9911796707
TMI Blog2024 (7) TMI 496X X X X Extracts X X X X X X X X Extracts X X X X ..... es carried out by the appellant trust. Mere fact that the trust deed contain a covenant that enables the settlor to utilize the premises for her use or family use, cannot empower the CIT to cancel the registration, as it does not lead to any conclusion that either the activities of the trust are not genuine or the activities are not being carried out in accordance with the objects of the trust. Similarly, the fact that huge investments are made in mutual funds, cannot also lead to the conclusion that the activities of the trust are not genuine. It is an admitted fact that the settlor died in the year 1965, therefore, the relevant clause had become infructuous and thus there is no question of violation of provisions of section 13(3). The inv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee under section 12AA of the Act from the AY 2006-07 relevant to FY 2005-06. 2. Erred in consequently holding that since the registration under section 12AA is cancelled, the Appellant is ineligible for registration under section 12AB of the Act and, hence, cancelling/withdrawing ab-initio the registration under section 12AB, granted on 24th September, 2021. 3. Erred in not appreciating that the Appellant is engaged in the activity of providing secular education to all sections of society irrespective of caste, creed religion since past 60(+) years and there was no material and/or documentary evidence on record to establish that trust was being run contrary to its objects. It is submitted that the Department has accepted the charitable na ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ities. The impugned order has been passed without appreciating the facts of the case and is, therefore, liable to be set aside on this ground alone. 7. Erred in not appreciating that the investment in mutual funds was made to meet the statutory requirement of section 11(5) read with rule 17(C) of the ITAT Rules. It is further submitted that the investments made in Mutual Funds are out of accumulations and corpus donations. The accretions in investments are on account of re-investing income generated from such investments, and, hence, the allegation of the Department that the Trust is engaged in the trading of Mutual funds is baseless and the impugned order has failed to take the same into consideration and, therefore, is liable to be set as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 022 and applies prospectively cannot be invoked in the facts of the present case. 13. Erred in holding that the Appellant was a Revocable Trust. The CIT(E) erred in holding that even though the Trust is running a school the overall arrangement of the provisions of Trust Deed indicate that they are for the benefit of persons covered under section 13(3) and hence, the activity cannot be considered as a genuine educational activity. 14. Erred in holding that the activity of frequent investment and redemptions of mutual fund is not in line with the objective of the Appellant. 15. Erred in holding that the expenditure on the objects of the Trust is very meagre as compared to the profits earned from the alleged business activity of investment in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... funds. 4. On receipt of the show cause notice, the assessee submitted that the question of utilising the trust property for the benefit of the settlor does not arise as the settlor had passed away in the year 1965. It is further submitted that the clauses in trust deed providing for accommodation to the settlor of the trust had become infructuous since the settlor had expired in the year 1965 itself. Therefore, there was no scope for the violation of provisions of section 13(3) of the Act. As regards to the violation of objects of the trust deed, it was submitted that the investment in the mutual funds are only made in order to meet statutory requirement of section 11(5) of the Act. However, all the above contentions were rejected by the CI ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sideration before us is whether or not the ld. CIT(Exemption) was justified in cancelling the registration granted u/s.12AA of the Act. The provisions of section 12AA(3) empower the CIT to cancel the registration granted u/s.12A of the Act only on the existence of one of the two conditions in the said section, i.e., (1) the activities of the trust are not genuine; and (2) the activities of the trust are not being carried out in accordance with the objects of the trust. 8. On a mere reading of the impugned order, it would reveal that the entire proceedings of the ld. CIT(Exemption) are based on the covenants of the trust deed but not based on the actual activities carried out by the appellant trust. Mere fact that the trust deed contain a co ..... X X X X Extracts X X X X X X X X Extracts X X X X
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