2014 (4) TMI 1300 - HC - Income Tax

Charitable Trust's Registration Maintained Post-Amalgamation, Tribunal's Decision Upheld, No Substantial Legal Questions.

The Director of Income Tax (Exemptions) Versus Shri Shanmukhanand Fine Arts

The HC upheld the Income Tax Appellate Tribunal's decision, confirming that the amalgamated charitable trust's registration should not be withdrawn. The ... Assessment of trust - necessity to remand the case back to the Director by ITAT - ITAT was not satisfied with the order passed by the Director of Income Tax (Exemptions) u/s 12AA(3) and took upon the matter to itself allowing exemption to assessee trust - revenue contented if the Tribunal was not satisfied with the order passed by the Director of Income Tax (Exemptions) u/s 12AA(3) then as an appellate Court or an authority, all that needed to be done was to quash that order and send the matter back to the Director of Income Tax (Exemptions) and for scrutiny as to whether the objects are identical and whether all requirements of the statute are complied with rather takin upon the matter to itself - HELD THAT:- In the present case, what the Tribunal noted and on fact is that the appellant before is Sri Shanmukhananda Fine Arts and Sangeetha Sabha Charitable Trust. The assessee society is a registered society and covered by both, the Societies Registration Act, 1960 and Bombay Public Trust Act, 1950. It is termed as a Charitable Institution. It changed the objects and that was permitted by the Charity Commissioner. Thereafter, the Trust named Bharatiya Music and Arts Society was amalgamated with the assessee society on 27th January, 2005. The Director sought to question this and even the lapses allegedly committed by the assessee society in not communicating to the Income Tax Department the changes made in the objects of the Trust. Finding that the other Trust which amalgamated with the assessee society was also established and founded for the same objects and purpose and that a case therefore was not made out for withdrawal of the registration, that the Income Tax Appellate Tribunal, after setting aside the order of the Director, granted full relief. In the given facts and circumstances, the Tribunal found that it was not necessary to remit or remand the case back to the Director. That was essentially because the facts were never in dispute. It is in these circumstances and finding that the view taken by the Tribunal is a possible one, that the present appeal does not deserve to be admitted. No substantial question of law. Issues:Challenge to order passed by Income Tax Appellate Tribunal under Section 12AA(3) of the Income Tax Act regarding charitable trust's objects and compliance with statute requirements.Analysis:The appellant, a charitable trust, amalgamated with another trust and made changes to its objects, which were permitted by the Charity Commissioner. The Income Tax Department questioned the changes and alleged lapses in communication. The Tribunal found that the amalgamated trust shared the same objects and purpose, and thus, withdrawal of registration was not warranted. The Tribunal set aside the Director's order and granted full relief to the appellant. The Tribunal did not remand the case back to the Director as the facts were undisputed. The High Court held that the Tribunal's decision was reasonable, as the appeal did not raise any substantial question of law and was accordingly dismissed.Conclusion:The High Court upheld the Income Tax Appellate Tribunal's decision, finding that the amalgamated charitable trust did not warrant withdrawal of registration and that the Tribunal's decision not to remand the case back to the Director was justified due to undisputed facts. The appeal challenging the Tribunal's order was dismissed as it did not raise any substantial question of law.