Super Gas Foundation v Director of Income Tax, 21 January 2014


In favour of: The assessee; Charitable Trusts — Registration — Allowability — Assessee charitable trust formed with object of granting educational aid, community support programmes and support to poor had applied for registration u/s 12AA — DIT(E) refused to grant registration u/s 12AA on grounds that author of trust was 100% subsidiary of a Dutch multinational company and had power to revoke trust — On appeal ITAT remanded matter to DIT(E) on grounds that though absolute power given to author/founder to revoke Trust disentitled assessee for registration as charitable trust but on making appropriate amendment by assessee to Trust Deed, to satisfaction of DIT(E), exemption could be granted — Notice was issued by DIT(E) for producing amended/supplementary trust deed — DIT(E) thereafter again refused grant of registration u/s 12AA on grounds draft trust deed was not signed by any trustee and was a vague document and not admissible — Held, earlier ITAT had remitted matter back to DIT(E) to grant registration if assessee carries out amendment to trust deed to satisfaction of DIT(E) — Keeping in view direction of Tribunal, appellant had submitted draft amended trust deed before DIT(E) to know if it was to his satisfaction or not — A perusal of draft trust deed does reveal that there was amendment to trust deed and which also showed genuine apprehension in mind of assessee as to whether amendment carried out would be to satisfaction of the DIT(E) or not — DIT(E) ought to have gone through draft trust deed once and pointed out to assessee whether amendment made was to his satisfaction or not — Rejection of draft deed alleging non-furnishing of amended trust deed without going into it was inappropriate on part of DIT(E) — Impugned order refusing grant of registration passed by DIT(E) is set aside — Assessee’s appeal is allowed.
CCH Citation: (2014) 39 CCH 017 HydTrib
ITAT Hyderabad Benches “B”,
ITA No 1116/Hyd/2013,
B Ramakotaiah, AM and Saktijit Dey, JM,
Decided on: 17 January 2014.
Held: Assessee’s appeal allowed.
As would be evident from order of DIT(E), the registration was refused to appellant, and rightly so, because cl 10 of trust deed allowed author to take decision with regard to its continuity which made trust revocable. However, ITAT had remitted matter back to DIT(E) to grant registration if assessee carries out amendment to trust deed to satisfaction of DIT(E). A perusal of draft trust deed does reveal that there was amendment to trust deed. In our view approach of assessee in submitting draft trust deed before DIT(E) for his approval in given circumstances was correct, since there was certainly a genuine apprehension in mind of assessee as to whether amendment carried out would be to satisfaction of the DIT(E). Had assessee submitted amended trust deed and DIT(E) would have again disapproved it or pointed out some more deficiency it would again have created a difficult situation for assessee. In these circumstances, it would have been proper on part of the DIT(E) to go through the draft trust deed and point out to assessee whether amendment made was to his satisfaction or not. Without doing so it was inappropriate on part of the DIT(E) to have refused to grant registration alleging non-furnishing of amended trust deed. (Para 7)

It was viewed that impugned order passed by DIT(E) was required to be set aside. We, accordingly, do so. We directed DIT(E) to go through draft trust deed and inform assessee as to whether proposed amendment carried out by assessee with regard to irrevocability of trust is to his satisfaction or not. Once DIT(E) accords his approval, assessee shall prepare a trust deed incorporating amended clause being signed by all concerned and complete in all respects and submit it before DIT(E). Upon submission of such amended trust deed the DIT(E) shall grant registration to assessee u/s 12AA of Act. With the aforesaid directions, we remitted matter back to file of DIT(E). Accordingly, this appeal of assessee was allowed for statistical purposes. (Paras 8 and 9)

Ratio decidendi:

Refusal of grant of registration u/s 12AA, without going through documents submitted by asseesee, is not justified.

Legislation referred: Income-tax Act, 1961, s 12AA.
Counsel appeared:
Y R Rao for the appellant.
D Sudhakar Rao for the respondent.