Our trust was formed weeks ago and has done nothing yet. Can registration be refused for that?
No. Registration cannot be refused merely because a newly formed trust has not started activities. 'Activities' includes proposed activities, so at the registration stage the Commissioner looks at whether the objects are genuinely charitable and whether the proposed activities are genuine.
Decided by the Supreme Court (S.A. Bobde, CJI, B.R. Gavai and Surya Kant, JJ. (three-Judge Bench)) on 2020-02-19, reported as (2020) 426 ITR 340 / 187 DTR 169 / 313 CTR 369 / 272 Taxman 7 (SC). It bears on section 12AA, section 12AA(3), section 12A, section 11, section 12 of the Income Tax Act 1961, in Charitable Trusts & Exemption matters.
This answers the standard refusal letter that says no charitable activity has been carried on since formation. On these facts the trust was formed on 30 May 2008 and applied about two months later. The Court also drew the line the department blurs: registration and cancellation are different exercises, and conduct after registration is dealt with under the cancellation power, which turns on activities actually undertaken.
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Three sets of appeals were heard together. In Civil Appeal Nos. 5437-5438 of 2012 the judgments under appeal were of the Karnataka High Court. In Civil Appeal No. 4702 of 2014 the Director of Income-tax appealed against a Delhi High Court judgment holding that a newly registered trust is entitled to registration under s.12AA on the basis of its objects, without any activity having been undertaken: that trust had been formed as a society on 30 May 2008 and applied for registration on 10 July 2008, about two months later, having undertaken no activities in the meantime; the Commissioner refused registration on that sole ground, the Tribunal reversed him and the High Court upheld the Tribunal. Civil Appeal No. 1727 of 2020 concerned a different trust, which had applied for registration and was found not to have spent any part of its income on charitable activities; the Commissioner refused registration and the Tribunal reversed him on the strength of the Delhi High Court line.
All three appeals were dismissed. Registration under s.12AA cannot be refused merely because a newly formed trust has not yet begun its activities: since the section pertains to registration and not to an assessment of what a trust has actually done, the word 'activities' in it includes proposed activities, and the Commissioner must consider whether the objects are genuinely charitable and whether the activities the trust proposes are genuine in the sense of being in line with those objects (para 12). The Commissioner is still bound to refuse registration where the objects and activities are not genuine, that is, not charitable (para 9). The position is different on cancellation under s.12AA(3), where the Commissioner must record a finding that activities actually carried on are not genuine as being outside the objects; and different again where a trust is found, before applying, to have undertaken activities contrary to its objects (para 12). On the third appeal the Court held that a trust which had spent nothing of its income on charitable purposes was a case of not carrying out the objects, not of carrying on activities contrary to them - circumstances which may arise for many reasons, including not finding suitable circumstances to act - and while inaction might become actionable depending on other circumstances, that case was not before the Court; it left the Commissioner to consider exercising his powers under s.12AA(3) if the facts justified it (paras 20 to 22).
The Court began from the text: s.12AA provides for registration of a trust, and such registration can be applied for by a trust that has been in existence for some time and equally by a newly registered trust; there is no stipulation that the trust should already have been in existence or have undertaken activities before applying (para 5). It accepted that the Commissioner must satisfy himself about both the objects and the genuineness of the activities, and that this matters because registration carries entitlement to the benefits of ss.11 and 12, so that where objects and activities are not genuine he is not merely entitled but bound to refuse (para 9). It rejected the Revenue's submission that where nothing has been done the Commissioner cannot assess genuineness and must therefore refuse (paras 10 and 11). The answer lay in what the provision is for: registration, not assessment of what has been done, so 'activities' takes in proposed activities (para 12). The Court drew the contrast with cancellation under s.12AA(3), which turns on activities actually carried on (para 12). It noted that the Allahabad High Court in CIT v. R.S. Bajaj Society had taken the same view as the Delhi High Court, and had referred to similar views in Karnataka and Punjab and Haryana (para 14). The contrary view of the Kerala High Court in Self Employers Service Society did not commend itself, though the Court observed that on the facts there the Commissioner had found the applicant had undertaken activities contrary to its objects (para 15).
Since section 12AA pertains to the registration of the Trust and not to assess of what a trust has actually done, we are of the view that the term 'activities' in the provision includes 'proposed activities'.
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Handle my notice → Ask a CA on WhatsAppNo. Registration cannot be refused merely because a newly formed trust has not started activities. 'Activities' includes proposed activities, so at the registration stage the Commissioner looks at whether the objects are genuinely charitable and whether the proposed activities are genuine. This was decided by the Supreme Court (S.A. Bobde, CJI, B.R. Gavai and Surya Kant, JJ. (three-Judge Bench)) and bears on section 12AA, section 12AA(3), section 12A, section 11, section 12 of the Income Tax Act 1961. It is reported as (2020) 426 ITR 340 / 187 DTR 169 / 313 CTR 369 / 272 Taxman 7 (SC). This answers the standard refusal letter that says no charitable activity has been carried on since formation. On these facts the trust was formed on 30 May 2008 and applied about two months later. The Court also drew the line the department blurs: registration and cancellation are different exercises, and conduct after registration is dealt with under the cancellation power, which turns on activities actually undertaken. If it applies to you, the first step is this: In your reply, set out the proposed activities and how they follow from the objects clause, with whatever board resolutions, plans or budgets exist to show they are genuine.
