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Commissioner of Income Tax Versus Tapagachha Sangh Mota

2015 (5) TMI 87 - GUJARAT HIGH COURT

Necessity of dissolution clause in the deed of the charitable trust - Commissioner refusing to grant registration certificate under Section 12 AA as trust deed do not provide any "dissolution clause" and / or any provision for distribution of the properties in the event of closure / dissolution of the trust - it is the case on behalf of assessee trusts that the Trust are in existence / prior to 1965 and in fact was regularly filing his return of income since, many year even claiming exemption u/ .....

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e trust is found to be genuine and / or genuineness of the trust is established, the trust may be entitled to registration under Section 12 AA of the Act, however subject to fulfillment of conditions under Section 12 AA of the Act i.e. when the Commissioner is satisfied about the genuineness of the activities of the trust or the institution. As observed herein above, both the Commissioner as well as learned Tribunal have not addressed themselves on the aforesaid relevant aspect, we are of the op .....

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to doubt the genuineness of the activities of the trust. - Decided in favour of assessee for statistical purposes. - Tax Appeal No. 915 of 2014, Tax Appeal No. 916 of 2014, Tax Appeal No. 917 of 2014 - Dated:- 25-3-2015 - M. R. Shah And S. H. Vora,JJ. For the Appellant : Mr Pranav G Desai, Adv. For the Respondent : Mr B S Soparkar, Adv. JUDGMENT (Per : Honourable Mr. Justice M. R. Shah) 1.0. As common question of law and facts arise in this group of appeals, all these appeals are decided and dis .....

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d order passed by the learned Tribunal Income Tax Appellate Tribunal, "SMC" Bench, Rajkot dated 29.5.2014 passed in ITA No.440/RJT/2013 for registration under Section 12 AA of the Income Tax Act (hereinafter referred to as the "Act"), by which, the learned Tribunal has allowed the said appeal preferred by the respondent assessee trust and has directed the Commissioner of Income Tax, Jamnagar to grant registration under Section 12AA of the Act to the assessee trust, the Revenu .....

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erred by the respondent assessee trust and has directed the Commissioner of Income Tax, Jamnagar to grant registration under Section 12AA of the Act to the assessee trust, the Revenue has preferred present Tax Appeal raising the aforesaid substantial question of law. TAX APPEAL NO. 917 OF 2014 3.2. Feeling aggrieved and dissatisfied with the impugned judgment and order passed by the learned Tribunal Income Tax Appellate Tribunal, "SMC" Bench, Rajkot dated 30.5.2014 passed in ITA No.442 .....

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under the Bombay Public Trust Act submitted the application for registration under Section 12 AA of the Act on 25.3.2013. 4.1. That on verification of the respective trust deed, it was observed by the Commissioner of Income Tax, Jamnagar that in the trust deed there is no "dissolution clause" and the respective trust did not explained anything related to provision in the events of its dissolution which should have reflected in trust deed, the Commissioner of Income Tax, Jamnagar doubt .....

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l, relying upon the decision of the Coordinate Bench in the case of Chargam Dasha Porwad Mahamandal vs. DIT (Exemption) in ITA Nos.. 337 & 338/ AHD/2013 dated 08.05.2013 has allowed the aforesaid respective appeals and has directed the CIT, Jamanagar to grant registration under Section 12AA of the Act to the respective assessee. 4.3. Feeling aggrieved and dissatisfied with the impugned judgment and order passed by the learned Tribunal directing the CIT(A) to grant registration under Section .....

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neness of the trust and / or its bona fide and consequently when the Commissioner, Jamnagar refused to grant registration under Section 12 AA of the Act to the respective assessee trust, the learned Tribunal has materially erred in interfering with the order passed by the Commissioner, Jamnagar and has materially erred in allowing the respective appeals and directing the Commissioner, Jamnagar to grant registration under Section 12 AA of the Act to the respective assessee trust. 5.1. Relying upo .....

