I.P.MUKERJI,J. - (1.) On 10th January, 2019 a division bench of this court admitted this appeal to be heard on the following substantial question of law: "Whether the Income Tax Appellate Tribunal erred in law by misinterpreting Section 12AA of the Income Tax Act, 1961 and came to an erroneous decision that verification of genuineness of activity is not condition precedent for granting registration under Section 12AA of the Income Tax Act, 1961." Section 12AA of the said Act provides that the Principal Commissioner or Commissioner of Income Tax shall register a trust on being satisfied about its objects and the genuineness of its activities.
(2.) The only question to be decided is whether the trust should show some activities undertaken by it before registration to the Commissioner to satisfy him or is the Commissioner required to be satisfied that the intended activities of the trust after registration are genuine? In this case, the tribunal proceeded on the basis that the activities of the trust were at the commencement stage and that the registration of the trust was to be made after the Commissioner only satisfied himself that the objects of the trust were charitable. By its impugned order dated 28th March, 2018, the tribunal allowed the appeal of the respondent trust by remanding the matter to the Commissioner of Income Tax (Appeals) to rehear and reconsider the matter on the above observations.
(3.) The Revenue appeals to us against that order. Now, let me discuss the authorities on the subject. In Director of Income-Tax (Exemptions) Vs. Meenakshi Amma Endowment Trust reported in (2013) 354 ITR 219 (Karnataka), a division bench of the Karnataka High Court opined as follows:- "On a perusal of the records we note that the trust was formed on January 23, 2008, and within a period of nine months they had filed an application under section 12A for issuance of the registration claiming exemption. The fact that the corpus of the trust is nothing but the contribution of Rs.1,000 by each of the trustees as corpus fund goes to show that the trustees were contributing the funds by themselves in a humble way and were intending to commence charitable activities. It is not even the case of the Revenue that by the time the application of the assessee came to be considered by them, the assessee had collected lots of donations for the activities of the trust. On the other hand, the grievance of the concerned authorities seems to be that there was no activity which could be termed as charitable as per the details furnished by the assessee, therefore, such registration could not be granted. When the trust itself was formed in January, 2008, with the money available with the trust, one cannot expect them to do activity of charity immediately and because of that situation the authority cannot come to a conclusion that the trust was not intending to do any activity of charity. In such a situation the objects of the trust have to be taken into consideration by the authority and the objects of the trust could be read from the trust deed itself. In the subsequent returns filed by the trust, if the Revenue comes across that factually the trust has not conducted any charitable activities, it is always open to the authorities concerned to withdraw the registration already granted or cancel the said registration under section 12AA(3) of the Act." ;