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2018 (10) TMI 606 - HC - Income TaxRegistration u/s 12AA - CIT(E) refused the registration to the trust on the ground that it not a legal trust in the State of Rajasthan in view of section 17(1) of the Rajasthan Public Trust Act, 1959? - ITAT allowed the registration - Held that - the issue is squarely covered by the decision of this court in case of Commissioner of Income Tax (Exemptions) vs. M/s Arihanth Charitable Trust 2018 (7) TMI 1815 - RAJASTHAN HIGH COURT As per the provisions of the Indian Trust Act, the trust can be created even orally and if the assessee is able to give some evidence of creation of such Trust by a word of mouth, the same shall be eligible for registration u/s 12AA/12A of the Act, provided such evidence is filed and the other conditions under the statute are satisfied. Decided against the revenue.
Issues:
1. Challenge to Tribunal's judgment allowing the appeal of the assessee. 2. Interpretation of requirements under Section 12AA of CIT(E), Jaipur. 3. Registration of trust under the Rajasthan Public Trust Act, 1959. 4. Necessity of trust establishment under an instrument. 5. Delhi High Court's judgment affirming the ITAT's decision. Analysis: 1. The appellant challenged the Tribunal's judgment allowing the appeal of the assessee. The questions of law framed included the correctness of allowing the appeal for statistical purposes and the setting aside of the order under Section 12AA of CIT(E), Jaipur. The issue was addressed in a previous case by the High Court, providing guidance on similar matters. 2. The Tribunal considered the interpretation of the requirements under Section 12AA of CIT(E), Jaipur. It was highlighted that the applicable Rule 17A does not mandate that the trust should be established under an instrument. The Tribunal referred to the Indian Trust Act, stating that a trust can be created orally, and if evidence is provided, it can be eligible for registration under the Act. 3. The issue of registration of the trust under the Rajasthan Public Trust Act, 1959, was examined. The Tribunal referred to a decision by a Coordinate Bench, emphasizing that the document evidencing the creation of the trust could be of any type, not necessarily requiring a formal instrument. The Tribunal decided to restore the appeal before the CIT (Exemptions) based on the guidance from the Coordinate Bench. 4. The necessity of trust establishment under an instrument was a crucial aspect of the case. The Delhi High Court affirmed the ITAT's decision, stating that it is not essential to have a formal deed of trust for registration under Section 12A/12AA of the Act. The Court concurred with the ITAT's findings regarding the charitable nature of the trust's objects and purposes, emphasizing that a formal deed was not a prerequisite for registration. 5. The Delhi High Court's judgment affirmed the ITAT's decision, addressing various aspects such as the charitable nature of the trust's objectives, the application of income for trust objects, and the permissibility of meeting basic needs from trust funds. The Court agreed with the ITAT's conclusions, stating that no substantial question of law arose, leading to the dismissal of the appeal.
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