2011 (3) TMI 352 - AT - Income Tax

Renewal of exemption u/s 80G - Registration u/s 12A - assessee had however not filed any fresh application for registration under section 12A which had been granted only with respect to the original objects - After demise of the original trustees, the new trustees thought it fit to open admission to all the students without any reservation as to caste and creed - One of the conditions for granting exemption under section 80G is that the trust must be registered under section 12A of the Income-tax Act as a charitable institution - there being no statutory requirement of intimating changes, registration cannot be cancelled or the trust cannot be declared invalid only on the ground that changes were not intimated - The trust has already been registered under section 12A and the registration has not been cancelled - Principle of consistency is also in favour of the assessee as based on the amended objects renewal of approval under section 80G has already been granted and factual and legal position remaining the same, we see no justification for rejecting the application for renewal under section 80G - Appeal is allowed

Issues Involved:
1. Renewal of exemption under section 80G of the Income-tax Act.
2. Validity of the trust's registration under section 12A after changes in the trust's objects.
3. Requirement of High Court approval for changes in the trust's objects.
4. Intimation of changes in the trust's objects to the Income-tax Department.

Issue-wise Detailed Analysis:

1. Renewal of Exemption under Section 80G:
The primary dispute in this case revolves around the renewal of the exemption under section 80G, which was denied by the Director of Income-tax (Exemption) (DIT(E)). The appellant trust, originally registered under section 12A of the Income-tax Act and previously granted exemption under section 80G, sought renewal of this exemption. The DIT(E) denied the renewal, citing changes in the trust's objects without a fresh application for registration under section 12A.

2. Validity of the Trust's Registration under Section 12A:
The appellant trust had been registered under section 12A since 21-11-1975. However, the DIT(E) noted that the trust's objects had been amended in 1994, and no fresh application for registration under section 12A had been filed. The DIT(E) argued that the original registration under section 12A did not survive due to these changes. The DIT(E) referenced the judgment in Allahabad Agricultural Institute v. Union of India, which held that changes in the trust's objects could invalidate the original registration.

3. Requirement of High Court Approval for Changes in the Trust's Objects:
The DIT(E) cited the judgment of the Hon'ble High Court of Madras in Sakthi Charities v. CIT, which held that changes in the trust's objects required High Court approval. The appellant trust argued that the changes were made under section 50A(1) of the Bombay Public Trust (BPT) Act, which did not necessitate High Court approval. The Tribunal noted that section 50A(1) empowered the Charity Commissioner to frame a scheme for the management or administration of the trust but did not authorize changes in the trust's objects without High Court approval.

4. Intimation of Changes in the Trust's Objects to the Income-tax Department:
The DIT(E) also pointed out that the trust had not communicated the changes in its objects to the Income-tax Department for almost 15 years, as required by Form No. 10A. The appellant trust contended that there was no statutory requirement for such intimation and that the changes were ultimately communicated. The Tribunal observed that there was no time limit prescribed for intimation in Form No. 10A and that the trust had eventually complied with this requirement.

Conclusion:
The Tribunal concluded that the trust's original object of providing hostel accommodation remained unchanged, and the amended objects were still charitable. The trust's registration under section 12A had not been canceled, and the trust had previously been granted exemption under section 80G based on the amended objects. The Tribunal emphasized the principle of consistency and directed the DIT(E) to grant renewal of approval under section 80G to the appellant trust. The appeal was allowed, and the order of the DIT(E) rejecting the application for renewal of approval under section 80G was set aside.

← Previous Next →