Rejection of application for Registration U/s. 12AA for No beneficiary clause in trust deed

Krishan Kanya Mahavidyalya Vs. CIT(Exemption) (ITAT Amritsar)

We are of the considered opinion that the learned Commissioner (Exemp­tion) has rightly passed the order under challenge for denying the regis­tration under section 12AA of the Act in the absence of dissolution clause and beneficiary clause in the memorandum of understanding of the soci­ety. However, in the interest of justice, we give opportunity to the appli­cant/appellant to approach the learned Commissioner (Exemption) by making fresh application while incorporating the dissolu­tion clause and beneficiary clause and getting the same registered in the office of the Registrar of the Societies of Registration Act and the learned Commissioner (Exemption) is requested to expedite the application of the assessee, if file afresh and adjudicate the same de novo.

FULL TEXT OF THE ITAT ORDER IS AS FOLLOWS:-

The instant appeal has been preferred by the assessee, on feeling aggrieved against the order dated 31-8-2016 passed by the learned Commissioner (Exemption), Chandigarh under section 12AA of the Income Tax Act.

2. The assessee has raised the following grounds of appeal :–

“1. That the order of the learned Commissioner (Exemptions) is unjust not based on facts, not in accordance with law and arbitrary.

2. That the learned Commissioner (Exemptions) has not considered completely the information/evidence brought on records, in correct perspectives while denying the registration under section 12AA of the Income Tax Act.

3. That the learned Commissioner (Exemption) has completely not considered the reply to the show cause dated 3-8-2016 for 10-8-2016, while the submissions reached his office on 10-8-2016 as per the postal records.

4. That the learned Commissioner (Exemptions) erred while holding that the provisions of section 13(l)(c) of the Act were attracted and it was not correct to hold that any part of income or property of the society was used in any such way.

5. While denying the registration under section 12AA of the Act, the learned Commissioner (Exemptions) never held that the society was not for charitable purposes as denned under section 2(15) of the Act.

6. That while denying registration under section 12AA of the Act, the humble appellant was never given any show cause to submit regarding attraction of section 13(l)(c) of the Act in its case.

7. The appellant-society prays for registration under section 12AA of the Act in view of its objectives and activities as per records.”

3. The brief facts of the case are as under :–

The applicant-trust has filed an application for registration under section 12AA of the Act on 25-2-2016 in the office of the learned Commissioner (Exemption) and in the application, it was revealed that the society is an own going entity and has been operation since 22-3-1947 and aim and objects of the society are mainly to educate the Hindu Girls in Hindi and Sanskrit in accordance with Sonatina School of thinking. In order to accord an opportunity while considering the application for grant of registration under section 12AA, the applicant was called upon on 5-7-2016, however, on request of the applicant, the case was adjourned to 19-7-2016 and further vide letter dated 3-8-2016 the applicant/appellant was called upon to provide certain documents/clar­ifications by 10-8-2016. That on examination of the material on record from the memorandum of association (MOU), it was observed by the learned Commissioner (Exemption) that as per the memorandum of undertaking of the society, there is no beneficiary clause and dissolution clause and it has neither been clarified in any clause of t\v, deed that in case of the society becomes defunct or ceases its operatic, s where the assets and liabilities of the society will go, therefore, the learn Commissioner (Exemption) denied the registration to the applicant-society in the absence of dissolution clause and beneficiary clause of the applicant-society.

4. On feeling aggrieved against the order passed by the learned Commissioner (Exemption), the assessee preferred the instant appeal and submitted that the order under challenge was passed on 31-8-2016, however, a resolution by making the clause for the dissolution society and/or cessation of its operation have been incorporated vide resolution dated 9-4-2017, therefore, the applicant/appellant is entitled to get registration under section 12AA of the Act.

5. On the other hand, the learned Departmental Representative relied upon the order passed by the authorities below and further submitted that the order under challenge does not suffer from any perversity, illegality and impropriety.

6. We have gone through with the facts and circumstances, as we realize from the impugned order dated 31-8-2016 passed by the learned Commissioner (Exemption) that the learned Commissioner (Exemption) denied the registration to the application in the absence of dissolution clause as well as the beneficiary clause in the memorandum of understanding of the society. However, from the reso­lution dated 9-4-2017 passed by the society, it reflects that significance of the dissolution of the society and/or cessation of its operation have already been incorporated vide resolution dated 9-4-2017 which is reproduced herein below :–

“That in the event of the dissolution of the society and/or cessation of its operations, any property whatsoever, remaining after the satisfaction of all its debts and liabilities, shall not be paid to or distributed among the members of the society or any of them, but shall be given to some other society having the similar objects.”

We have given thoughtful consideration to the observation of the learned Commissioner (Exemption), who has denied the registration on to aspects (i) in absence of dissolution clause and (if) beneficiary clause. Hence, we are of the considered opinion that dissolu­tion clause has only been incorporated on 9-4-2017 which is much beyond the date of the impugned order, however, it reflects that benefi­ciary clause has not been incorporated so far.

On the aforesaid consideration and observations, we are of the considered opinion that the learned Commissioner (Exemp­tion) has rightly passed the order under challenge for denying the regis­tration under section 12AA of the Act in the absence of dissolution clause and beneficiary clause in the memorandum of understanding of the soci­ety. However, in the interest of justice, we give opportunity to the appli­cant/appellant to approach the learned Commissioner (Exemption) by making fresh application while incorporating the dissolu­tion clause and beneficiary clause and getting the same registered in the office of the Registrar of the Societies of Registration Act and the learned Commissioner (Exemption) is requested to expedite the application of the assessee, if file afresh and adjudicate the same de novo.

7. In the result, the appeal filed by the assessee is dismissed.