Tribunal grants registration to trust under Section 12AA, emphasizing charitable nature and genuine activities.

The Tribunal set aside the Commissioner of Income Tax's order and directed the grant of registration to the trust under Section 12AA of the Income Tax Act. The Tribunal found the reasons for refusal lacked concrete evidence, emphasizing the trust's charitable nature and genuine albeit small-scale activities. The decision, pronounced on 16th December 2015, highlighted the legality of amendments to the trust deed and dismissed concerns over company control, trust activities' genuineness, and clarity of deed provisions.

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Issues Involved:
1. Refusal to grant registration under Section 12AA of the Income Tax Act.
2. Legality of amendments made to the original trust deed via a supplementary deed.
3. Control of the company over the trust.
4. Genuineness and scale of the trust's activities.
5. Clarity of the trust deed provisions.

Detailed Analysis:

1. Refusal to Grant Registration under Section 12AA:
The primary issue was the refusal by the Commissioner of Income Tax to grant registration under Section 12AA of the Income Tax Act, 1961. The Commissioner cited several reasons, including the legality of the amendments made to the trust deed, the control of the company over the trust, and the genuineness and scale of the trust's activities.

2. Legality of Amendments Made to the Original Trust Deed:
The Commissioner found that the amendments made to the original trust deed via a supplementary deed were not for rectification of any 'mistake' but were regular amendments, which were not routed through the court and thus deemed illegal. The assessee argued that the amendments were authorized by the original resolution of the company and registered with the Joint Registrar of Registration of properties. The Tribunal referred to the judgment of the Hon'ble Rajasthan High Court in the case of Laxminarain Lath Trust Vs. Commissioner of Income Tax, which allowed for amendments to clarify the settler's intention without court intervention. The Tribunal concluded that the amendments were valid and not illegal.

3. Control of the Company Over the Trust:
The Commissioner observed that certain clauses in the trust deed indicated direct and indirect control of the company over the trust, such as the requirement for trustees to be company employees and the need for company approval for major decisions. The Tribunal noted that while some control by the settler (the company) is common, the Commissioner failed to provide concrete evidence that the trust served the company's interests rather than charitable purposes. The Tribunal emphasized that the Commissioner has the power to cancel the registration if it is later found that the trust's activities are not genuine.

4. Genuineness and Scale of the Trust's Activities:
The Commissioner questioned the genuineness of the trust's activities, noting minor discrepancies in record-keeping and the small scale of activities. The Tribunal found that the trust had carried out various charitable activities within its first year, such as distributing blankets and organizing diabetic camps. The Tribunal concluded that the activities were charitable in nature and the discrepancies in record-keeping were not significant enough to question the genuineness.

5. Clarity of the Trust Deed Provisions:
The Commissioner noted that certain provisions of the trust deed were unclear. The Tribunal held that the lack of clarity in one or two words in the deed should not be a ground for refusing registration if the trust otherwise meets the conditions for registration.

Conclusion:
The Tribunal set aside the order of the Commissioner of Income Tax and directed the Commissioner to grant registration to the trust under Section 12AA of the Income Tax Act. The Tribunal found that the reasons provided by the Commissioner for refusing registration were based on possibilities and presumptions rather than concrete evidence. The Tribunal emphasized that the objects of the trust were charitable in nature and the activities carried out were genuine, albeit on a small scale. The decision was pronounced in the open court on 16th December 2015.

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