2023 (7) TMI 675 - AT - Income Tax

Denial of Registration u/s 12AA - Charitable purpose u/s 2(15) - dissolution clause in the trust deed not exists - HELD THAT - CIT(E) has not made any allegations or has not made any adverse comment or conclusion, except omission of dissolution clause in the trust deed, regarding charitable objects of the assessee and the genuineness of its activities. Therefore in our humble opinion although the inclusion of dissolution clause in the trust deed is not mandatorily required and absence of such clause cannot be a sole basis for rejecting application seeking registration u/s. 12AA - See judgement of Tara Educational Charitable Trust 2014 (7) TMI 869 - ITAT MUMBAI and Geeta Lalvani Foundation 2015 (1) TMI 1368 - ITAT MUMBAI - Decided in favour of assessee.

Summary

Issues involved:
The appeal against the order of CIT(Exemption) Chandigarh dated 16.09.2020 for AY 2020-21 regarding denial of registration u/s 12AA of the Income Tax Act.

Issue I: Impugned order unjust and arbitrary
The grounds of the assessee were that the order passed by the Commissioner of Income Tax (Exemption) was unjust and arbitrary, contrary to provisions of law and facts available on record.

Issue II: Consideration of evidence for registration
The counsel of the assessee argued that the Commissioner did not consider the information/evidence in the correct perspective while denying registration u/s 12AA of the Income Tax Act.

Issue III: Charitable purposes assessment
The counsel contended that the Commissioner never held that the Trust was not for charitable purposes as defined under section 2(15) of the Income Tax Act 1961.

Issue IV: Rejection based on presumptions
It was argued that the Commissioner erred in rejecting the application for registration u/s 12AA of the Income Tax Act based on apprehensions and presumptions for a future event, rather than on facts, ignoring the provisions of the Income Tax Act 1961.

The ITAT Delhi, after considering the submissions, noted that the Commissioner had not made any adverse comments regarding the charitable objects of the assessee or the genuineness of its activities. The Tribunal held that the absence of a dissolution clause in the trust deed cannot be the sole basis for rejecting the registration application u/s 12AA of the Act. Citing relevant judgments, the Tribunal dismissed the Commissioner's basis for rejection as incorrect, invalid, and unsustainable. The ITAT directed the Commissioner to grant registration to the appellant trust u/s 12AA of the Act.

Before concluding, the ITAT directed the assessee to include a dissolution clause in its trust deed and submit an amended copy to the Commissioner within two months. The appeal was allowed with the specified directions.

Order pronounced in the open court on 14.07.2023.