2016 (8) TMI 1465

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..... ector of Income Tax (Exemption). The Director of Income Tax (Exemption) rejected the application of the assessee for registration u/s 12A on two grounds first that the trust did not provide for "dissolution clause" in the deed of trust and therefore the appellant could not be said to have validly constituted public trust and second that the applicant trust incurred a sum of Rs. 3,92,830/- on religious activities for the purpose of Pooja and making donations for religious purposes which worked out to 29% of its gross receipt of Rs. 13,55,090/- and thus, the activities carried by the applicant were not in consonance with the objects set out in the trust deed and finally the ld. Director (Exemption) held that he was not satisfied with the genu .....

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..... rector (Exemption) for two reasons (i) for absence of dissolution clause in the trust deed and (ii) the application of income of the trust to the extent of 29% for various religious activities by making donations to the temples and for performing poojas in AY 20011-12. We are in agreement with the ld. AR that the application of the trust cannot be rejected on these flimsy grounds. Moreover the case of assessee find support from the decision of Tapagachha Sangh Mota (supra), wherein the Hon'ble High Court has held that registration u/s 12A cannot be denied on the ground that deed of trust does not contain dissolution clause. In the case of Geeta Lalwani Foundation (supra) , the coordinate bench has held as under : "5. We have heard both t .....

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..... Vs ACIT (Supra) in which it is held that the issue of application of income or the activities carried on were to be considered at an appropriate proceedings i.e. the assessment proceedings and not at the time of granting registration u/s 12A. In view of the ratio laid down in the decisions cited (supra), we find that the order of ld.CIT(A) is wrong and cannot be sustained as registration has been denied for no valid reasons. We ,therefore following the ratio laid down by the above said decisions, set aside the order of ld.Director (Exemption) with a direct to grant registration to the assessee u/s 12A of the Act. 7. In the result the appeal of the assessee is allowed. The above order was pronounced in the open court on 22nd Aug,2016.

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