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Foundation for Indo-German Studies Versus Director of Income-tax (Exemptions) , Hyderabad

2016 (9) TMI 912 - ITAT HYDERABAD

Registration u/s 12A denied - religious trust - Held that:- While registration in accordance with the provisions of Section 12AA of the Act is a condition precedent for claiming the benefits u/s. 11 and 12 of the Act, registration as per Section 12AA by itself will not automatically confer the benefits of Section 11 and 12 of a trust, but the trust will get the benefit only on complying with the requirements of Section 11 & 12 of the Act, which compliance can be examined by the assessing authori .....

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ng as the objects are charitable in nature, assessee deserves registration u/s. 12AA of the Act. - Just because the reply is not given as desired by the DIT, it does not mean that the trust is not genuine. Moreover, as submitted by the Ld. Counsel, various clauses of the trust operate independently and there is no confusion as made out by the DIT. In fact the DIT himself got confused in understanding the irrevocability of the trust and power of the trustees in dissolving the trust while admi .....

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er which it is prohibited. So long as the trust objects are charitable in nature and trust activities/benefits claimed are within India, the trust can get the registration. . Considering the principles laid down on the subject and the fact that assessee’s objects are charitable in nature, we direct the DIT to grant registration u/s. 12AA - Decided in favour of assessee - ITA No. 1792/Hyd/14, 1793/Hyd/14 - Dated:- 10-8-2016 - SHRI D. MANMOHAN, VICE PRESIDENT AND SHRI B. RAMAKOTAIAH, ACCOUNTANT ME .....

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from the DIT, it seems assessee filed another application on 07-02-2014 which was again rejected by the order dt. 28-08-2014. Accordingly, assessee has preferred both appeals, as the first order was also communicated on 28-09-2014. It was submitted that the issue is same in both the appeal i.e., registration u/s. 12AA of the Act. 3. Briefly stated, assessee is an institution formed vide a Trust Deed executed on 28-03-2012. It sought registration u/s. 12AA of the Act by filing the application in .....

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stated to be irrevocable trust under Clause-7, whereas Clause-37 empowers the trustees is to dissolve the trust. According to DIT, there is an anomalous situation in the trust Deed. The fourth reason considered by the DIT was that Clause-14 mentions that the trust shall have a minimum of two trustees and maximum of 12 trustees, whereas Clause-15 states that Board shall have the power to increase the number of trustees to any number not exceeding 18 (eighteen). Thus, he was of the opinion that th .....

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passed on the second application filed by assessee, dt. 28-08-2014. 4. Ld. Counsel while referring to the order of the DIT submitted that there is no objection from the DIT about the objects of the trust and assessee has been carrying on the activities as per the objects of the trust. It was his submission that the reasons stated by the DIT are not correct as assessee s activities are charitable in nature. It was further submitted that if there is any violation of the objects, the provisions of .....

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nt, but DIT cannot refuse registration on that ground. He relied on the Co-ordinate Bench decision in the case of Manhatten Foundation Vs. CIT (Exemptions) in ITA No. 1353/Hyd/2015 dt. 24-06-2016. On the objection that the trust is irrevocable as well as having power to dissolve, it was submitted that Ld.DIT got confused the irrevocability of the trust with the power of administering the trust. It was submitted that irrevocability will apply only to the creator of the trust whereas the trustees .....

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s these two clauses operate separately. With reference to Clause-16, about co-opted/ex-officio members, Ld. Counsel vehemently argued that there is no restriction about somebody being nominated as trustee. What is required to be examined at the time of registration is whether the objects are charitable in nature and trust is genuine or not? It was submitted that assessee deserves registration u/s. 12AA of the Act. 5. Ld. DR however, supported the arguments of the DIT as stated in the order and d .....

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t and objects of the trust. He can make further enquiry as he may deem it necessary. It is only after satisfying himself about the objects of the trust and genuineness of its activities that he has to pass an order in writing registering the trust or institution. This Section does not refer to any other aspects which the Ld.DIT has undertaken in his order. Since there is no comment about the objects of the trust being not charitable in nature, we presume that Ld.DIT has no objection to the objec .....

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self will not automatically confer the benefits of Section 11 and 12 of a trust, but the trust will get the benefit only on complying with the requirements of Section 11 & 12 of the Act, which compliance can be examined by the assessing authority while processing the return filed by the trust. So long as the trust has objects which are charitable in nature, it satisfies for registration u/s. 12AA of the Act, unless there is a finding that the trust is not genuine. Even if the objects are mix .....

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orce in the arguments of the DIT considered in the order for rejection of the registration. Just because the reply is not given as desired by the DIT, it does not mean that the trust is not genuine. Moreover, as submitted by the Ld. Counsel, various clauses of the trust operate independently and there is no confusion as made out by the DIT. In fact the DIT himself got confused in understanding the irrevocability of the trust and power of the trustees in dissolving the trust while administering t .....

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is prohibited. So long as the trust objects are charitable in nature and trust activities/benefits claimed are within India, the trust can get the registration. 6.2. The last objection with reference to activities being carried out outside India. This issue was considered by the Hon'ble Delhi High Court in the case of M.K. Nambyar Saarc Law Charitable Trust Vs. Union of India [269 ITR 556], wherein it was held that: CHARITABLE PURPOSES - CHARITABLE TRUST - REGISTRATION OF TRUST -APPPLICATIO .....

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ribes the procedure for registration. Reading the section, it becomes clear that after the application is made, the officer has to call for documents or information from the trust to satisfy himself about the genuineness of the activities of the trust. He can make further enquiry as he may deem necessary. It is only after satisfying himself about the objects of the trust and the genuineness of its activities that he has to pass an order in writing registering the trust or institution. And if he .....

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d be paid to the members even outside India. On a writ petition against the order: Held, that it was very clear that there was non-application of mind. It was necessary for the Commissioner to examine the purpose for satisfying himself that the activities were genuine. The order was not valid . 6.3. Not only that the Co-ordinate Bench in the case of Manhatten Foundation Vs. CIT (Exemptions) in ITA No. 1353/Hyd/2015 (supra) relied on by the Counsel has considered the decision of the Co-ordinate B .....

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the assessee to pursue its activities outside India. This objection of the Commissioner for denial of registration is also without any force. We notice from the relevant incidental clause relied upon by the Revenue that such clause primarily enables the assessee to raise funds to attain the main objects of the company. It does not give any impression that the assessee shall carry out its activities outside India. Be it as it may, we simultaneously notice that on this aspect also, the decision o .....

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ed needs to be relooked by the Ld. DIT(E). In view of our above observations, we hold that if the activities otherwise are charitable and fall in the definition of charitable purposes as defined under section 2(15) of the Act and further the property is held wholly and exclusively under trust for charitable and religious purposes as provided under section 11 of the Act, then such a trust subject to the fulfilment of other conditions as laid down by the different provisions of the Act, will be en .....

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