner is entitled to refuse and in fact, bound torefuse such registration. 10.It was argued before us that the Commissioner isrequired to be satisfied about two things — firstly that theobjects of the trust and secondly, its activities are genuine. Ifthere have been no activities undertaken by the trust then theCommissioner cannot assess whether such activities aregenuine and therefore, the Commissioner is bound to refusethe registration of such a trust. 10.It was argued before us that the Commissioner isrequired to be satisfied about two things — firstly that theobjects of the trust and secondly, its activities are genuine. Ifthere have been no activities undertaken by the trust then theCommissioner cannot assess whether such activities aregenuine and therefore, the Commissioner is bound to refusethe registration of such a trust. 11.We have given our anxious consideration to the abovesubmissions made by Ms Aishwarya Bhati, the learned SeniorCounsel appearing for the appellant Director of Income Taxand find that it is not possible to agree with the same. Thepurpose of Section 12-AA of the Act is to enable registrationonly of such trust or institution whose objects and activitiesare genuine. In other words, the Commissioner is bound tosatisfy himself that the objects of the trust are genuine andthat its activities are in furtherance of the objects of the trust,that is equally genuine. (Tax Case No.176/2024) 12.Since Section 12-AA pertains to the registration of thetrust and not to assess of what a trust has actually done, weare of the view that the term “activities” in the provisionincludes “proposed activities”. That is to say, aCommissioner is bound to consider whether the objects of thetrust are genuinely charitable in nature and whether theactivities which the trust proposed to carry on are genuine inthe sense that they are in line with the objects of the trust. Incontrast, the position would be different where theCommissioner proposes to cancel the registration of a trustunder sub-section (3) of Section 12-AA of the Act. There theCommissioner would be bound to record the finding that anactivity or activities actually carried on by the trust are notgenuine being not in accordance with the objects of the trust.Similarly, the situation would be different where the trust hasbefore applying for registration been found to haveundertaken activities contrary to the objects of the trust.” 11. The principle of law laid down in Ananda Social and Educational Trust(supra) has been followed by the SupremeCourt with approval in the matter of Commissioner of IncomeTax Exemptions v. M/s International Health CareEducation and Research Institute2 in which it has been held in paragraphs 14 and 15 as under: - “14.We may agree to a certain extent with the learned ASGthat the very purpose for any assessee to seek registrationunder Section 12AA of the Act is to claim exemption underSections 10 and 11 respectively of the Act, as the case may be.Therefore, before seeking registration, it is essential that theTrust should adduce cogent material to the satisfaction of theCommissioner that the activities are genuinely charitable innature. 15.To the aforesaid extent there is no problem. We mayonly say that mere registration under Section 12-AAautomatically does not entitle any charitable trust to claimexemption under Section 10 and 11 respectively of the Act,1961. When a return is filed by any trust claiming exemptionit is for the assessing officer to look into all the materials andsatisfy itself whether the exemption has been claimed Soma (Tax Case No.176/2024) genuinely or not. If the assessing officer is not convinced it isalways open for him to decline grant of exemption.“ 12.In the instant case, the ITAT after considering the submissions of 15.To the aforesaid extent there is no problem. We mayonly say that mere registration under Section 12-AAautomatically does not entitle any charitable trust to claimexemption under Section 10 and 11 respectively of the Act,1961. When a return is filed by any trust claiming exemptionit is for the assessing officer to look into all the materials andsatisfy itself whether the exemption has been claimed Soma (Tax Case No.176/2024) genuinely or not. If the assessing officer is not convinced it isalways open for him to decline grant of exemption.“ 12.In the instant case, the ITAT after considering the submissions of parties, recorded a categorical finding in paragraph 10 of the orderthat the objects of the assessee Trust are charitable purpose andfurther held that therefore, the request of the assessee Trust forgrant of registration under Section 12AB of the IT Act could not bedenied on the basis of assessment of the activities, which haveactually been carried out by the assessee trust. Therefore, the orderdirecting grant of registration under Section 12AB of the IT Act isneither perverse nor contrary to the record. We do not find anygood ground to allow this appeal. Accordingly, the present taxappeal is hereby dismissed leaving the parties to bear their owncost(s) and the substantial question of law is answered in favour ofthe assessee and against the Revenue. Sd/- Sd/-(Sanjay K. Agrawal) (Sachin Singh Rajput)JUDGEJUDGE