CIT(E) v. International Health Care Education and Research Institute

Case snapshot

Sections / provisions: 12AA

Questions before the Court / Tribunal

• Charitable registration before commencement of activities: The reported Supreme Court judgment holds that at the registration stage the authority must assess whether the objects and proposed activities are genuinely charitable; actual operational activity need not already have commenced.

Material facts and background

declining registration under Section 12-AA of the Act, 1961, the assessee went before the Appellate Tribunal, The Tribunal allowed the appeal observing as under:“3. We have heard the parties. The brief facts of the case as appearing from the order of the Id. CIT are as under:"The above said trust was created on 01.01.2008. It filed an application in Form No. 10A on 18.02.2008 seeking registration under section 12A(a) of the I.T. Act, 1961. On perusal of the documents filed by the trust along with its application, it is observed that the trust tiled a copy of the trust deed along with its application for registration instead of the original trust deed as is required under Rule 17A(a) of the Income-tax Rules, 1961. No reason for not filing the original trust deed has been given. An opportunity of being heard was afforded by this office for 14.08.2008 & 27.08.2008 vide this office letter no. CIT/ITO(Tech.)/Alwar/2008-09/999 & 1379 dated 01.08.2008 & 25.08.2008 respectively, requiring to furnish the details of Income & Expenditure account along with notes on activities carried out by the trust from its inception. On the fixed date, Shri J.N. Goyal, Secretary of the trust appeared on...

A trust is required to fulfil the following two conditions for getting itself registered under section 12A(a) of the Act: a) The objects of the trust/ institution should be charitable in nature. b) The activities of the trust/ institution should be genuine. The above requirements are mandatory in nature for granting registration to a trust/ institution under section 12A(a). It is, however, observed that activities claimed to be carried out by the assessee are not verifiable till now from the date of creation of trust. The said trust has not done any work of charitable nature till now and that by relying on the decision of Hon'ble Kerla High Court in the case of Self Employers Service Society Vs. CIT (247 ITR 118), the request/application for registration is at a premature stage and the trust should come up for registration if it had I actually done any work. Head note of the judgment read as under:"In-the present case, admittedly, the society has not done any charitable work during the relevant period, on the other hand, the activities which they have carried on during the period were only for the purpose of generating income for its members. There were no materials before the...

Thus the Tribunal reversed the decision of the CIT(A) and

directed to grant registration to the Trust as applied in Form-10A of the Act. 7.

The revenue being dissatisfied with the order passed by the

Appellant / assessee submissions

appeal and thereby affirmed the order passed by the Tribunal. High Court observed as under:"2. This court while admitting the appeal on 16.11.2009 framed substantial question of law: Whether the learned ITAT were right in law and facts in directing the CIT to grant registration u/s 12A (a) to the respondent after having acknowledged the fact that no charitable activity was ever carried out by the trust upto 31.3.2008. 3. Counsel for the appellant has taken us to the reasoning adopting by the Commissioner of Income Tax, Alwar where the application of the assessee for registration was rejected and he has also relied upon the decision of Kerala High Court in self Employers service society vs. CIT 247 ITR 118 head note of the judgment reads as under: "In the present Case, admittedly, the society has not done any charitable work during the relevant period, on the other hand, the activities which they have carried on during the period were only for the purpose of generating income for its members. There were no materials before the Commissioner to be satisfied of the genuineness of the activities of the trust or institution. Under these circumstances, rejection of the application cannot...

appearing for the respondent assessee submitted that no error not to speak of any error of law could be said to have been committed by the High Court in passing the impugned order. He would submit that

Revenue / respondent submissions

The judgment copy does not separately set out this component in a distinct section; refer to the full order and the reasoning section below.

Court / Tribunal analysis and reasoning

declining registration under Section 12-AA of the Act, 1961, the assessee went before the Appellate Tribunal, The Tribunal allowed the appeal observing as under:“3. We have heard the parties. The brief facts of the case as appearing from the order of the Id. CIT are as under:"The above said trust was created on 01.01.2008. It filed an application in Form No. 10A on 18.02.2008 seeking registration under section 12A(a) of the I.T. Act, 1961. On perusal of the documents filed by the trust along with its application, it is observed that the trust tiled a copy of the trust deed along with its application for registration instead of the original trust deed as is required under Rule 17A(a) of the Income-tax Rules, 1961. No reason for not filing the original trust deed has been given. An opportunity of being heard was afforded by this office for 14.08.2008 & 27.08.2008 vide this office letter no. CIT/ITO(Tech.)/Alwar/2008-09/999 & 1379 dated 01.08.2008 & 25.08.2008 respectively, requiring to furnish the details of Income & Expenditure account along with notes on activities carried out by the trust from its inception. On the fixed date, Shri J.N. Goyal, Secretary of the trust appeared on...

