Indian Kanoon - Search engine for Indian Law

4. Assailing the action of the Ld. CIT(E), the Ld. AR narrated the entire factual history of the assessee trust and explained the nature and purpose ITA Nos.2940 & 2941/Chny/2025 (AY 2025-26) Sir CV Raman Educational & Charitable Trust :: 4 ::

of the same, which we shall discuss in detail in the ensuing paragraphs. The Ld. AR also elaborately set out the profiles of the erstwhile Trustees as well as the present Trustees to show that these trustees had come together with a noble charitable intent to work in the field of education and medical relief for the poor and needy people. The Ld. AR submitted that, the fact that the assessee trust had acquired land by raising loans and had also applied for conversion of the same showed that it had undertaken active steps in pursuance of the charitable objects. The Ld. AR explained that, it was majorly due to lack of funds and other external hurdles that the assessee trust took considerable time to commence its activities. Taking us through the provisions of Explanation (e) of Section 12(1)(ac) of the Act, the Ld. AR submitted that, non-commencement or delayed commencement of charitable activities cannot be held to be a non-genuine activity or activity being carried out contrary to the objects of a Trust. The Ld. AR submitted that, the trustees were making every endeavor to raise funds by way of donations for setting up the medical institution and showed us that they had also taken necessary steps to obtain approvals/clearances from the local authorities and that, once the registrations u/s 12AB / 80G of the Act is issued, it would enable the Trustees to promote the charitable objects of the assessee trust. The Ld. AR thus submitted that, the CIT(E) had erred in holding that, the assessee trust was not genuine.

commence, it cannot be straight away alleged that the activities are not genuine. So long as the proposed activities of the assessee trust to achieve its objects are found to be charitable in nature, mere non- commencement of the activities at the time of filing of application or at the time of passing of order for grant of registration u/s 12AB of the Act, cannot be treated as a 'specified violation' to deny registration to an assessee. In our view, where the assessee trust demonstrates that it has been formed for charitable objects and shows that the proposed activities are charitable in nature, then the conditions prescribed in Section 12AB cannot be said to be not satisfied. If in the facts and circumstances of the given case, the assessee is able to show that it had carried out charitable activities in the subsequent years, the same is required to be considered by the Ld. CIT(E) to satisfy himself about the genuineness of the activities and it is unjustified on his part to reject the application only because the activities did not commence at the time of filing of application/ passing of the order. Our view finds support from the decision of the Hon'ble Supreme Court in the case of Ananda Social and Educational Trust vs CIT (426 ITR 340)wherein it was held as under:-

ITA Nos.2940 & 2941/Chny/2025 (AY 2025-26) Sir CV Raman Educational & Charitable Trust :: 13 ::

(ii) To undertake any other activity incidental to the above activities but which are not inconsistent with the above objects.

If any of the above objects is found to be inconsistent with the objects of a public charitable institution under section 11 or any other section of the Income Tax Act 1961 or any other direct tax law or any other law applicable to such trusts as now enacted or as may be enacted or amended at a future date, the objects stated above will be treated as so modified to accord with such law or amended law so that any concessions, privileges, conditions or regulations available to and applicable to such public charitable institutions will be available or applicable to this Trust as well so that this Trust will continue to retain its character as a public charitable institution without profit motive with public character within the meaning of all such laws. All the objects of the trust and its activities will be confined to India and will be carried on without profit motive and without any distinction on account of caste, creed, color or religion."

12. We also find that, none of the activities undertaken by the assessee trust relating to acquisition of land or which was undertaken subsequently involving conversion of land usage, expending for charitable purposes, can be regarded as non-genuine or contrary to the objects for which the assessee trust was formed. There is also merit in the submission of the Ld. AR that, once the registration is in place, then it would give impetus to the assessee trust to pursue its charitable objects by obtaining patronage from the public at large. Unless the registration is granted, the ITA Nos.2940 & 2941/Chny/2025 (AY 2025-26) Sir CV Raman Educational & Charitable Trust :: 15 ::