MANEKJI MOTA CHARITABLE TRUST,MUMBAI vs. DIT (E), MUMBAI

This is an appeal filed by the assessee and is directed against the order of the Director of Income Tax (Exemption), Mumbai dated 21.2.2013.

The only issue raised by the assessee in the grounds of appeal is against the rejection of registration u/s 12A of the Income Tax act, 1961 (hereinafter called and referred to as the Act) by the Director of Income Tax (Exemption). The Director of Income Tax (Exemption) rejected the application of the assessee for registration u/s 12A on two grounds first that the trust did not provide for “dissolution clause” in the deed of trust and therefore the appellant could not be said to have validly constituted public trust and second that the applicant trust incurred a sum of Rs.3,92,830/- on religious activities for the purpose of Pooja and making donations for religious purposes which worked out to 29% of its gross receipt of Rs.13,55,090/- and thus, the activities carried by the applicant were not in consonance with the objects set out in the trust deed and finally the ld. Director (Exemption) held that he was not satisfied with the genuineness of the activities of the trust which was a pre-condition for the registration and accordingly rejected registration of the application trust.

The ld. AR vehemently argued that the Director (Exemption) has wrongly rejected the application for registration u/s 12A of the assessee on two reasons i.e. absence of dissolution clause in the trust deed and the application of 29% of its gross receipt for making donations to various temples and for performing Pooja. The ld. AR submitted that so far as the absence of dissolution clause mentioned in the trust deed of the appellant trust is concerned, the ld. AR relied on the case of CIT V/s Tapagachha Sangh Mota (2015) 59 Taxman.204 (Guj) (ii)Geeta Lalwani Foundation V/s Director of Income Tax Exm) in and as regard the second reason cited for rejection u/s 12A, the ld.AR strongly relied on the decision of Chennai Tribunal in the case of Life Shines Educational and Charitable Trust V/s ACIT (2015) 39 ITR (Trib) 291 (Chennai) and thus submitted that the registration was denied without any cogent reasons.

On the other hand, the ld. DR strongly relied on the order of Director (Exemptions) and prayed for upholding the same.

We have carefully considered the submissions of the parties, perused the material placed before us including the orders of authorities below and case laws relied upon by the parties. We find that in the present case before us the registration was denied and rejected by the ld. Director (Exemption) for two reasons (i) for absence of dissolution clause in the trust deed and (ii) the application of income of the trust to the extent of 29% for various religious activities by making donations to the temples and for performing poojas in AY 20011-12. We are in agreement with the ld. AR that the application of the trust cannot be rejected on these flimsy grounds. Moreover the case of assessee find support from the decision of Tapagachha Sangh Mota (supra), wherein the Hon’ble High Court has held that registration u/s 12A cannot be denied on the ground that deed of trust does not contain dissolution clause. In the case of Geeta Lalwani Foundation (supra) , the coordinate bench has held as under : “5. We have heard both the parties and perused the orders of the Revenue Authorities as well as cited judgments of the higher judiciary and the relevant material placed before us. After hearing both the parties and on perusal of the orders of the Revenue Authorities, we find the judgment of the Hon‟ble Kerala High Court in the case of Self Employers Service Society (supra) is decided on the facts of the said trust generating the income and not undertaking any charitable work.

So far as the second objection by the Director (Exemption) for rejection of registration of trust u/s 12A is concerned , we are of the opinion that the application of income of the trust has to be seen at the time of assessment and it is premature to examine the said issue at the time of grant of registration u/s 12A of the Act. The case of the assessee is supported by a decision of the Tribunal Life Shines Educational and Charitable Trust Vs ACIT (Supra) in which it is held that the issue of application of income or the activities carried on were to be considered at an appropriate proceedings i.e. the assessment proceedings and not at the time of granting registration u/s 12A. In view of the ratio laid down in the decisions cited (supra), we find that the order of ld.CIT(A) is wrong and cannot be sustained as registration has been denied for no valid reasons. We ,therefore following the ratio laid down by the above said decisions, set aside the order of ld.Director (Exemption) with a direct to grant registration to the assessee u/s 12A of the Act.

In the result the appeal of the assessee is allowed. The above order was pronounced in the open court on 22nd Aug, 2016. घोषणध खुरे न्मधमधरम भें ददनधंकः 22nd Aug,2016 को की गई । Sd/- Sd/- (SHAILENDRA KUMAR YADAV) (RAJESH KUMAR) न्याययक सदस्य / JUDICIAL MEMBER लेखा सदस्य / ACCOUNTANT MEMBER म ुंबई Mumbai: 22nd Aug, 2016. व.नन.स./ SRL , Sr. PS आदेश की प्रतिलऱपप अग्रेपिि/Copy of the Order forwarded to : अऩीरधथी / The Appellant 1. प्रत्मथी / The Respondent. 2. आमकय आमुक्त(अऩीर) / The CIT(A)- concerned 3. आमकय आमुक्त / CIT concerned 4. ववबधगीम प्रनतननधध, आमकय अऩीरीम अधधकयण, भुंफई / 5. DR, ITAT, Mumbai concerned 6. गधर्ा पधईर / Guard file. आदेशधनुसधय/ BY ORDER, / / True Copy / /