ITAT Delhi directs registration for trust under section 12AA, emphasizes genuine charitable activities. Dissolution clause required.

The ITAT Delhi directed the Commissioner to grant registration to the appellant trust u/s 12AA of the Income Tax Act, noting no adverse comments on charitable objects or activities' genuineness. The absence of a dissolution clause in the trust deed was deemed insufficient for rejection. The Tribunal dismissed the Commissioner's basis as incorrect and unsustainable, citing relevant judgments. The appellant was instructed to include a dissolution clause in the trust deed within two months. Appeal allowed with specified directions.

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Issues involved:
The appeal against the order of CIT(Exemption) Chandigarh dated 16.09.2020 for AY 2020-21 regarding denial of registration u/s 12AA of the Income Tax Act.

Issue I: Impugned order unjust and arbitrary
The grounds of the assessee were that the order passed by the Commissioner of Income Tax (Exemption) was unjust and arbitrary, contrary to provisions of law and facts available on record.

Issue II: Consideration of evidence for registration
The counsel of the assessee argued that the Commissioner did not consider the information/evidence in the correct perspective while denying registration u/s 12AA of the Income Tax Act.

Issue III: Charitable purposes assessment
The counsel contended that the Commissioner never held that the Trust was not for charitable purposes as defined under section 2(15) of the Income Tax Act 1961.

Issue IV: Rejection based on presumptions
It was argued that the Commissioner erred in rejecting the application for registration u/s 12AA of the Income Tax Act based on apprehensions and presumptions for a future event, rather than on facts, ignoring the provisions of the Income Tax Act 1961.

The ITAT Delhi, after considering the submissions, noted that the Commissioner had not made any adverse comments regarding the charitable objects of the assessee or the genuineness of its activities. The Tribunal held that the absence of a dissolution clause in the trust deed cannot be the sole basis for rejecting the registration application u/s 12AA of the Act. Citing relevant judgments, the Tribunal dismissed the Commissioner's basis for rejection as incorrect, invalid, and unsustainable. The ITAT directed the Commissioner to grant registration to the appellant trust u/s 12AA of the Act.

Before concluding, the ITAT directed the assessee to include a dissolution clause in its trust deed and submit an amended copy to the Commissioner within two months. The appeal was allowed with the specified directions.

Order pronounced in the open court on 14.07.2023.

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