Brief Facts Of The Case Are That The Cit(E) Refused To Grant Registration U/S.12Aa Of The Act To The Assessee Trust On Two Grounds v. We Find That In The Present Case Also The Cit (E) Has Refused To Grant Registration

02. 11.12.2019 Heard Mr. R.S. Chiminka, learned Sr. Standing Counsel along with Shri A. Kedia, learned Standing Counsel for the appellant-Income Tax Department. 2. Instant appeal is against the order dated 01.08.2018 passed by learned Income Tax Appellate Tribunal, Cuttack Bench, Cuttack in ITA No.347/CTK/2017, allowing the appeal preferred by the assessee-respondent. 3. Perused the impugned order in detail. Learned Tribunal while allowing the appeal at paragraphs-10, 11, 12, 13 and 14 has observed as under: “10. We have heard the rival submissions, perused the orders of lower authorities and materials available on record. In the instant case, the assessee is a society had applied for registration under section 12AA of the Act in the prescribed Form 10A on 31.7.2017 seeking registration under the Income Tax Act as well as application in Form 10G was filed on the same date by the assessee society for approval u/s.80G of the Act. The same was rejected by the Commissioner of Income Tax (Exemption), Hyderabad for the following reasons: i) The amendment clause does not specifically stipulate that the amendments shall be carried out with the prior approval of the CIT(E).specifically stipulate that the amendments shall be carried out with the prior approval of the CIT(E). ii) Similarly, the “Dissolution clause” does not specifically stipulate that on dissolution of the society, the remaining assets shall be transferred/paid to an institution having registration u/s.12AA and approval u/s.80G(5) of the I.T. Act, 1961. specifically stipulate that on dissolution of the society, the remaining assets shall be transferred/paid to an institution having registration u/s.12AA and approval u/s.80G(5) of the I.T. Act, 1961. iii) There is no investment clause in MOA, which indicates that there is no intention on the part of the society to invest the funds in the modes specified under the provisions of Section 11(5) r.w.s. 13(1)(d) of the Act.which indicates that there is no intention on the part of the society to invest the funds in the modes specified under the provisions of Section 11(5) r.w.s. 13(1)(d) of the Act. 11. We find that the reasons for rejecting the registration in Ground No.(ii) and ((iii) are covered by the decision of this Bench of the Tribunal in the case of Indo Swedish Rheumatology Foundation (supra), wherein, it has been held as under: 3. Brief facts of the case are that the CIT(E) refused to grant registration u/s.12AA of the Act to the assessee trust on two grounds: -i) the amendment clause in the trust deed does not specifically stipulate that the amendments shall be carried out only with the prior approval of the CIT(E) . ii) the investment clause has not been incorporated in the trust deed, which indicates that the there is no intention on the part of the trust to invest the funds in the modes specified under the provisions of section 13(1)(d) r.w.s.11(5) of the I.T.Act. 11. We find that the reasons for rejecting the registration in Ground No.(ii) and ((iii) are covered by the decision of this Bench of the Tribunal in the case of Indo Swedish Rheumatology Foundation (supra), wherein, it has been held as under: 3. Brief facts of the case are that the CIT(E) refused to grant registration u/s.12AA of the Act to the assessee trust on two grounds: -i) the amendment clause in the trust deed does not specifically stipulate that the amendments shall be carried out only with the prior approval of the CIT(E) . ii) the investment clause has not been incorporated in the trust deed, which indicates that the there is no intention on the part of the trust to invest the funds in the modes specified under the provisions of section 13(1)(d) r.w.s.11(5) of the I.T.Act. 4. With regard to the first objection of the CIT(E) that the amendment clause in the trust deed does not specifically provide that the amendments shall be carried out only with the prior approval of the CIT(E), we find that the issue is covered in favour of the assessee by the decision of this bench of the Tribunal in the case of Balasore Law College Vs. CIT(E) , ITA No.459/CTK/2015, order dated 15.02.2017, wherein it was held that, “the scope of enquiry contemplated u/s.12A of the Act is limited to the extent of Commissioner Getting himself satisfied about object of the Trust and the genuineness of its activities so as to grant or refuse the registration u/s.12A of the Act. A perusal of the impugned order of the ld.DIT(Exemptions) shows that he has not recorded any adverse comment or dis-satisfaction about the object of Trust or genuineness of the Trust activities. He has refused to grant the registration u/s.12A of the Act on the ground that its Trust Deed does not contain “dissolution clause”. In our opinion, the ld. DIT (Exemptions) thus has clearly gone beyond the scope of enquiry contemplated u/s.12A of the Act and has refused to grant the registration u/s.12A of the Act to the assessee Trust on a totally irrelevant ground without pointing out as to how he was not satisfied either about the object f the Trust or the genuineness of its activities.” 