Charitable registration cannot be refused for absence of a dissolution clause; 80G denial on that basis also fails.

Registration under section 12AA cannot be refused merely because the trust deed lacks a dissolution clause transferring assets to another charitable institution. The enquiry at the registration stage is limited to whether the objects are charitable and the activities are genuine; it does not extend to testing the eventual application of income or adding extraneous conditions. The statutory scheme, including section 115TD, protects revenue interests in specified contingencies and does not justify denial on that basis alone. On that reasoning, denial of section 80G approval based on the same defect also cannot stand.

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Issues: Whether registration under section 12AA of the Income-tax Act, 1961 could be refused solely because the assessee's governing instrument did not contain a dissolution clause transferring assets to another charitable institution, and whether approval under section 80G could be denied on that basis.

Analysis: The scope of enquiry under section 12AA is confined to the charitable character of the objects and the genuineness of the activities of the trust or institution. At the stage of registration, the Commissioner is not to test the eventual application of income, and refusal cannot rest on an extraneous condition such as the absence of a dissolution clause. The statutory scheme, including section 115TD, protects revenue interests in specified eventualities and does not justify denial of registration on the sole ground relied upon by the Commissioner. The decisions considered showed that a registration application may be rejected only where the objects are not charitable or the activities are not genuine.

Conclusion: The refusal of registration under section 12AA was not sustainable, and the consequential denial of approval under section 80G also could not stand.

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