Swarup Charitable Trust Vs CIT (E) (ITAT Delhi)
Delhi ITAT: Registration U/s 12AB & 80G Cannot Be Denied Before Charitable Project Is Implemented
The Delhi ITAT held that the CIT(E) was not justified in rejecting the trust’s applications for registration under section 12AB and approval under section 80G merely because the trust had not yet commenced its proposed charitable activity. The trust had been constituted to construct one-room residential units for poor and destitute persons, and the building was still under construction when the applications were considered. The CIT(E) denied registration on the grounds that no charitable activity had yet been undertaken, the trust had failed to explain the manner of allotment and charging of beneficiaries, and one of its objects of leasing affordable tenements appeared to be commercial in nature. The Tribunal observed that these objections were premature, as the charitable project had not yet been completed and the actual implementation of the scheme could only be examined after construction and allotment of the houses. It held that the CIT(E) ought to have waited for completion of the project and then verified whether the trust was carrying out genuine charitable activities, instead of rejecting the applications at the threshold. Accordingly, the Tribunal set aside the orders of the CIT(E) and allowed the trust’s appeals, holding that the denial of registration under section 12AB and approval under section 80G before the charitable project had even commenced was unsustainable in law.
