TaxTMI 
TaxTMI 
2011 (9) TMI 255
X X X X Extracts X X X X
X X X X Extracts X X X X
....such income would not be taxable. One of the conditions for availing of exemption under section 11 of the Act is that the trust or institution has to make an application for registration of the trust or institution in the prescribed form and in the prescribed manner and such trust or institution should be registered under section 12AA of the Act. Registration under section 12AA of the Act will be granted only after the Commissioner is satisfied that the objects of the trust or institution are charitable and the activities of the trust or institution are genuine. There is no dispute that the Appellant Sabha in the present case was granted such registration under section 12AA of the Act and its assessments were being completed on the basis that there exists a valid registration under section 12AA of the Act. 4. The Addl.Director of Income Tax (Exemptions), Range-1, Mumbai, during the scrutiny assessment proceedings of the appellant Sabha noticed that the appellant Sabha had amended its objects clause Since January, 2008 by incorporating clause 3(iii) in the objects clause of its Memorandum of Association. The objects of the appellant Sabha as it existed after such amendment are as....
X X X X Extracts X X X X
X X X X Extracts X X X X
....sh application was made for grant of registration to the DIT. It has further informed in the said letter that the Hon'ble Allahabad High Court in the case of Allahabad Agricultural Institute v. Union of India [2007] 291 ITR 116/163 Taxman 67 has held that wherever there is change in the objects of an institution the institution has to make a fresh application for grant of registration under section 12A of the Act and get concurrence of the Department. 5. The reasons why the Appellant Sabha had to make the amendment to the objects clause of its Memorandum are as follows: There was a Society by name Bharatiya Music & Arts Society (hereinafter referred to as "the Society"). The Society was registered under the Societies Registration Act and also as a Public Charitable Trust with the Office of the Charity Commissioner, Greater Mumbai Region, Mumbai. Its objects were (a) To conduct classes, establish and run schools or colleges for the study of Music, Dance and allied arts which include inter alia. (b) To affiliate the institution or institutions so established with the above object in view with Universities, Academics or centres of learning deemed proper by ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ng the amalgamation it was mentioned that post amalgamation the combined institution would be continued to be called as "Shanmukhananda Fine Arts & Sangeetha Sabha". Since there was no specific power in the Memorandum of Association of the Appellant Sabha to merge with any other society or institution having similar objects, by way of amendment to the objects clause 3(iii) was inserted by passing necessary resolution in the Extraordinary General Meeting held on 26-9-2004. This the background under which the amendment by which clause 3(iii) referred to in the earlier part of this order was inserted in the objects clause of the Memorandum of Association. The Charity Commissioner by order dated 18-12-2007 allowed the application for merger of the appellant Sabha with the Society. 6. On receipt of the aforesaid letter from the ADIT, the DIT issued a notice dated 13-9-2010 pointing out that the appellant sabha changed it's object after grant of registration under section 12A of the Act and that the alteration in the objects clause was significant. It was further pointed out that in the case of significant change in the objects clause, the very foundation of registration granted u....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... DIT referred to the decision of the Hon'ble Allahabad High Court in the case of Allahabad Agricultural Institute (Supra) and held that change of objects of a trust or institution without the concurrence of DIT (Exemption) would result in withdrawal of the registration granted under section 12A of the Act. The Appellant Sabha contended before the DIT that there is no change in the objects of the Appellant Sabha even after the merger and that the objects continue to be the same as it existed before the merger and that the objects of the Society are identical to the appellant sabha. The DIT however held that the appellant Sabha cannot decide for itself whether there was change in the objects or not and that it was the authority which granted registration that has to decide whether there was change of objects or not and that the appellant Sabha ought to have approached the DIT(Exemption) for registration afresh. For the above reasons the DIT withdrew the registration granted to the appellant Sabha. 10. Aggrieved by the aforesaid order of the DIT, the appellant Sabha is in appeal before the Tribunal. 11. The learned counsel for the Appellant Sabha after referring to the factu....
X X X X Extracts X X X X
X X X X Extracts X X X X
....of association was the power to merge with a society having similar objects as that of the appellant Sabha. The fact that pursuant to such amendment of the objects clause, the merger of the Appellant Sabha with the Society was approved by the Bombay Charity Commissioner would by itself show that the objects of the appellant Sabha and the Society are one and the same. In this regard it was also submitted that even if one were to assume that the objects of the appellant sabha and the society were different, it was only the main or dominant objects that has to be seen. 13. His next submission was that the decision of the Hon'ble Allahabad High Court in the case of Allahabad Agricultural Society (Supra) is a case where there was a drastic change of objects. Our attention was drawn to the following observation of the Hon'ble High Court at page-120 of the report "We have not been shown that the original objects and the altered objects of the petitioner in its memorandum of association are practically the same or are charitable". It was submitted that the ratio laid down in the said case has to be read in the context of the above facts of the said case. It was also submitted th....
X X X X Extracts X X X X
X X X X Extracts X X X X
....portunity of being heard." The power to cancel registration already granted can be done in two situations; (a) satisfaction of the Commissioner that the activities of the trust or institution are not genuine (b) satisfaction of the Commissioner that the activities of the trust or institution are not being carried out in accordance with the objects of the trust or institution. 18. In the impugned order there is no finding on the satisfaction of any of the above two conditions. The objects of the appellant sabha are charitable and on this aspect there is no dispute or doubt. There is no finding that the objects of the society that merged with the appellant sabha are not charitable. A mere finding that the objects of the society and the appellant sabha are not similar would not be sufficient to exercise the power under section 12AA (3) of the Act without giving a finding that the society's objects are not charitable. On this score the impugned order is liable to set aside. 19. Apart from the above, we also agree with the submission on behalf of the Appellant Sabha that the objects of the Society are identical to that the appellant sabha and t....