PCIT (Exemption) Vs Nathji Goverdhan Nathji Charitable Trust (Calcutta High Court)
Summary: The Calcutta High Court considered whether verification of the genuineness of activities already undertaken by a charitable trust is a condition precedent for registration under Section 12AA of the Income Tax Act, 1961.
The appeal was admitted on 10 January 2019 on the substantial question whether the Income Tax Appellate Tribunal had erred in interpreting Section 12AA by holding that verification of genuineness of activity was not a condition precedent for granting registration under the provision.
The Court noted that Section 12AA requires the Principal Commissioner or Commissioner of Income Tax to register a trust upon being satisfied about its objects and the genuineness of its activities. The issue before the Court was whether a trust must first demonstrate activities undertaken before registration or whether the Commissioner is required to consider whether the intended activities of the trust after registration are genuine.
The Tribunal had proceeded on the basis that the activities of the respondent trust were at the commencement stage and that registration was to be considered after the Commissioner satisfied himself that the objects of the trust were charitable. By order dated 28 March 2018, the Tribunal allowed the respondent trust’s appeal by remanding the matter to the Commissioner of Income Tax (Appeals) for rehearing and reconsideration. The Revenue challenged that order before the High Court.
