TaxTMI 
TaxTMI 
2026 (8) TMI 878
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...., they are being disposed of by this consolidated order for the sake of convenience and to avoid repetition. 2. The assessee is a public charitable trust administering St. Joseph's High School situated at Vikhroli, Mumbai. The institution traces its origin to the year 1966 and has, since its inception, been engaged in imparting primary and secondary education without any discrimination based on caste, creed, religion or social status. It is not in dispute that the institution has been registered as a public trust under the Maharashtra Public Trusts Act, 1950 and has enjoyed recognition from various statutory and educational authorities over several decades. It has also remained registered under the provisions of the Income-tax Act and has consistently claimed exemption under sections 11 and 12. In the new registration regime introduced by the Finance Act, 2020, the assessee had also been granted registration under section 12AB vide Form No.10AC, which remained valid up to the assessment year under consideration. The present proceedings have arisen only because the assessee, upon expiry of the earlier registration, filed an application in Form No.10AB seeking renewal of such regi....
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....12AB constituted a pre-condition for grant of approval under section 80G(5), the application seeking approval under section 80G was also rejected solely on that basis, without recording any independent finding regarding the genuineness of the assessee's charitable activities or its eligibility under section 80G. 5. Aggrieved by the aforesaid orders, the assessee is in appeal before us. The principal grievance of the assessee is that the learned CIT(E) has fundamentally misdirected himself in law by treating the existence of a formal written trust deed as an indispensable condition for grant of registration under section 12AB, while completely overlooking the statutory distinction recognised under Rule 17A between trusts created under a written instrument and those established otherwise than under such an instrument. It has been contended that the assessee, being a public charitable trust duly registered under the Maharashtra Public Trusts Act since the year 1966 and continuously recognised by the Income-tax Department for several decades, had furnished all documents legally required to establish its creation, existence and charitable character. According to the assessee, the imp....
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....ects of the trust, its activities or the governing statutory provisions, the impugned orders violate the well-settled rule of consistency recognised by the Hon'ble Supreme Court as well as the Hon'ble jurisdictional Bombay High Court. Strong reliance was placed upon the decisions in Laxminarayan Maharaj v. CIT, Merciful Jesus Church v. CIT (Exemption), Tsurphu Labrang v. DIT (Exemption), Pr. CIT (Exemption) v. Dawoodi Bohra Masjid, Shree Ram Gopal Temple Trust v. CIT (Exemption), Ananda Social & Educational Trust v. CIT and the recent judgment of the Hon'ble Bombay High Court in Chamber of Tax Consultants v. CIT (Exemptions) to contend that the enquiry under section 12AB is confined to examining the charitable objects and genuineness of activities and cannot be expanded by importing a mandatory requirement of a written trust deed where the statute itself recognises trusts created otherwise than under an instrument. ITA No.5646 and 5849-Mum-2026 St. Josephs High School.doc 7. Per contra, the learned Departmental Representative strongly relied upon the reasoning recorded in the impugned orders and submitted that the learned CIT(E) has acted strictly in accordance with the statutor....
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....existence and continued recognition of such trust under the applicable law. The answer to this question necessarily depends upon a harmonious construction of section 12AB of the Act, Rule 17A of the Income-tax Rules and the provisions governing public trusts under the Maharashtra Public Trusts Act, 1950. 9. Since the controversy essentially turns upon the interpretation of the statutory framework governing grant and renewal of registration under section 12AB, it would be appropriate, before examining the rival contentions, to reproduce the relevant statutory provisions. The controversy primarily revolves around the scope of enquiry contemplated under section 12AB(1)(b) of the Act and the true import of Rule 17A(2) of the Income-tax Rules, 1962, particularly the distinction drawn therein between trusts created under an instrument and those created otherwise than under an instrument. Equally relevant are the provisions of the Maharashtra Public Trusts Act, 1950, which prescribe the statutory mechanism for registration and recognition of public trusts and the legal consequences flowing therefrom. We shall, therefore, first notice these provisions before proceeding to examine the co....
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....evant, reads as under:- Rule 17A(2): "The application under sub-rule (1) shall be accompanied by the following documents, as required by Form No.10A or Form No.10AB, as the case may be, namely:- (a) where the applicant is created, or established, under an instrument, self-certified copy of such instrument creating or establishing the applicant; (b) where the applicant is created, or established, otherwise than under an instrument, self-certified copy of the document evidencing the creation or establishment of the applicant; (c) self-certified copy of registration, if any, with the Registrar of Companies or Registrar of Firms and Societies or Registrar of Public Trusts, as the case may be." The controversy in the present appeals substantially centres around the interpretation of clauses (a) and (b) extracted above. While the learned CIT(E) has proceeded on the footing that production of a trust deed or Memorandum of Association constitutes an indispensable statutory requirement, the assessee contends that clause (b) expressly recognises trusts established otherwise than under a written instrument and, therefore, permits production of a....
