2021 (1) TMI 1205 - HC - Income Tax

Exemption u/s 11 - registration under Section 12AA denied - dissolution clause was not found and/or available in the Deed of Trust - HELD THAT - As stating that the Trust is a public charitable trust, the immovable property has been set apart for a temple at Haridwar for the general public and no trustee or the Trust are there related or entitled for any profits from the assets and usufructs of the Trust and the Trustee has passed a resolution stating therein that in the event of dissolution of Trust, all available funds including the immovable and movable assets of the Trust to be handed to any other Trust having similar objects and operating within the Union of India. Further, if no such Trust is found, the property shall be vested to the Government. This resolution was annexed as Annexure No. IV to the grounds. Tribunal after considering the factual position and on examining the records placed before it allowed the appeal filed by the assessee. We find that there is no error in the order passed by the Tribunal. As already pointed out the CIT(E) did not doubt the genuineness of the activities of the Trust but merely stated that dissolution clause was not found and/or available in the Deed of Trust. The order passed by the CIT(E) dated 4th November, 2015 is a non-speaking order. Had the CIT(E) examined the entire records including the resolution passed by the Trust which came into being as early in the year 1944 then in all probability the application would not have been rejected. - Decided against revenue.

Summary

Issues:
1. Registration under Section 12AA of the Income Tax Act without a dissolution clause and original copy of the Trust Deed.
2. Reliance on a decision not applicable to the case.

Analysis:
1. The first issue revolves around the registration of a Trust under Section 12AA of the Income Tax Act. The Trust in question filed an application for registration, which was rejected by the Commissioner of Income Tax (Exemptions) due to the absence of a dissolution clause in the Deed of Trust. However, the Tribunal, after reviewing the case, allowed the appeal filed by the Trust. The Tribunal found that the Trust had genuine charitable activities, and a resolution was passed by the Trustee regarding the dissolution of the Trust, ensuring that assets would be transferred to another Trust or to the Government in case of dissolution. The Court upheld the Tribunal's decision, noting that the absence of a dissolution clause in the Deed of Trust was the sole reason for rejection by the Commissioner, who did not doubt the genuineness of the Trust's activities. The Court emphasized that the Commissioner's order was non-speaking and that the Tribunal correctly applied the legal position in allowing the appeal.

2. The second issue pertains to the reliance on a decision by the ITAT, Mumbai, which was deemed not applicable to the current case. The Tribunal in the present case considered the factual position and the records before it, ultimately allowing the Trust's appeal based on the specific circumstances and evidence presented. The Court determined that the decision of the ITAT, Mumbai, cited by the Revenue, did not apply to the facts of the instant case. Consequently, the Court dismissed the appeal by the Revenue and answered the substantial questions of law against the Revenue, affirming the Tribunal's decision to allow the Trust's registration under Section 12AA of the Income Tax Act.

In conclusion, the High Court of Calcutta upheld the Tribunal's decision to allow the Trust's registration under Section 12AA of the Income Tax Act, emphasizing the genuineness of the Trust's activities and the presence of a resolution regarding the dissolution of the Trust's assets. The Court dismissed the Revenue's appeal, highlighting the non-speaking nature of the Commissioner's rejection order and the inapplicability of a previous decision cited by the Revenue.