The Commissioner Of Income Tax-Iii v. The Rotary Club Of Karad Charitable Trust

ttm IN THE HIGH COURT OF JUDICATURE AT BOMBAYORDINARY ORIGINAL CIVIL JURISDICTION INCOME TAX APPEAL NO.4723 OF 2010 The Commissioner of Income Tax-III.. AppellantVs.The Rotary Club of Karad Charitable Trust.. Respondent. Mr.Vimal Gupta for the appellant Mr.S.N.Inamdar with Mr.Mihir Naniwadekar for the respondent CORAM: J.P. DEVADHAR & K.K. TATED, JJ.DATE: 15TH SEPTEMBER, 2011. P.C. 1. This appeal is filed by the Revenue against the order of ITAT dt.24.2.2010 in ITA No.1049/PN/2008. In the present case, the assessee trust had made an application for registration under section 12AA of the I.T. Act, 1961. The said application was rejected by the CIT on the ground that clause 30.1 of the Trust Deed entitles any Trustee of the Trust being a doctor, lawyer, accountant or other person engaged in any profession or business to receive all the usual professional or proper charges for the time expended for the trust activities as professionals and therefore, the object of the trust cannot be said to be genuine. 2. The ITAT has recorded a finding of fact that the Commissioner has not gone into the question relating to the objects of the trust & has made no gone into the question relating to the objects of the trust & has made no 2 inquiry in respect of the genuineness of the activities of the trust. Accordingly, the ITAT restored the issue to the file of the CIT with a direction to examine the objects and activities of the trust and if satisfied regarding the genuineness of the activities of the trust, grant registration to the assessee. The Tribunal has further held that if after registration, the assessee is found to violate the provisions of Section 13 of the Act, then, it is open to the Assessing Officer to deny the benefits under section 11 and 12 r/w s.13 of the I.T. Act but that cannot be a ground to deny registration under section 12AA of the Act. 3. In our opinion, no fault cannot be found with the decision of the ITAT, because, if an assessee fulfills the criteria laid down under Section 12AA, then registration cannot be denied to the assessee merely because a clause in the trust deed could be misused by the trustees of the trust. If the trust is otherwise genuinely established, then, the registration cannot be denied merely on the presumption that there is a possibility of trustees misusing the trust funds by taking undue advantage of the clause in the trust deed.4. In the result, we see no merit in the appeal and the same is hereby dismissed. (K.K. TATED, J.) (J.P. DEVADHAR, J.)