2009 (8) TMI 1150 - AT - Income Tax

Tribunal Reinstates Assessee-Trust's Registration, Overturns Director's Decision; Lack of Activity Not Permanent Cessation Under 12AA.

The tribunal allowed the appeal of the assessee-trust, overturning the Director of IT (Exemption)'s order to withdraw the trust's registration under ... Withdrawal of registration granted u/s 12AA(1)(b)(ii) - nature of the constitution of the trust is purely a family affair and not a public charitable trust - HELD THAT:- Ld counsel of the assessee has filed the copy of acknowledgement of return of income for the AY's 2005-06 and 2006-07 along with audit report for the year ending 31st March, 2005 and 31st March, 2006. It is pointed out that from the perusal of the same, no activities are carried out by the trust. Merely, all the trustees are family members, it does not mean that trust is not a public trust. This proposition finds support from the decision of Hon'ble Supreme Court in the case of Deoki Nandan v. Murlidhar & Ors.[1956 (10) TMI 35 - SUPREME COURT].As a matter of fact the trust is genuine and because of this, the ld Director of IT (Exemption) granted the exemption u/s 12AA. There is no finding or allegation in the impugned order that activities carried out by the trust are not in accordance with the objects of the trust or institution. Merely because the assessee has not carried out any activities, that does not mean that the trust has totally stopped the activity forever. In our considered opinion, the ld Director of IT (Exemption) has not made out a case justifying cancellation of the registration granted u/s 12AA. We, therefore, set aside the impugned order of the Director of IT (Exemption). we allow the appeal of the assessee. The appeal involves an assessee-trust contesting the withdrawal of registration granted under section 12AA of the IT Act, 1961. The Director of IT (Exemption) withdrew the registration due to concerns regarding the nature of the trust and the lack of activities carried out. The withdrawal was based on the trust being deemed a family affair rather than a public charitable trust and the absence of activities till a specified date. The tribunal reviewed the case and found no justifiable reason for cancellation of registration. The trust's lack of activities did not imply a permanent cessation, and the trust was considered genuine. The tribunal set aside the Director's order, allowing the appeal. The Director retains the right to cancel registration in the future if conditions under section 12AA(3) are met. Ultimately, the appeal of the assessee was allowed, with the Director's order being overturned.