Three sets of appeals were heard together. In Civil Appeal Nos. 5437-5438 of 2012 the judgments under appeal were of the Karnataka High Court. In Civil Appeal No. 4702 of 2014 the Director of Income-tax appealed against a Delhi High Court judgment holding that a newly registered trust is entitled to registration under s.12AA on the basis of its objects, without any activity having been undertaken: that trust had been formed as a society on 30 May 2008 and applied for registration on 10 July 2008, about two months later, having undertaken no activities in the meantime; the Commissioner refused registration on that sole ground, the Tribunal reversed him and the High Court upheld the Tribunal. Civil Appeal No. 1727 of 2020 concerned a different trust, which had applied for registration and was found not to have spent any part of its income on charitable activities; the Commissioner refused registration and the Tribunal reversed him on the strength of the Delhi High Court line. The matter was decided on 2020-02-19 by the Supreme Court (S.A. Bobde, CJI, B.R. Gavai and Surya Kant, JJ. (three-Judge Bench)). On those facts the Supreme Court held as follows. All three appeals were dismissed. Registration under s.12AA cannot be refused merely because a newly formed trust has not yet begun its activities: since the section pertains to registration and not to an assessment of what a trust has actually done, the word 'activities' in it includes proposed activities, and the Commissioner must consider whether the objects are genuinely charitable and whether the activities the trust proposes are genuine in the sense of being in line with those objects (para 12). The Commissioner is still bound to refuse registration where the objects and activities are not genuine, that is, not charitable (para 9). The position is different on cancellation under s.12AA(3), where the Commissioner must record a finding that activities actually carried on are not genuine as being outside the objects; and different again where a trust is found, before applying, to have undertaken activities contrary to its objects (para 12). On the third appeal the Court held that a trust which had spent nothing of its income on charitable purposes was a case of not carrying out the objects, not of carrying on activities contrary to them - circumstances which may arise for many reasons, including not finding suitable circumstances to act - and while inaction might become actionable depending on other circumstances, that case was not before the Court; it left the Commissioner to consider exercising his powers under s.12AA(3) if the facts justified it (paras 20 to 22).
The Court began from the text: s.12AA provides for registration of a trust, and such registration can be applied for by a trust that has been in existence for some time and equally by a newly registered trust; there is no stipulation that the trust should already have been in existence or have undertaken activities before applying (para 5). It accepted that the Commissioner must satisfy himself about both the objects and the genuineness of the activities, and that this matters because registration carries entitlement to the benefits of ss.11 and 12, so that where objects and activities are not genuine he is not merely entitled but bound to refuse (para 9). It rejected the Revenue's submission that where nothing has been done the Commissioner cannot assess genuineness and must therefore refuse (paras 10 and 11). The answer lay in what the provision is for: registration, not assessment of what has been done, so 'activities' takes in proposed activities (para 12). The Court drew the contrast with cancellation under s.12AA(3), which turns on activities actually carried on (para 12). It noted that the Allahabad High Court in CIT v. R.S. Bajaj Society had taken the same view as the Delhi High Court, and had referred to similar views in Karnataka and Punjab and Haryana (para 14). The contrary view of the Kerala High Court in Self Employers Service Society did not commend itself, though the Court observed that on the facts there the Commissioner had found the applicant had undertaken activities contrary to its objects (para 15). In the words reproduced by the source cited on this page: "Since section 12AA pertains to the registration of the Trust and not to assess of what a trust has actually done, we are of the view that the term 'activities' in the provision includes 'proposed activities'." The decision followed or applied CIT v. R.S. Bajaj Society [2014] 42 taxmann.com 573 / 222 Taxman 111 (All.) (noted as taking the same view, para 14); Self Employers Service Society v. CIT [2000] 113 Taxman 703 / [2001] 247 ITR 18 (Ker.) (distinguished; the contrary view 'does not commend itself', para 15).
It was decided by the Supreme Court on 2020-02-19 and is reported as (2020) 426 ITR 340 / 187 DTR 169 / 313 CTR 369 / 272 Taxman 7 (SC). Binding on every court and authority in India. A Supreme Court decision binds every assessing officer, every Commissioner (Appeals), every bench of the Income Tax Appellate Tribunal and every High Court in India. An officer who declines to follow it is acting contrary to law, and that refusal is itself a ground of appeal. On section 12AA, section 12AA(3), section 12A, section 11, section 12, the practical question is whether the facts of your own notice match the facts of this case closely enough for the same rule to apply.
