Vidya Vihar Educational Trust Vs ACIT (ITAT Patna)
Patna ITAT: Section 12AB Registration Cannot Be Rejected Where Irrevocability of Trust Assets Is Discernible From Trust Deed – Dissolution Clause to Be Re-examined
In Vidya Vihar Educational Trust v. ACIT (Exemption), Patna, the Patna ITAT considered rejection of the Trust’s application for regular registration under section 12A(1)(ac)(ii)/12AB on account of the wording of its dissolution clause.
The Trust had filed Form 10AB on 29.09.2025. The CIT(E) noticed that Clause 7 of the Trust Deed permitted, upon dissolution, transfer of the Trust’s assets to another trust, society or institution founded by the majority of the existing trustees. According to the CIT(E), the clause did not conclusively ensure that the assets would be transferred only to an independent charitable institution registered under section 12A/12AB and, therefore, did not establish permanent and irrevocable dedication of the assets to charitable purposes.
Although the assessee offered to submit a modified trust deed, the CIT(E) held that statutory compliance had to exist on the date when the application was considered. He therefore rejected the registration while permitting the Trust to make a fresh application after appropriately amending its deed.
The ITAT, however, examined the material in the paper book and observed that the required irrevocability clause could be inferred from various provisions of the Trust Deed itself. Consequently, there was no justification for outright rejection of the registration application merely on the perceived deficiency in the dissolution clause.
