WOMEN AND CHILD WELFARE FOUNDATION,MUMBAI vs. DIT (E), MUMBAI

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ITA 4747/MUM/2013Status: DisposedITAT Mumbai06 January 2016AY 2013-144 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal held that the DIT (Exemption) should have provided an opportunity to the assessee to amend the trust deed. The matter was restored to the DIT for fresh consideration.

What were the facts?

The assessee trust applied for registration under Section 12AA of the Income Tax Act. The DIT (Exemption) rejected the application because the trust deed lacked a dissolution clause.

What were the issues?

Whether the rejection of registration under Section 12AA solely for the absence of a dissolution clause in the trust deed is justified without providing an opportunity to amend.

Which sections of the Income-tax Act were involved?

Section 12AA,Section 12A

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “G” BENCH, MUMBAI

Before: SHRI SAKTIJIT DEY & SHRI N.K. BILLAIYA

Hearing: 06.01.2016

आदेश / O R D E R

PER N.K. BILLAIYA, AM:

1.

With this appeal the assessee has challenged the correctness of the order of the DIT(Exem) Mumbai dated 25.3.2013.

2.

The sum and substance of the grievance of the assessee is that the DIT(Exem) erred in rejecting the application for grant of Registration u/s. 12AA of the Act.

3.

The assessee trust filed an application for Registration u/s. 12A of the Act on 17.9.2012. While scrutinizing the said application, the DIT(Exem) found that the Trust have been constituted by a Deed of Trust dated 18.6.2011 and the same was registered with the Charity Commissioner, Mumbai vide order dated 20.4.2012.

4.

The assessee-trust was asked to furnish certain details/documents like PAN cards of trustees and settler, copy of bank accounts, NOC in respect of its office premises, certificate of registration issued by the Charity Commissioner, copies of audited accounts and note on activities undertaken by it duly substantiated with documentary evidences.

5.

The requisite details were furnished and one of the trustees Ms. Kavita Saxena also attended the proceedings. While scrutinizing the Deed of Trust, the DIT (Exem) noticed that it does not have a “dissolution clause”. The DIT (Exem) was of the firm belief that the issue of prohibition on distribution of property of the trust in the event of its dissolution or winding up must find clear and specific mention in the Trust Deed itself and cannot be left to the discretion of the trustees. The DIT(Exem.) further observed that in case the trustees are enable to carry out the objects of the Trust which has to be dissolved or wound up, its corpus and properties etc remaining on the date of dissolution have to be transferred to another trust having similar objects. No such clause is found in the Trust Deed of the applicant. The DIT (Exem) concluded by holding that the applicant- trust cannot be said to have been constituted as a valid public charitable trust and accordingly the application for registration was rejected.

6.

Aggrieved by this, the assessee trust is before us.

7.

No one attended on behalf of the assessee-trust in respect of notice, therefore, we decided to proceed ex-parte.

8.

Having heard the Ld. Departmental Representative at length, we have carefully perused the order of the DIT (Exem). The admitted fact is that the trust has been granted registration by the Charity Commissioner, Mumbai and this fact has been admitted by the DIT (Exem) also. The only reason which we find for the rejection of application is non-mention of dissolution clause in the Trust Deed. In our considered opinion, the DIT(Exem) should have given an opportunity to the assessee-trust to amend Trust Deed. A similar view was taken by the Tribunal Rajkot Bench in the case of Late Shri Mohanlal Kanjibhai Pansara Education & Charitable Trust Vs CIT in order dated 20.6.2013.

9.

In the interest of justice and fair play, we set aside the order of the DIT (Exem) and the matter is restored to his file so that reasonable time is made available to the assessee-trust to amend Trust Deed. The assessee-trust can amend the Trust-Deed within a period of 6 months from the date of receipt of this order and the DIT (Exem) is directed to decide the issue afresh as per the provisions of the law.

10.

In the result, the appeal filed by the assessee is treated as allowed for statistical purpose. Order pronounced in the open court at the time of hearing on 6th January, 2016.

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