Summary
The Supreme Court held that absence of completed charitable activity does not by itself prevent registration under Section 12AA of the Income Tax Act. For a newly constituted trust, the Commissioner must examine genuinely charitable objects and proposed activities consistent with them. Actual activities contrary to those objects present a different case. A connected appeal concerning non-expenditure was also dismissed, while leaving statutory cancellation available if justified by the facts.
Issues
- Whether a trust must already have undertaken charitable activities before registration under Section 12AA.
- Whether mere non-expenditure establishes activities contrary to charitable objects.
Provisions considered
- Section 12AA(1) and (3), Income Tax Act, 1961Distinguished examination of objects and proposed activities for registration from cancellation based on actual activities inconsistent with the trust’s objects.
Held
- Section 12AA imposes no prerequisite that a newly formed trust must already have undertaken activities. Activities for registration include proposed activities; the Commissioner must ascertain that the objects are genuinely charitable and that the intended activities further them.
- Registration is distinct from assessment of what the trust has actually done. Activities already undertaken contrary to the objects may justify refusal; cancellation under sub-section (3) requires the relevant finding concerning actual activities.
- In the connected non-expenditure case, not carrying out charitable objects was distinguished from carrying on activities contrary to them. Inaction might become actionable in other circumstances, and the Commissioner remained free to consider cancellation if facts justified it.
Result
All appeals dismissed. In the connected non-expenditure matter, Commissioner left free to consider action under Section 12AA(3) if justified by the facts.