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....ich arises for our consideration is as to the true scope of the jurisdiction exercisable by the Commissioner while dealing with an application under section 12AB of the Act. In our considered opinion, the answer to the controversy must necessarily commence with the language employed by the Legislature itself. Section 12AB does not contemplate an adjudication akin to an assessment proceeding, nor does it authorise the Commissioner to undertake an exhaustive investigation into every conceivable aspect relating to the constitution or administration of a charitable institution. The legislative intent is clearly discernible from the provision itself, which confines the enquiry to examining the charitable objects of the trust, the genuineness of its activities and the compliance with such other laws as are material for achieving those objects. The satisfaction contemplated by the statute is thus one of a limited and prima facie nature intended to determine the eligibility of the institution for registration, and not to pronounce upon every legal aspect relating to its creation or governance. 15. It is equally significant that while section 12AB authorises the Commissioner to call for ....
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....pon the premise that since the assessee could not produce a separate written trust deed or Memorandum of Association, the Commissioner was disabled from recording the satisfaction contemplated under section 12AB. In our considered opinion, such an approach, at least prima facie, appears to shift the focus of enquiry from the statutory parameters expressly prescribed by Parliament to a requirement which is sought to be inferred from the form of documentation. Whether such inference is legally sustainable would necessarily depend upon the correct interpretation of Rule 17A, because it is that Rule which prescribes the nature of documents required to accompany an application under Form No. 10AB. 18. We are, therefore, of the considered view that the real controversy does not lie in the genuineness of the assessee's activities or the charitable nature of its objects, both of which have remained consistently recognised over several decades. The core issue requiring adjudication is far narrower, though legally significant, namely, whether Rule 17A obliges every charitable institution seeking registration under section 12AB to produce a formal written instrument of trust irrespective o....
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....h an instrument, the Rule merely requires production of a document which evidences its creation or establishment. The emphasis, therefore, shifts from the constitutive instrument itself to the evidentiary material demonstrating the existence and establishment of the institution. The interpretation adopted by the learned CIT(E), however, virtually obliterates this legislative distinction by treating both clauses as though they prescribe one and the same requirement. Such an approach, in our opinion, travels beyond the language employed in the Rule and defeats the legislative intent underlying its bifurcated structure. 21. In the facts of the present case, it is an admitted position that the assessee has consistently maintained before the learned CIT(E) that it was never constituted under a separate trust deed or Memorandum of Association. Instead, it produced the statutory application submitted before the Charity Commissioner at the time of registration under the Maharashtra Public Trusts Act together with the certificate of registration issued pursuant to the statutory enquiry conducted under that enactment. The assessee also furnished its earlier registration under section 12A,....
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.... undoubtedly retains the jurisdiction to examine the charitable objects, the genuineness of activities and compliance with other applicable laws on the basis of the material produced before him. However, where the statute itself recognises institutions established otherwise than under an instrument, the enquiry cannot be prematurely concluded merely because a formal trust deed is unavailable. The question is whether the material produced is sufficient to enable the Commissioner to arrive at the satisfaction contemplated by section 12AB. In the present case, therefore, the real enquiry ought to have been directed towards the evidentiary value of the documents furnished by the assessee and not confined to the singular circumstance that no formal trust deed existed. It is in this backdrop that the evidentiary significance of the registration granted under the Maharashtra Public Trusts Act and the judicial precedents governing the issue assume decisive importance, to which we shall now advert. 28. There is yet another important aspect of the matter which, in our considered opinion, completely undermines the reasoning adopted by the learned CIT(E). The material placed before us unequ....
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....e Commissioner cannot introduce an altogether new condition at the stage of renewal in the absence of any material change in the governing facts or statutory provisions. The observations of the Hon'ble High Court apply with equal force to the facts before us. The impugned orders do not record any finding that the assessee's objects have undergone any change, that its educational activities have ceased to be genuine, or that there has been any violation of any law material to the attainment of its charitable purposes. In the absence of any such finding, the learned CIT(E), in our considered opinion, was not justified in denying renewal solely on a ground which had never been regarded as fatal while granting registration over the preceding decades. ITA No.5646 and 5849-Mum-2026 St. Josephs High School.doc 30. Viewed holistically, therefore, the impugned orders suffer from a fundamental legal infirmity. The learned CIT(E) has proceeded on the premise that the absence of a formal written trust deed, by itself, disables him from recording the satisfaction contemplated under section 12AB. Such an approach, as discussed hereinabove, overlooks the express language of Rule 17A(2)(b), ign....
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....as been disputed by the learned CIT(E). Equally, there is no allegation that the assessee has deviated from its educational objects, that its activities are not genuine, or that it has violated any law material to the attainment of its charitable purposes. Once these aspects remain undisputed, the enquiry ought to have been directed towards examining whether the documents produced by the assessee sufficiently established its creation and existence within the meaning of Rule 17A(2)(b), instead of treating the absence of a written trust deed as conclusive against it. 32. We are also unable to subscribe to the view that the statutory registration granted under the Maharashtra Public Trusts Act and the contemporaneous records produced by the assessee are incapable of constituting documents evidencing the creation or establishment of the trust. Such an interpretation would not only render clause (b) of Rule 17A(2) substantially redundant but would also lead to anomalous consequences whereby institutions admittedly established otherwise than under a written instrument would stand permanently excluded from the benefit of registration, notwithstanding their long-standing charitable exis....