Income Tax : Order Passed by Commissioner Against a Trust Set Aside and Assessee Granted Relief

Income Tax : Order Passed by Commissioner Against a Trust Set Aside and Assessee Granted Relief

It has been held that "at the stage of granting registration u/s.12AB of the Income-tax Act, 1961 the scope of enquiry is confined to examination of the objects of the Trust and verification of the genuineness of its activities. issues relating to application of income or computation of income are to be examined at the stage of assessment and not at the stage of registration."

The rejection of registration travels beyond the permissible scope of enquiry u/s.12AB of the Income-tax Act, 1961.

The mere existence of sale transactions does not render the activity commercial in nature. Even assuming that certain elements of the activity may resemble business, Section 11(4A) permits incidental business activities, provided they are incidental to the attainment of the objects and supported by maintenance of separate books of account. 

Case : Gramonnati Trust v CIT (E) [2026] GCtR 334 (ITAT, Chennai)