Remuneration to trustee cannot be ground to cancel registration of trust

Education Renaissance Trust Vs CIT (ITAT Hyderabad)

ITAT Hyderabad held that payment of remuneration to the trustees could result into disallowance of excess expenditure and the same cannot be a ground to cancel the registration of trust.

Facts- The CIT(E) observed that the assessee had cancelled the trust deed on 20.12.2002 and reconstituted the trust. The assessee had received 12A registration in 1998 based on Original Trust deed. However, as can be seen the assessee had cancelled the Original Trust deed and reconstituted the trust, the 12A certificate issued in 1998 is not valid for the reconstituted trust. He noted that the assessee had not bothered to inform the department regarding the reconstitution of the trust and cancellation of the earlier original trust deed.

The CIT(E) further noted violation of section 13(1) of the IT Act; activities of the assessee in violation of the trust deed; running Posh School; source of income is from the activity lawfully carried on, but, the assessee failed in fulfillment of the basic requirement of income derived from the property held under trust wholly/solely for charitable purposes; books of account do not inspire genuineness.

The CIT(E) cancelled the registration u/s 12AA(3) r.w.s. 12AA(4) of the Act. Aggrieved by the order of the CIT(E), the assessee is in appeal before the ITAT.

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