High Court Upholds Trust's Registration Appeal, Emphasizes Compliance with Tax Act

The Commissioner of Income Tax. Rohtak Versus BKK. Memorial Trust

The Commissioner of Income Tax. Rohtak Versus BKK. Memorial Trust - [2013] 256 CTR 424 Issues:
1. Appeal under Section 260A of the Income Tax Act, 1961 against the order of the Income Tax Appellate Tribunal.
2. Substantial questions of law raised by the revenue regarding registration of the Trust under Section 12A of the Income Tax Act.
3. Rejection of Trust's application by the Commissioner of Income Tax, Rohtak.
4. Tribunal's decision to grant registration to the Trust.
5. Contention regarding charitable activities of the Trust.
6. Interpretation of Section 12AA of the Income Tax Act.
7. Application for registration within one year of Trust creation.
8. Examination of Trust's objects for registration.
9. Comparison with previous judgments regarding registration of Trusts.

Detailed Analysis:
1. The High Court heard an appeal under Section 260A of the Income Tax Act against the order of the Income Tax Appellate Tribunal. The revenue raised substantial questions of law concerning the registration of the Trust under Section 12A of the Income Tax Act. The Trust's application was rejected by the Commissioner of Income Tax, Rohtak, based on various grounds, including lack of charitable activities and potential misuse for non-charitable purposes.

2. The Tribunal, however, granted registration to the Trust after considering Section 12AA of the Act and the Trust's objects. The Tribunal noted that the Trust's properties were in its name, and the power of the trustees to remove others was for the Trust's benefit. The Tribunal also examined the evidence of trustees' identity and initial investments, distinguishing previous cases and supporting the Trust's registration.

3. The revenue contended that the Trust did not engage in charitable activities, but the Court emphasized that the Trust was in its nascent stage and had not yet fully operated towards its objectives. The Court interpreted Section 12AA, highlighting the importance of examining the Trust's genuineness and objects for registration, rather than its current income usage.

4. Referring to previous judgments, the Court emphasized the requirement of applying for registration within one year of Trust creation and reiterated that the focus should be on the Trust's objects and activities, not its income usage. The Court dismissed the appeal, stating that no substantial question of law arose, as the Trust's registration was valid based on the provided evidence and compliance with the Act.

5. The Court's decision aligned with previous rulings, emphasizing that the Trust's registration should be granted based on its objects and activities, with the possibility of cancellation if deviations were later observed. The Court upheld the Tribunal's decision to grant registration to the Trust, dismissing the revenue's contentions and affirming the importance of examining the Trust's objectives for registration under Section 12AA of the Act.