Sec. 12AA registration cannot be denied merely for having activities outside India

Section 12AA prescribes the procedure for registration. Reading the section, it becomes clear that after the application is made the officer has to call for documents or information form the Trusty to satisfy himself about the genuineness of the activities of the Trust. He can make further enquiry as he may deem necessary. It is only after satisfying himself about the genuineness of the activities of the Trust. He can make further enquiry as he may deem necessary.It is only after satisfying himself about the objects of the Trust and the genuineness of its activities that he has to pass an order in writing registering the Trusty or institution And if he is not satisfied he can reject the same.

This section 12AA does not refer to the activities in India or outside India. It refers to application of income for charitable or religious purposes in India as also with direction or order of the Board for application of income as aforesaid outside India. Reading the order dated 24.02.2004, it is very clear that there is non application of mind. It was necessary for the Commissioner to examine the purpose for satisfying himself that the activities are genuine. It was open for him to make necessary enquiries in this behalf and to pass an order as per the procedure laid down under section 12AA of the said Act. So far as income which is applied outside India is concerned, is not a relevant criteria for rejecting the application.

Full Text of the ITAT Order is as follows:-

This appeal of the assessee arises from the order of DIT(E), New Delhi dated 17.12.2013 passed u/s. 12AA(I)(b) r.w.s. 12A of the Income Tax Act, 1961. The assessee has raised the sole ground of appeal as under:

“On the facts and circumstances of the case, the learned Director of Income Tax (Exemption)has erred both on facts and in law in rejecting the application of the assessee for registration under Section 12A of the Income Tax Act, 1961. “

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