By TIOL News Service

MUMBAI, MAR 08, 2018: THE issue is - Whether amendment of trust deed or change in the management of trust, will form basis for cancellation of registration granted to the trust u/s 12A, when its charitable nature remains untouched. NO IS THE VERDICT.

Facts of the case:

The Revenue Department preferred present appeal challenging the action of ITAT in restoring the registration u/s 12A without appreciating the fact that as a result of amendment to the trust deed, the absolute control over the management and conducting the activities of assessee trust was with the Chief Trustee, for all times to come, thereby barring the public from access to the properties / funds of the trust.

High Court held that,

++ it is to be noted that cancellation of registration of Trust u/s 12AA(3) is only in two contingencies, one the activities of the Trust are not genuine or the trust is not being carried out in accordance with the objects of the Trust. In this case, undisputedly, the cancellation is not on these two grounds but on the basis of breach of Section 13(1)(c) and against the spirit of Charitable Trust. None of these would justify cancellation. As is evident from the Section 13 itself, it comes into play while applying Section 11 of the Act. It is in domain of AO during the assessment proceedings and not a basis for cancellation of registration. Besides, the amendment not being in the spirit of Charitable Trust, cannot be the basis of cancellation u/s 12AA(3). This is as vague as vague could be. The term "spirit of a Charitable Trust" is not defined in the Act nor elaborated in the order of CIT. Therefore, the Tribunal correctly holds that the Commissioner has focused on change in the future management of the Trust rather than the object of the Trust to cancel the Registration.

(See 2018-TIOL-399-HC-MUM-IT)