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2014 (9) TMI 424 - ITAT HYDERABADCancellation of registration granted u/s 12AA – Loans taken from the two private companies detriment to the objects of the trust or not - Held that:- DIT(E) was of the view that the assessee has invested in purchase of equity shares of M/s. Matrix Laboratories Ltd. which is in violation of objects of trust deed and loans were obtained from two private companies which is in contravention of the trust deed – Held that:- DIT(E) cannot reopen the issue again for the purpose of cancellation of registration, more so, after the order of the ITAT - it appears from the reply to show-cause notice, assessee has not referred to the order of the Tribunal, however, on a reference to the order of ITAT it is clear a copy of the order was also marked to the DIT(E) - in spite of such order of the ITAT holding that there is no violation by the assessee of the provisions contained in section 11(5) r.w.s. 13(1)(d) of the Act, the action of the DIT(E) in cancelling registration on the issue of investment in shares cannot be appreciated. Regarding receiving unsecured loans from M/s. Vanpic Projects (P) Ltd. and M/s. Vanpic Ports (P) Ltd., it is clear that in respect of the loans also there is no violation of the provisions contained under the trust deed - clause 5 of the trust deed empowers the trustees to obtain loan from banks and financial institutions, it cannot be construed in a manner to suggest that the said clause restricts the trust/ trustees from obtaining loans from private parties - Even raising of loans is not coming under the object clauses of the trust deed - There is nothing brought on record by the DIT(E) to show that funds have not been applied for achieving the objects of the trust - DIT(E) can cancel the registration of a trust or institution if he is satisfied that the activities of the trust are not genuine or not in accordance with the objects of the trust - neither in the order of the DIT(E) nor from any other facts and materials on record, it is established that the activities of the trust are not genuine or are not in accordance with the objects of the trust - The grounds on which the DIT(E) has cancelled the registration are neither germane nor relevant for the purpose of section 12AA(3) of the Act - Nothing has been brought on record to show that obtaining of loans from the two private companies is in detriment to the objects of the trust or they are for the benefit of the trustees or their relatives - cancellation of registration by the learned DIT(E) u/s. 12AA(3) of the Act is legally unsustainable – Decided in favour of assessee.
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