2017 (3) TMI 1876 - AT - Income Tax

Appeal success: Trust registration granted despite missing dissolution clause. Commissioner's role clarified.

The appeal involved the rejection of registration under section 12AA of the Act by the Commissioner of Income Tax (Exemptions), Kolkata, for a Trust ... Exemption u/s 11 - rejecting the grant of registration u/s. 12AA as original trust deed was not produced and dissolution clause was not found in the copy of said deed - power to exercise in granting registration for a religious or charitable institution - Charitable object u/s 2(15) - HELD THAT:- As relying on Case of TARA EDUCATIONAL AND CHARITABLE TRUST VERSUS DIRECTOR OF INCOME TAX (EXEMPTIONS) [2014 (7) TMI 869 - ITAT MUMBAI] we set aside the impugned order of the CIT(E) in rejecting the grant of registration - Decided in favour of assessee. Issues:Grant of registration u/s. 12AA of the Act.Analysis:The appeal concerns the rejection of registration u/s. 12AA of the Act by the Commissioner of Income Tax (Exemptions), Kolkata. The key issue is whether the rejection of registration was justified. The appellant, a Trust established for charitable purposes, argued that the rejection was unwarranted as the Trust had fulfilled all necessary requirements. The Trust was created in 1944 and primarily operated a temple in Hardwar for the benefit of Hindu Sanyasis and other needy individuals. The appellant contended that the rejection was based on technical grounds, specifically the absence of a dissolution clause in the trust deed. The appellant cited a similar case from the Mumbai Bench to support their argument that the Commissioner's scope of inquiry under section 12A was limited to assessing the trust's objectives and activities' genuineness.Upon reviewing the material submitted by the appellant, it was found that the Trust had complied with all requirements for registration. The Trust possessed only immovable assets, specifically a temple in Hardwar, and the trustees did not derive any income from the temple. In case of dissolution, the Trust had a clear plan to transfer its assets to another trust with similar objectives or to the government. The Commissioner had not raised any concerns regarding the Trust's activities or objectives' genuineness. The rejection was solely based on the absence of a dissolution clause in the trust deed, which was deemed irrelevant to the registration process. Citing a precedent from the ITAT Mumbai, it was concluded that the rejection was unjustified, and the Commissioner was directed to grant registration to the Trust based on the submissions made before him.In light of the above analysis, the appeal was allowed, and the decision to reject the registration was overturned. The Tribunal emphasized that the Commissioner's role in assessing registration applications under section 12A was limited to verifying the trust's objectives and activities' genuineness, not irrelevant technicalities like the presence of a dissolution clause in the trust deed.