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2024 (1) TMI 483 - AT - Income TaxExemption u/s 11 - registration u/s 12AB and approval u/s 80G(5) denied - Charitable activity u/s 2(15) - sole reason of rejecting assessee’s application by CIT(E) is the last part of Clause 4(p) in the trust-deed which prescribes “without being responsible or accountable for any loss caused thereby” from which as inferred that the trustees have unlimited authority to divert funds of trust by giving loans to any ‘related or favourable party’ - HELD THAT:- The words “for any of the above charitable purposes” coming before the underlined words being relied upon by revenue, cannot be ignored. One cannot take out a part of the sentence and interpret, one has to read entire verdict of a sentence. Otherwise, it becomes mis-reading. We find that in the said clause 4(p), it is clearly mentioned that the trustees can give loans “for any of the above charitable purposes” only. Therefore, the apprehension of revenue that the loans would be given to a related or favourable party is a heighted apprehension. In any case, Ld. AR has shown, with the help of audited financial statements, that till now the trust has not made any such loan to a related or favourable party. If the trust makes any such loan in future, the law provides for forfeiture of exemption u/s 13 which in case of necessity, can be invoked by authorities. Looking into these aspects, we do not find any merit in the objection raised by Ld. CIT(E). Since the sole objection raised by Ld. CIT(E) is dissolved, we order the Ld. CIT(E) to consider the application of assessee and pass a needful order granting registration u/s 12AB as applied for. Registration u/s 80GB - Since objection, as noted for registration u/s 12AB stands dissolved, it stands dissolved for section 80G also. We find that the assessee’s case is directly covered by two decisions relied upon by Ld. AR, namely (i) KVC Trust [2011 (3) TMI 121 - ITAT, CHENNAI] and (ii) Mishri Lal Gordhan Lal Batra Charitable Trust [2007 (12) TMI 200 - RAJASTHAN HIGH COURT]. DR is not able to show any reason for non-applicability of these decisions or to show any contrary decision holding the field. Therefore, following the same view, we are inclined to direct the CIT(E) to consider the application of assessee and grant registration after limited verification that the assessee’s case fits in section 80G(5B).
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