CIT Cannot Cancel Trust Registration for Settlor’s Use Clause or Mutual Fund Investments

S.M. Batha Education Trust Vs CIT (Exemption) (ITAT Pune)

In a landmark judgment, the Income Tax Appellate Tribunal (ITAT) Pune sided with S.M. Batha Education Trust in its legal confrontation with the Commissioner of Income Tax, Exemption, Pune. The heart of the dispute revolved around the cancellation of the trust’s registration under Section 12AB of the Income Tax Act, 1961, a crucial status that affirms the trust’s charitable nature and eligibility for tax exemptions.

The Basis of the Legal Challenge: S.M. Batha Education Trust, engaged in providing secular education for over 60 years, faced a significant setback when its registration under Section 12AA of the Act, essential for tax exemption, was canceled by the CIT (Exemption). This cancellation was based on alleged violations of the Act’s provisions, jeopardizing the trust’s operations and its mission to educate all sections of society.

Reasons for Cancellation of Trust Registration

The primary reason for the cancellation of the trust’s registration, as outlined by the CIT (Exemption), revolved around several alleged violations of the Act:

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