May 2008
S. 12A, S. 12AA : CIT cannot refuse registration to trust on extraneous considerations, when no fault with objects, genuineness of activities
By C. N. Vaze, Shailesh Kamdar, Chartered Accountants
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7 (2007) 109 TTJ (Asr.) 850
Dream Land Educational Trust. v. CIT
ITA No. 481 (Asr.) 2005
Dated : 5-4-2007
S. 12A and S. 12AA of the Income-tax Act, 1961 — CIT, having
found no fault with objects of the trust and genuineness of its activities, was
not justified in refusing registration u/s.12A on extraneous considerations.
The CIT rejected the assessee’s application for registration
u/s.12A, on the following grounds :
(a) Dissolution deed of the firm of which property was
settled on trust was not registered.
(b) No transfer deed was executed regarding property
transferred to trust.
(c) The takeover action was unilateral.
(d) No objection certificate was not obtained from bankers.
(e) On dissolution of firm, it was left to the trustees to
decide the fate of net assets.
The Tribunal held that the CIT was not justified in refusing
registration u/s.12A. The Tribunal noted as under :
(1) U/s.12AA, the CIT was only required to satisfy himself
with regard to the objects and genuineness of the activities of the trust.
(2) The CIT has not, anywhere in the impugned order,
doubted either the genuineness of the activities of the trust or its objects.
It has not been stated that any object of the trust is not that of charity or
that the income of the trust has been used for the purpose of the trustee or
their families and has not been utilised for charity.
(3) In the absence of any dissatisfaction of the CIT with
regard to either the objects or the genuineness of the activities of the
trust, registration has been refused to the trust in violation of the
provision of S. 12AA. The reasons recorded for such rejection of registration
are entirely extraneous to the requirement of the said Section.
The Tribunal relied on the decisions in the following cases :
(1) Sanjeevamma Hanumanthe Gowda Charitable Trust v.
Director of IT (Exemption), (2006) 203 CTR (Kar.) 533; (2006) 285 ITR 327
(Kar.)
(2) St. Don Bosco Educational Society v. CIT, (2004)
84 TTJ (Lucknow) 805; (2004) 90 ITD 477 (Lucknow)
(3) Smt. Mansukhi Devi Bihani Jan Hitkari Trust v. CIT,
(2004) 83 TTJ (Jd) 763; (2005) 94 ITD 1 (Jd)
(4) People Education & Economic Development Society (Peeds)
v. ITO, (2006) 104 TTJ (Chennai) (TM) 467; (2006) 100 ITD 87 (Chennai)
(TM)
(5) Acharya Sewa Niyas Uttaranchal v. CIT, (2006)
105 TTJ (Del.) 761
