(Tax Case No.176/2024) 2025:CGHC:40696-DB NAFR HIGH COURT OF CHHATTISGARH AT BILASPUR TAXC No. 176 of 2024 {Arising out of order dated 22-1-2024 passed by the Income Tax Appellate 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, BMT Anupama Tripathi, Near Brahmavid School, Gokul Dham Residency, Mahadev Ghat, Raipur, Chhattisgarh. ... Respondent For Appellant : Mr. Ajay Kumrani, Advocate, on behalf of Mr. Amit Chaudhari, Standing Counsel for the Income Tax Department. 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 be answered in this tax appeal preferred under Section 260A of the Income Tax Act, 1961 (for short, ‘the IT Act’) states as under: - SISTA SOMAYAJULU Digitally signed by SISTA SOMAYAJULU Date: 2025.08.14 10:49:59 +0530 (Tax Case No.176/2024) “Whether the ITAT is justified in reversing the order of CIT(Exemption) holding that the assessee is entitled for registration under Section 12AB of the Income Tax Act by recording 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 under Sections 12AB & 80G(5) of the IT Act by the Centralised Processing Centre (CPC) on 10-3-2022 and thereafter, the assessee Trust further applied for regular registration under Section 12AB read with Section 80G(5) of the IT Act. The Commissioner of Income Tax (Exemption) by order dated 21-2-2023, denied the registration under Sections 12AB & 80G(5) of the IT Act and cancelled the respective provisional registrations dated 10-3-2022 holding that the assessee Trust is not entitled for registration. However, aggrieved against that order, the assessee Trust preferred an appeal before the ITAT and the ITAT by the impugned order, allowed the appeal against which the present tax appeal has been preferred by the Revenue. 5. Mr. Ajay Kumrani, learned counsel appearing on behalf of the appellant herein/Revenue, would submit that the ITAT has wrongly relied upon the decision of the Supreme Court in the matter of Ananda Social and Educational Trust v. Commissioner of Income Tax and another1 while granting relief 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 Principal Commissioner or Commissioner, on receipt of an application for registration of a trust or institution made under clause (a) or clause (aa) or clause (ab) of sub-section (1) of section 12A, shall— (a) xxx xxx xxx (b) after satisfying himself about the objects of the trust or institution and the genuineness of its activities as required under sub-clause (i) of clause (a) and compliance of the requirements under sub-clause (ii) of the said clause, he— (i) shall pass an order in writing registering the trust or institution; (ii) xxx xxx xxx and a copy of such order shall be sent to the applicant:” 9. A careful perusal of the aforesaid provision would show that the Principal Commissioner or the Commissioner has to satisfy himself about the objects of the trust or institution and the genuineness of its activities as required under sub-clause (i) of clause (a) and compliance 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 or institution and a copy of the order so passed will be sent to the applicant. 10. The Supreme Court in Ananda Social and Educational Trust (supra) held that newly registered trust on basis of its objects, without any activity having been undertaken, is entitled for registration under Section 12AA of the IT Act, and observed as under: - “9. Section 12-AA undoubtedly requires the Commissioner to satisfy himself about the objects of the trust or institution and genuineness of its activities and grant a registration only if he is so satisfied. The said section requires the Commissioner to be so satisfied in order to ensure that the objects of the trust and its activities are charitable since the consequence of such registration is that the trust is entitled to claim benefits under Sections 11 and 12 of the Act. In other words, if it appears that the objects of the trust and its activities are not genuine that is to say not charitable the Commissioner is entitled to refuse and in fact, bound to refuse such registration. 10. It was argued before us that the Commissioner is required to be satisfied about two things — firstly that the objects of the trust and secondly, its activities are genuine. If there have been no activities undertaken by the trust then the Commissioner cannot assess whether such activities are genuine and therefore, the Commissioner is bound to refuse the registration of such a trust. 11. We have given our anxious consideration to the above submissions made by Ms Aishwarya Bhati, the learned Senior Counsel appearing for the appellant Director of Income Tax and find that it is not possible to agree with the same. The purpose of Section 12-AA of the Act is to enable registration only of such trust or institution whose objects and activities are genuine. In other words, the Commissioner is bound to satisfy himself that the objects of the trust are genuine and that its activities are in furtherance of the objects of the trust, that is equally genuine. Page 5 of 6 (Tax Case No.176/2024) 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 objects of the trust. In contrast, the position would be different where the Commissioner proposes to cancel the registration of a trust under sub-section (3) of Section 12-AA of the Act. There the Commissioner would be bound to record the finding that an activity or activities actually carried on by the trust are not genuine being not in accordance with the objects of the trust. Similarly, the situation would be different where the trust has before applying for registration been found to have undertaken 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 Supreme Court with approval in the matter of Commissioner of Income Tax Exemptions v. M/s International Health Care Education 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 ASG that the very purpose for any assessee to seek registration under Section 12AA of the Act is to claim exemption under Sections 10 and 11 respectively of the Act, as the case may be. Therefore, before seeking registration, it is essential that the Trust should adduce cogent material to the satisfaction of the Commissioner that the activities are genuinely charitable in nature. 15. To the aforesaid extent there is no problem. We may only say that mere registration under Section 12-AA automatically does not entitle any charitable trust to claim exemption under Section 10 and 11 respectively of the Act, 1961. When a return is filed by any trust claiming exemption it is for the assessing officer to look into all the materials and satisfy itself whether the exemption has been claimed 2 Special Leave Petition (Civil) Diary No.19528/2018, decided on 11-2-2025 (Tax Case No.176/2024) genuinely or not. If the assessing officer is not convinced it is always 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 order that the objects of the assessee Trust are charitable purpose and further held that therefore, the request of the assessee Trust for grant of registration under Section 12AB of the IT Act could not be denied on the basis of assessment of the activities, which have actually been carried out by the assessee trust. Therefore, the order directing grant of registration under Section 12AB of the IT Act is neither perverse nor contrary to the record. We do not find any good ground to allow this appeal. Accordingly, the present tax appeal is hereby dismissed leaving the parties to bear their own cost(s) and the substantial question of law is answered in favour of the assessee and against the Revenue. Sd/- Sd/- (Sanjay K. Agrawal) (Sachin Singh Rajput) JUDGE JUDGE Soma