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2018 (10) TMI 787 - AT - Income TaxNon fulfillment of conditions for grant of registration u/s 12AA and exemption u/s 80G - restriction of appointment of NRI as trustee - trustees are the non-resident and therefore, under the provisions of ‘Indian Trust Act, 1882’ they cannot be held to be a valid trustee; and when the trust and its structure itself is not proper, therefore, the condition precedent for grant of registration is not fulfilled - Charitable activities - Held that:- Section 10 of the Indian Trust Act provides for who can be the trustees and here is no specific bar under Section 10 of the Trust Act for an appointment of NRI as trustee of an Indian Trust. Section 73 deals with the appointment of a new trustee on death, or is absent from India for the period of more than 6 months or domiciled outside India, etc. This section merely provides that a new trustee may be unfit to be appointed in case the said person is domiciled abroad for a period of six months continuously; or leaves India for the purpose of residing abroad, etc. In such a case, it is considered that there is a personal incapacity to act in a Trust by such person.Section 73 per se cannot invalidate a Trust, but rather provides bar for appointment of non-resident as a trustee. Thus provisions of Section 60 and 73 of the ‘Indian Trust Act, 1882’ as relied upon by the ld. CIT(E) to hold that assessee Trust is not a valid Trust, and therefore, cannot be granted registration u/s.12AA cannot be held to be a valid reason. As pointed out by the learned counsel before the ld. CIT (E) in the application filed in ‘Form 10A’, assessee-applicant Trust has already given the list of the trustees and one of the trustee was citizen of India and domiciled in India, and therefore, it cannot be held that simply because other four trustees were non-resident and the assessee trust is not a valid trust. We accordingly, hold that assessee is a valid trust under the Indian Trust Act, 1882. Coming to the ‘objects’ as given in the ‘Trust Deed’, prima facie, it appears that all the objects are ostensibly for the charitable purposes. CIT(E) has not examined the objects and the genuineness of the activities of the assessee trust which is required to be examined while considering the registration u/s 12AA, and therefore, in all fitness of mater, we deem it proper that this matter of registration should be restored back to the file of the ld. CIT(E) who shall examine the ‘objects’ of the Trust as well as genuineness of its activities. Consequently, the application for exemption u/s.80G should also be examined in that light. - Appeal of the assessee is treated as allowed for statistical purpose.
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