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2012 (6) TMI 656 - AT - Income TaxWhether a preference given to lineal descendants over the general Parsis is sufficient enough to mar the registration of a trust whose objects are otherwise charitable – Held that:- if the income does not enure for the benefit of the public or under clause (c) of section 13(1) where any part of such income is applied directly or indirectly for the benefit of persons referred to in sub-section (3) of section 13, that is, the author of the trust or any person who has made a substantial contribution to the trust or where author of trust is a HUF, then a member of the family or any relative of such author or any trustee of the trust or any relative of any such author, founder or any concern in which any of the above persons has a substantial interest. final amount of income exempt is the one which is determined by adding the income under section 11 with that under section 12 as reduced by the income or its such part as is covered under section 13. Registration cannot be denied. Exemption – charitable trust - in order to claim exemption of income under sections 11 and 12 as reduced by that under section 13, it is sina qua non that, inter alia, the trust must be registered under section 12AA. The sequence of events is thus, evident that the person claiming exemption must firstly apply for and get the trust or institution registered under section 12AA, then return is filed for the relevant previous year and on the basis of such registration and other relevant factors, the Assessing Officer considers the applicability or otherwise of sections 11, 12 and 13. Registration under section 12AA - after the death of the settlor, the income from the trust property is to be used for charitable purposes, which are covered under section 2(15) of the Act - It was specifically claimed that not even a single paisa was applied for the benefit of any lineal descendants of the father of the settler – Held that:- Commissioner, despite the availability of audited accounts before him for the last three years, failed to point out any single instance in which the income of the trust was not utilized for the charitable purposes set out in the trust deed or the money was applied for the lineal descendants of the father of the settlor. Even if any amount is actually spent on the relatives of the settlors, then there is section 13(3) enabling the Assessing Officer to refuse exemption under section 11 read with section 13 to that extent and that too in the year in which such amount is spent. It cannot be a reason to refuse registration under section 12AA. Commissioner was not justified in refusing the registration. Decided in favor of assessee.
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