INDO SWEDISH RHEUMATOLOGY FOUNDATION,BALASORE vs. CIT(EXEMPTIONS), HYDERABAD

Brief facts of the case are that the CIT(E) refused to grant registration u/s.12AA of the Act to the assessee trust on two grounds :- i) the amendment clause in the trust deed does not specifically stipulate that the amendments shall be carried out only with the prior approval of the CIT(E). No.459/CTK/2015, order dated 15.02.2017, wherein it was held that, “the scope of enquiry contemplated u/s.12A of the Act is limited to the extent of Commissioner getting himself satisfied about object of the Trust and the genuineness of its activities so as to grant or refuse the registration u/s.12A of the Act. A perusal of the impugned order of the ld. DIT(Exemptions) shows that he has not recorded any adverse comment or dis-satisfaction about the object of Trust or genuineness of the Trust activities. He has refused to grant the registration u/s.12A of the Act on the ground that its Trust Deed does not contain “dissolution clause”. In our opinion, the ld. DIT(Exemptions) thus has clearly gone beyond the scope of enquiry contemplated u/s.12A of the Act and has refused to grant the registration u/s.12A of the Act to the assessee Trust on a totally irrelevant ground without pointing out as to how he was not satisfied either about the object of the Trust or the genuineness of its activities.”

We find that in the present case also the CIT(E) has refused to grant registration u/s.12AA of the Act to the assessee trust on the ground that amendment clause does not provide for prior approval of the CIT(E) before carrying out the amendment in the trust deed. We find that there is no such provision in the Act for refusal to grant registration to the assessee trust. Thus, the refusal to grant registration on this ground is an irrelevant ground and, hence, not sustainable.

With regard to objection regarding investment clause stating that there was no intention on the part of the assessee trust to invest the funds in the modes specified under the provisions of section 13(1)(d) r.w.s. 11(5) of the Act and that no investment clause was incorporated in the trust deed, we are of the considered view that the Income Tax Act prohibits investment in violation of Section 13(1)(d) & 11(5) of the Act and the trust deed prohibits such an investment by the assessee trust and, therefore, refusal to grant registration to the assessee trust on this count also is an irrelevant ground. Hence, we set aside the order of CIT(E) on this ground also. We therefore, direct the CIT(E) to grant registration u/s.12AA of the Act to the assessee trust.

With regard to not granting approval u/s.80G of the Act, we find that the reason given by the CIT(E) that he has refused to grant registration u/s.12AA of the Act, therefore, consequently he had not granted approval u/s.80G of the Act to the assessee trust. As we have granted registration u/s.12AA of the Act to the assessee trust, we set aside the order of CIT(E) on his count and also direct the CIT(E) to grant approval u/s.80G of the Act to the assessee trust and allow the appeal of the assessee.

In the result, both the appeals of the assessee are allowed. Order pronounced in the open court on 11/12/2017. (PAVAN KUMAR GADALE) (N. S. SAINI) न्यानयक सदस्य / JUDICIAL MEMBER ऱेखा सदस्य / ACCOUNTANT MEMBER कटक Cuttack; ददनाांक Dated 11/12/2017 प्र.कु.मि/PKM, Senior Private Secretary आदेश की प्रनिलऱपप अग्रेपषि/Copy of the Order forwarded to : 1. अपीलाथी / The Appellant- Indo Swedish Rheumatology Foundation, AT/PO: Bada Sindhia, Via-Motiganj, District-Balasore-756003 प्रत्यथी / The Respondent-

CIT(Exemptions), Hyderabad. आयकर आयुक्त(अपील) / The CIT(A), 3. आयकर आयुक्त / CIT 4. निभागीय प्रनतनिनर्, आयकर अपीलीय अनर्करण, कटक / DR, ITAT, Cuttack 5. गार्ड फाईऱ / Guard file. 6. आदेशािुसार/ BY ORDER, सत्यापपत प्रतत //// (Senior Private Secretary) आयकर अपीऱीय अधिकरण, कटक / ITAT, Cuttack