Section 12A and section 80G — Registration of charitable institution and renewal of exemption certificate — Application for renewal of exemption certificate rejected for the reason that changes made in object clause of trust without following the required procedure, hence the trust became invalid — Whether Revenue was justified in refusing to renew exemption certificate — Held, No.
Facts:
The appellant-trust had been registered u/s.12A of the Income-tax Act and had also been granted exemption u/s.80G earlier. The assessee filed application for renewal of exemption u/s.80G. The DIT(E) noted that the original objects of the trust had been amended and new objects were inserted. According to him in view of the changes in the objects, the original registration u/s.12A did not survive and therefore approval u/s.80G could not be granted. For the purpose he relied on the decision of the Allahabad High Court in the case of Allahabad Agricultural Institute v. Union of India, (291 ITR 116) and of the Madras High Court in case of Sakthi Charities v. CIT, (149 ITR 624). Before the Tribunal the Revenue strongly supported the order of the DIT(E) and contended that:
the objects of the trust cannot be amended without the approval of the High Court. For the purpose, it relied on the decision of the Madras High Court in the case of Sakthi Charities;
the changes in the objects of the trust were not intimated to the Department as provided in form No. 10A;
the changes made in the objects of the trust were not legal, hence the trust had become invalid and therefore the registration already granted u/s.12A could not survive. Reliance was placed on the decision of the Allahabad High Court in the case of Allahabad Agricultural Institute & Others v. Union of India.
Held:
The Tribunal noted that:
the trust was already registered u/s.12A which had not been cancelled;
the original object of the trust of providing hostel accommodation to the ‘Modh’ students had not been deleted;
The object had only been modified so as to include other deserving students also in addition to the students of the Modh community;
There was only one addition in the object clause viz., to provide medical aid to the poor and deserving persons of any community;
even the amended objects remained charitable and had not caused any detriment to the original objects as students of the Modh community continued to be eligible for the benefits;
There was no statutory requirement of intimating the changes except the one mentioned in the form No. 10A. and even in the form No. 10A, there was no time limit prescribed;
The assessee had intimated the changes to the Department, though later.
As regards the applicability of the decision of the Allahabad High Court, the Tribunal observed that in the case of Allahabad Agricultural Institute there were wholesale changes in the objects. The number of objects had been increased to 14 from 6 objects in the original deed and the assessee in that case could not show that the revised objects were practically the same or were charitable. While in the case before it, the Tribunal observed that there were practically no changes in the objects. The original object of providing hostel accommodation remained the same. Only the scope was enlarged to cover all students. The only new object was medical aid to poor, which was also charitable. Therefore it was held that the decision of the Allahabad High Court in the case of Allahabad Agricultural Institute was distinguishable and cannot be applied to the facts of the present case.
Relying on the Supreme Court decision in the case of CIT v. Surat City Gymkhana the Tribunal agreed with the assessee that since the trust had already been registered and since the registration was not cancelled, the AO cannot probe the objects and declare the trust invalid.
In view of the above, the DIT(E) was directed to grant renewal of approval u/s.80G to the assessee.