It helps the taxpayer. All three appeals were dismissed. Registration under s.12AA cannot be refused merely because a newly formed trust has not yet begun its activities: since the section pertains to registration and not to an assessment of what a trust has actually done, the word 'activities' in it includes proposed activities, and the Commissioner must consider whether the objects are genuinely charitable and whether the activities the trust proposes are genuine in the sense of being in line with those objects (para 12). The Commissioner is still bound to refuse registration where the objects and activities are not genuine, that is, not charitable (para 9). The position is different on cancellation under s.12AA(3), where the Commissioner must record a finding that activities actually carried on are not genuine as being outside the objects; and different again where a trust is found, before applying, to have undertaken activities contrary to its objects (para 12). On the third appeal the Court held that a trust which had spent nothing of its income on charitable purposes was a case of not carrying out the objects, not of carrying on activities contrary to them - circumstances which may arise for many reasons, including not finding suitable circumstances to act - and while inaction might become actionable depending on other circumstances, that case was not before the Court; it left the Commissioner to consider exercising his powers under s.12AA(3) if the facts justified it (paras 20 to 22). It arises in Charitable Trusts & Exemption matters, on section 12AA, section 12AA(3), section 12A, section 11, section 12 of the Income Tax Act 1961, and was decided by S.A. Bobde, CJI, B.R. Gavai and Surya Kant, JJ. (three-Judge Bench). Before relying on it, read the source linked on this page and check whether it has since been distinguished, overruled or overtaken by an amendment to the Income Tax Act. In practice the steps that follow from it are these. Point out that absence of past activity is not by itself a ground of refusal where the trust is newly formed. Do not accept a refusal that reasons as though the trust's later conduct were being judged; that enquiry belongs to the cancellation power, not to registration. Keep the objects clause tight, because the enquiry at this stage is directed at whether the objects are genuinely charitable.
Searched for later treatment; none was found. That is not the same as a source affirming it. A three-Judge Bench of the Supreme Court. No later decision applying, following or affirming it was established on this read. The provision it construes has since been displaced: s.12AA gave way to the s.12AB regime, registrations being renewed under s.12AB(1) with effect from 1 April 2021, and the 'specified violation' cancellation framework in s.12AB(4) was introduced by the Finance Act 2022 with effect from 1 April 2022. The reasoning on proposed activities still answers a refusal, but frame it under the current provision. No source could be cited for that finding. Checking whether an authority still stands matters as much as knowing what it held: a decision may be overruled on one point and survive on another, or the provision it interprets may have been amended since. Read the source and the editor's note on this page before relying on it in a reply to an Assessing Officer or in an appeal.
This construes s.12AA, which has been displaced by the s.12AB regime - registrations were renewed under s.12AB(1) with effect from 1 April 2021 and the 'specified violation' cancellation framework in s.12AB(4) came in by the Finance Act 2022 with effect from 1 April 2022 - so the reasoning on proposed activities still answers a refusal, but frame it under the current provision. Two things the short version of this case leaves out. It decides three appeals, and the third, Civil Appeal No. 1727 of 2020, is the one about a trust that had applied none of its income to charitable purposes: the Court held that is a case of not carrying out the objects rather than of acting contrary to them, that such circumstances may arise for many reasons, and it left the Commissioner to consider his powers under s.12AA(3) if the facts justify it (paras 20 to 22). And on the other side of the ledger, the Court is explicit at para 9 that where the objects and activities are not genuine the Commissioner is bound to refuse. Take care with the name: a 2026 Karnataka High Court decision involving an assessee called Ananda Social & Education Trust concerns unrelated additions under s.153A and is not this case. This library shows the verification state of every entry openly. This entry has not yet been read in full by a chartered accountant. The summary reflects the sources listed on this page. Read the source before you rely on it in a reply to an Assessing Officer or in an appeal before the Commissioner (Appeals) or the Income Tax Appellate Tribunal.
All three appeals were dismissed. Registration under s.12AA cannot be refused merely because a newly formed trust has not yet begun its activities: since the section pertains to registration and not to an assessment of what a trust has actually done, the word 'activities' in it includes proposed activities, and the Commissioner must consider whether the objects are genuinely charitable and whether the activities the trust proposes are genuine in the sense of being in line with those objects (para 12). The Commissioner is still bound to refuse registration where the objects and activities are not genuine, that is, not charitable (para 9). The position is different on cancellation under s.12AA(3), where the Commissioner must record a finding that activities actually carried on are not genuine as being outside the objects; and different again where a trust is found, before applying, to have undertaken activities contrary to its objects (para 12). On the third appeal the Court held that a trust which had spent nothing of its income on charitable purposes was a case of not carrying out the objects, not of carrying on activities contrary to them - circumstances which may arise for many reasons, including not finding suitable circumstances to act - and while inaction might become actionable depending on other circumstances, that case was not before the Court; it left the Commissioner to consider exercising his powers under s.12AA(3) if the facts justified it (paras 20 to 22).
TaxSphere, “Ananda Social and Educational Trust v CIT”, https://taxnotice.vittsphere.com/caselaw/case/ananda-social-and-educational-trust-v-cit/ (validity last checked 2026-08-19)
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