Case Law Details
Roop V.K Jain Foundation Vs CIT (ITAT Delhi)
Introduction: In the case of Roop V.K Jain Foundation Vs CIT (ITAT Delhi), the central issue revolved around the denial of registration under section 12AA of the Income Tax Act due to the absence of a dissolution clause in the Trust Deed. This appeal concerned whether such a clause was mandatory and whether its absence could be the sole reason for rejection.
Analysis: The Income Tax Appellate Tribunal (ITAT) carefully analyzed the legal requirements and past precedents, notably examining the orders and judgments relating to the necessity of the dissolution clause in a trust deed. The assessee’s counsel relied on previous cases and the judgment of the Bombay High Court, arguing that the absence of such a clause should not hinder the operation of the statute. The counsel also assured that the assessee was ready to include the dissolution clause if required.
The ITAT found that the lack of a dissolution clause could not be the sole basis for rejecting the application for registration under section 12AA. The judgment further supported that inclusion of a dissolution clause is not mandatorily required, and the absence of such a clause was not a valid ground for rejection.
Conclusion: The ruling by ITAT Delhi in Roop V.K Jain Foundation Vs CIT emphasizes that legal technicalities such as the absence of a dissolution clause should not be grounds for denying registration under section 12AA of the Income Tax Act. This decision offers clarity on the prerequisites for such registration and confirms that the core focus should be on the charitable objects of the trust and the genuineness of its activities, rather than peripheral legal provisions. The decision strengthens the legal framework governing charitable trusts in India, providing guidance for future cases.
FULL TEXT OF THE ORDER OF ITAT DELHI
This appeal has been filed against the order of CIT(Exemption) Chandigarh dated 16.09.2020 for AY 2020-21.
2. The grounds of assessee are as follows:-
I. THAT the impugned order passed by the learned Commissioner of Income Tax (Exemption) unjust and arbitrary, contrary to provisions of law and facts available on
II. That the learned Commissioner of Income Tax (Exemptions) has not considered completely the information/evidence brought on records, in correct perspectives while denying the registration us 12AA of the Income Tax Act.
III. While denying the registration u/s 12AA of the Act, the learned Commissioner of Income Tax (exemptions) never held that the Trust was not for charitable purposes as defined us 2(15) of the – Income Tax Act 1961.
IV. The Ld. CIT(A) has erred on facts and in law in rejecting the application for grant of registration Us 12AA of Income Tax Act, 1961 of the Appellant on the basis of apprehensions and presumptions for an event that might happen in future and not on the basis of facts ignoring the provisions of Income tax Act 1961.
3. The ld. counsel of assessee submitted that the impugned order passed by the learned Commissioner of Income Tax (Exemption) unjust and arbitrary, contrary to provisions of law and facts available on record and has not considered completely the information/evidence brought on records, in correct perspectives while denying the registration us 12AA of the Income Tax Act. He further submitted that the registration u/s 12AA of the Act, the learned Commissioner of Income Tax (exemptions) never held that the Trust was not for charitable purposes as defined us 2(15) of the – Income Tax Act 1961 and rejected application merely on the basis of apprehensions and presumptions for an event that might happen in future and not on the basis of facts ignoring the provisions of Income tax Act 1961.
4. Further placing reliance on the order of ITAT Mumbai dated 02.01.2015 in the case of Geeta Lalvani Foundation vs. DIT(E) in ITA No. 3566/Mum/2013 for AY 2013-14 the ld. counsel submitted that nothing has been brought on record, except alleging that there is no dissolution clause in the trust deed, that the same is a mandatory clause of dissolution of any trust. Further placing reliance on the order of ITAT Mumbai Bench dated 14.07.2014 in the case of Tara Educational & Charitable Trust vs. DIT(E) the ld. counsel submitted that the ld. DIT(E) has gone beyond scope of enquiry while rejecting application of assessee on the ground that its trust deed does not contain dissolution clause and on totality of irrelevant ground without pointing out as to how he was not satisfied either about the objects of trust of the genuineness of its activities.
5. Lastly, placing reliance on the judgment of Hon’ble High Court of Bombay in the case of CIT(E) vs Tara Educational & Charitable Trust the ld. counsel submitted that the Hon’ble High Court has upheld the said order of ITAT Mumbai Bench and submitted that in absence of the clause of dissolution in the trust deed would in no manner and impediment in the operation of the statue. The ld. counsel submitted that if it is found necessary then the assessee is ready to include dissolution clause in its trust deed and copy of the same would be submitted to the ld. CIT(E) for his satisfaction and compliance but in absence of any other allegation about the charitable objects of the trust and genuineness of its activities the registration u/s. 12A of the Act cannot be denied at the threshold.
6. Replying to the above, the ld. Senior DR supported the order of ld. CIT(E). however, in all fairness, the ld. CIT(DR) candidly agreed that the only objections of ld. CIT(E) would met if the assessee trust files its amended trust deed including dissolution
7. On careful consideration of above submissions, from the impugned order we clearly note that the ld. CIT(E) has not made any allegations or has not made any adverse comment or conclusion, except omission of dissolution clause in the trust deed, regarding charitable objects of the assessee and the genuineness of its activities. Therefore in our humble opinion although the inclusion of dissolution clause in the trust deed is not mandatorily required and absence of such clause cannot be a sole basis for rejecting application seeking registration u/s. 12AA of the Act. This conclusion also gets support from the judgment of Hon’ble Bombay High Court in the case of CIT(E) vs. Tara Educational & Charitable Trust (supra) and order of ITAT Mumbai Bench in the case of Gaeta Galvani Foundation (supra) therefore the sole basis for rejection of registration u/s. 12AA of the Act taken by the ld. CIT(E) is not correct, valid and sustainable thus the same is dismissed and the ld. CIT(E) is directed to grant registration to the appellant trust u/s. 12AA of the Act.
8. Before we part with the order, we find a proper and necessary to direct the assessee to amend its trust deed by way of inclusion of dissolution clause therefore we direct the appellant to submit a copy of amended trust deed before ld. CIT(E) clarifying the position in a situation dissolution of trust, complying with the requirements of registration granting authority preferably within two months of receipt of this order.
9. In the result, the appeal is allowed with the directions given hereinabove. Order pronounced in the open court on 14.07.2023.