5. We find that in the present case also the CIT (E) has refused to grant registration u/s.12AA of the Act to the assessee trust on the ground that amendment clause does not provide for prior approval of the CIT(E) before carrying out the amendment in the trust deed. We find that there is no such provision in the Act for refusal to grant registration to the assessee trust. Thus, the refusal to grant registration on this ground is an irrelevant ground and, hence, not sustainable. 6. With regard to objection regarding investment clause stating that there was no intention on the part of the assessee trust to invest the funds in the modes specified under the provisions of section 13(1)(d) r.w.s.11(5) of the Act and that no investment clause was incorporated in the trust deed, we are of the considered view that the Income Tax Act prohibits investment in violation of Section 13(1)(d) & 11(5) of the Act and the trust deed prohibits such an investment by the assessee trust and, therefore, refusal to grant registration to the assessee trust on this court also is an irrelevant ground. Hence, we set aside the order of CIT(E) on this ground also. We therefore, direct the CIT(E) to grant registration u/s.12AA of the Act to the assessee trust. 7. With regard to not granting approval u/s.80G of the Act, we find that the reason given by the CIT(E) that he has refused to grant registration u/s.12AA of the Act, therefore, consequently he had not granted approval u/s.80G of the Act to the assessee trust. As we have granted registration u/s.12AA of the Act to the assessee trust, we set aside the order of CIT(E) on his count and also direct the CIT(E) to grant approval u/s.80G of the Act to the assessee trust and allow the appeal of the assessee.” 12. As regards the dissolution clause, we find that there is a clause in the MOA, which reads as under: 7. With regard to not granting approval u/s.80G of the Act, we find that the reason given by the CIT(E) that he has refused to grant registration u/s.12AA of the Act, therefore, consequently he had not granted approval u/s.80G of the Act to the assessee trust. As we have granted registration u/s.12AA of the Act to the assessee trust, we set aside the order of CIT(E) on his count and also direct the CIT(E) to grant approval u/s.80G of the Act to the assessee trust and allow the appeal of the assessee.” 12. As regards the dissolution clause, we find that there is a clause in the MOA, which reads as under: “The society may be dissolved by 3/5[th] of members. Upon dissolution of the society its assets will be handed over to similar registered society or to Government after clearing up all its debts and liabilities.” 13. A reading of above clause shows that the Memorandum of Association specifically provides that upon dissolution of the society, its assets will be mp handed over to similar registered society or to Government after clearing up all it’s debts and liabilities. Therefore, in view of above clause in the MOA of the society, in our considered view, the ld CIT(Exemption) was not justified in refusing registration to the assessee society on this ground also. 14. For the reasons stated above, we are of the considered view that the refusal to grant registration u/s.12AA of the Act to the assessee society is not proper and justified. Similarly, the refusal to grant of approval u/s.80G of the Act is also not justified. Hence, we set aside the order of the CIT(Exemption), Hyderabad and direct him to grant registration u/s.12AA of the Act and approval u/s.80G of the Act to the assessee society. Thus, the grounds of appeal of the assessee are allowed.” 4. Considering the submission made and keeping in view the observations made by the learned Tribunal as quoted above, we are in complete agreement with the view taken by the learned Tribunal in the impugned order and find no case is made out to interfere with the same. 5. Hence, the appeal, being devoid of merits, deserves to be dismissed and is accordingly dismissed. All connected Misc. Case(s)/I.A(s) if any, is/are accordingly dismissed. .…….......……………… ( K.S. Jhaveri ) Chief Justice …………………..……… (K.R.Mohapatra) Judge