A trust is required to fulfil the following two conditions for getting itself registered under section 12A(a) of the Act: a) The objects of the trust/ institution should be charitable in nature. b) The activities of the trust/ institution should be genuine. The above requirements are mandatory in nature for granting registration to a trust/ institution under section 12A(a). It is, however, observed that activities claimed to be carried out by the assessee are not verifiable till now from the date of creation of trust. The said trust has not done any work of charitable nature till now and that by relying on the decision of Hon'ble Kerla High Court in the case of Self Employers Service Society Vs. CIT (247 ITR 118), the request/application for registration is at a premature stage and the trust should come up for registration if it had I actually done any work. Head note of the judgment read as under:"In-the present case, admittedly, the society has not done any charitable work during the relevant period, on the other hand, the activities which they have carried on during the period were only for the purpose of generating income for its members. There were no materials before the...

"We have heard the rival contentions and perused the facts of the case. The trust was carried on 1.1.2008 and the application in form no. 10A was filed on 18.2.2008 for seeking registration u/s 12A(a) of the Act. As per Section. 12AA(1), there is a procedure for registration where the Commissioner on receipt of such application call for such documents or information to satisfy himself about the genuineness of the activities of the trust or may make such enquiries as he deems necessary in this behalf and after satisfying himself about the objects of the trust and genuineness of the activities, shall pass an order accordingly. In the present case on the date of registration and upto 31.3.2008, no activity has been carried out by the assessee. Therefore, it will be premature for the Id. CIT to take a decision that the activities are not of charitable in nature. Therefore, in such circumstances and facts of the case, the Id, CIT cannot comment on the genuineness of the its activities. As regards the object of the trust, the ld.. CIT has not pointed out any defect in the clauses of the trust deed. The application, therefore, appears to be in accordance with the requirement of Section...

revenue at the outset very fairly pointed out that there is a three judge bench decision of this Court which goes against the revenue. He invited the attention of this Court to the decision in M/s. Ananda Social and Educational Trust vs. Commissioner of Income Tax and Anr. reported in [(2020) 17 SCC 254]. However, according to the learned ASG the decision in Ananda Social (supra) needs a relook. He made a fervent appeal to us to refer this to a larger bench. According to him having regard to the specific provision of 12-AA and more particularly the language, the ultimate findings recorded by the Court in Ananda Social (supra) in para 12 runs contrary to the very object of Section 12-AA. Para 12 of the Ananda Social (supra) reads thus:“12. Since Section 12-AA pertains to the registration of the trust and not to assess of what a trust has actually done, we are of the view that the term "activities" in the provision includes "proposed activities". That is to say, a Commissioner is bound to consider whether the objects of the trust are genuinely charitable in nature and whether the activities which the trust proposed to carry on are genuine in the sense that they are in line with the...

Operative decision and relief

"We have heard the rival contentions and perused the facts of the case. The trust was carried on 1.1.2008 and the application in form no. 10A was filed on 18.2.2008 for seeking registration u/s 12A(a) of the Act. As per Section. 12AA(1), there is a procedure for registration where the Commissioner on receipt of such application call for such documents or information to satisfy himself about the genuineness of the activities of the trust or may make such enquiries as he deems necessary in this behalf and after satisfying himself about the objects of the trust and genuineness of the activities, shall pass an order accordingly. In the present case on the date of registration and upto 31.3.2008, no activity has been carried out by the assessee. Therefore, it will be premature for the Id. CIT to take a decision that the activities are not of charitable in nature. Therefore, in such circumstances and facts of the case, the Id, CIT cannot comment on the genuineness of the its activities. As regards the object of the trust, the ld.. CIT has not pointed out any defect in the clauses of the trust deed. The application, therefore, appears to be in accordance with the requirement of Section...

With the aforesaid this petition stands disposed of.

Pending application(s), if any, stand disposed of.

Authorities and precedents appearing in the judgment

• Kerala High Court in self Employers service society vs. CIT 247 ITR 118 head note of the judgment reads as
• Fifth General Education Society vs. CIT
• N.N. Desai Charitable Trust vs. CIT 246 ITR 452
• Ananda Social and Educational Trust vs. Commissioner of Income Tax

This list is machine-assisted from the judgment text and is not a substitute for checking the full citation chain in the PDF.

Ratio and legal principle

The decision turns on Charitable registration before commencement of activities. The operative result is classified as Disposed. Read the rule only with the statutory version, factual findings and precedent chain recorded in the full judgment.

Why this judgment matters

The case is relevant to taxpayers, advisers and litigators dealing with Charitable registration before commencement of activities. Its practical value lies in the interaction between the statutory text, the evidentiary record and the procedural route followed in this case.

Practitioner action points

• Keep registration, audit-report, Form 10/10B/10BB and filing timestamps together; many exemption disputes are procedural and depend on when the form existed versus when it was uploaded.
• For litigation, attach the full judgment/order to the working paper and cite the paragraph/page supporting the proposition rather than relying on a headnote alone.

Full judgment and source trail

Read / download the authenticated official judgment PDF

Related Finin2min guidance