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2011 (9) TMI 255 - AT - Income TaxSociety registered u/s 12A - Change in objects of the society - DIT directed the society to apply fresh registration - appellant sabha brought to the notice of the DIT the facts that there was no change in the objects for which the appellant sabha existed and the amendment in question was only for enabling amalgamation under the Bombay Public Trusts Act 1950. - Held that - . The decision in Allahabad Agricultural Institute v. Union of India 2007 (3) TMI 208 - ALLAHABAD High Court in our view is not applicable to the facts of the present case. As rightly contended on behalf of the Appellant in that case there was a drastic change of objects. The Hon ble High Court has specifically noted the failure of the assessee in that case to show that the altered objects and the original objects were the same and that they were charitable. The ratio laid down in the said case has to be read in the context of the above facts of the said case. In the case of the Appellant Sabha the objects continue to be the same even after merger with society and the objects are charitable and therefore the very foundation on which the registration was granted to the appellant sabha is not removed. - Decided in favor of assessee.
Issues Involved:
1. Whether the amendment to the objects clause of the appellant Sabha's Memorandum of Association required a fresh application for registration under section 12AA of the Income-tax Act, 1961. 2. Whether the merger of the appellant Sabha with another society resulted in a change of objects that warranted the withdrawal of registration under section 12AA. 3. Whether the Director of Income Tax (Exemption) was justified in withdrawing the registration under section 12AA(3) of the Income-tax Act, 1961. Issue-wise Detailed Analysis: 1. Amendment to the Objects Clause and Requirement for Fresh Registration: The appellant Sabha, a registered charitable institution, amended its objects clause to include the power to affiliate and merge with other societies having similar objects. The Addl. Director of Income Tax (Exemptions) noted that this amendment had not been intimated to the Director of Income Tax (Exemption) (DIT) nor was a fresh application for registration made. The DIT issued a notice stating that the significant alteration in the objects clause necessitated a fresh application for registration, as per the Allahabad High Court's decision in the case of Allahabad Agricultural Institute v. Union of India. 2. Merger and Change of Objects: The appellant Sabha merged with Bharatiya Music & Arts Society due to the latter's financial and operational difficulties. The DIT opined that the objects of the appellant Sabha and the Society were different. The DIT summarized the objects of both entities and concluded that the merger resulted in a change of objects, which required fresh registration under section 12AA. The appellant Sabha contended that the objects of both entities were identical and the amendment was merely to facilitate the merger, not to change the primary objects. 3. Justification for Withdrawal of Registration: Under section 12AA(3), the DIT can cancel registration if the activities of the trust are not genuine or not carried out in accordance with its objects. The DIT withdrew the registration, stating that the appellant Sabha should have applied for fresh registration post-amendment. The appellant Sabha argued that the objects remained charitable and the amendment was only to enable the merger, which was approved by the Bombay Charity Commissioner. Tribunal's Findings: 1. No Requirement for Fresh Registration: The Tribunal noted that the amendment was to confer power to merge with societies having similar objects and did not alter the charitable nature of the appellant Sabha's objects. The Tribunal distinguished between the objects of a trust and the powers conferred to achieve those objects, citing the Supreme Court's decision in Yogiraj Charity Trust v. CIT. 2. No Change in Charitable Objects: The Tribunal found that the objects of the appellant Sabha and the Society were similar and both were charitable. The Tribunal held that the DIT's conclusion that the objects were different was without basis. The merger did not result in a change of objects that would affect the charitable status of the appellant Sabha. 3. Improper Withdrawal of Registration: The Tribunal observed that the DIT did not provide a finding that the activities of the appellant Sabha were not genuine or not carried out in accordance with its objects, which are prerequisites for cancellation under section 12AA(3). The Tribunal held that the amendment did not lead to the objects becoming non-charitable and quashed the DIT's order. Conclusion: The Tribunal allowed the appeal, quashing the DIT's order under section 12AA(3) and reinstating the appellant Sabha's registration. The Tribunal emphasized that the amendment to the objects clause was to facilitate the merger and did not alter the charitable nature of the appellant Sabha's activities.
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