Charitable trust registration cannot be denied for a technical dissolution-clause objection when the deed provides asset transfer on closure.

Registration of a charitable trust under the Income-tax Act could not be refused merely on the ground that the deed lacked a detailed dissolution clause, where it provided that on closure the property would be transferred to another with similar objects by appropriate resolution. The tribunal followed an earlier co-ordinate Bench view that such a technical objection does not justify denial of registration when the trust otherwise has charitable objects and an operative transfer-of-assets provision exists. The refusal was therefore held unsustainable, and registration under section 12AA was to be granted.

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Issues: Whether registration of a trust under the Income-tax Act could be refused merely because the trust deed was said to lack an adequate dissolution or transfer-of-assets clause.

Analysis: The denial of registration was founded on the absence of a suitable clause dealing with transfer of assets on closure of the trust. The trust deed, however, did contain a provision that on closure the property would be handed over to another institution with similar objects by appropriate resolution. The issue was identical to one already decided by a co-ordinate Bench in favour of the assessee, and the same reasoning was followed. In view of the existing clause and the settled view that such a technical objection does not justify rejection where the trust otherwise has charitable objects, the refusal to grant registration was unsustainable.

Conclusion: The objection was rejected and registration under section 12AA was directed to be granted to the assessee.

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