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there is no "dissolution clause" and /or any provision, with respect to the properties of the trust, in the event of closure / dissolution of the trust and there is no provision where the properties of the trust on dissolution and/ or on the closure of the trust will go and / or there is no provision where the properties of the trust will devolve on closure / dissolution of the trust and consequently when the Commissioner doubted the genuineness and bona fide of the trust, Commissione .....

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"dissolution clause" in the trust deed and / or in absence of any provision in the trust deed in the event of closure and /or dissolution of trust, the authority is justified in refusing to grant registration under Section 12 AA of the Act. However, for the reasons stated herein below, this Court proposes to remand the matter to the First Authority to consider the applications afresh, this Court is not further considering the larger issue in detail. 6.0. Shri B.S. Soparkar, learned Ad .....

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at any point of time doubted the genuineness of the trust. It is submitted that as such the earlier, respective trusts applied for registration under Section 12 AA of the Act, however in view of the death of their Chartered Accountant could not trace out the registration certificate under Section 12 AA of the Act, if any, and therefore, they applied for duplicate registration certificate / new/ fresh registration certificate. It is submitted that therefore, without admitting that in absence of .....

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that they are filing return of income every year and they are claiming exemption since many years and same have been granted and / or accepted by the concerned AO there was no reason for the Charity Commissioner to doubt the genuineness and / or bona fide of the trust and therefore, the Commissioner, Jamnagar was not justified in refusing the registration under Section 12 AA of the Act solely on the ground that in the trust deed there is no "dissolution clause" and / or provision in th .....

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material to the aforesaid extent, before it. Therefore, it is requested to remand the matter to the first authority to consider the application of the respective assessee trusts afresh and in accordance with law and on merits and to consider the genuineness and /or credibility of the trust claiming registration under Section 12 AA of the Act. 8. To the aforesaid, Shri Soparkar, learned counsel for the assessee trust has stated that he will not have any objection if the matters are remanded to th .....

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at a liberty may also be reserved in favour of respective assessee trust to produce the additional evidence / material to prove the genuineness / credibility of the trust such as return of income claiming the exemption and concerned AO having accepted the same without doubting the genuineness of the assessee trust. 9.0 Heard the learned advocates for the respective parties at length. At the outset, it is required to be noted that the First AuthorityCommissioner refused the registration certifica .....

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mmissioner to issue the registration certificate under Section 12 AA of the Act to the assessee trust solely relying upon the decision of the Coordinate Bench in the case of Chargam Dasha Porwad Mahamandal (supra). That the decision of the Tribunal in the case of Chargam Dasha Porwad Mahamandal (supra), however has been confirmed by the Division Bench of this Court. However, it is required to be noted that in the case of Chargam Dasha Porwad Mahamandal (supra) in fact there was a dissolution cla .....

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and the genuineness of its activities may pass an order in writing registering the trust or institution and grant the registration certificate under Section 12 AA of the Act. 11. As observed herein above, the Commissioner had refused the registration certificate under Section 12 AA of the Act to the assessee trust solely on the ground that trust deed do not provide any "dissolution clause" and / or any provision for distribution of the properties in the event of closure / dissolution .....

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that they are entitled to registration certificate under Section 12 AA of the Act. 12. From the orders passed by the Commissioner refusing to grant registration certificate under Section 12 AA of the Act and even from the order passed by the learned Tribunal, it appears that none of the authorities belows have considered the above material and relevant aspect with respect to the satisfaction of the Commissioner with respect to genuineness of the trust. In a given case even in absence of any prov .....

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have not addressed themselves on the aforesaid relevant aspect, we are of the opinion that matters are required to be remitted back to the file of the Commissioner and remanded to the learned Commissioner to consider the issue /grant of registration certificate under Section 12 AA of the Act afresh in accordance with law and on merits and to consider the genuineness of the trust / institution / genuineness of the activities of the trust after giving an opportunity to the trust to make submission .....

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