Mere Inactivity at Time of Application No Ground to Deny 12AB Registration If Proposed Activities Match Trust’s Objectives: ITAT

The Delhi bench of the Income Tax Appellate Tribunal (ITAT) has ruled that a trust cannot be denied registration under Section 12AB of the Income Tax Act merely because it was inactive at the time of its application. The tribunal emphasized that if the proposed activities of the trust are in line with its stated charitable objectives, registration should be granted. In this case, the Commissioner of Income Tax (Exemptions) had rejected the trust's application for registration, citing a lack of charitable activities since its inception. However, the ITAT observed that the purpose of Section 12AB is to examine the genuineness of the trust's objectives, not its past activities. As long as the trust's objects are charitable in nature and it intends to carry out such activities, a lack of prior activity is not a valid ground for denial. This provides relief for newly formed trusts seeking tax-exempt status.