By TIOL News Service

AHEMDABAD, MAR 23, 2018: THE ISSUE BEFORE THE TRIBUNAL IS - Whether inclusion of any new objects by an amendment to trust-deed, can be construed as an illegal exercise, warranting disentitlement of trust from registration u/s 12AA, if the same was not communicated to the Department. NO IS THE ANSWER.

Facts of the case:

The Assessee is a public charitable trust, which was granted registration u/s 80G(5) which was renewed from time to time. According to assessee, Assistant Commissioner of Charity under Bombay Public Trust Act 1980 carried out an inquiry u/s 22A of this Act with regard to objects of assessee, wherein it was noticed that in clause (6) of the object clause, the expression "abroad" means that assistance could be given within and outside India. Thus, on the basis of this inquiry, the trustees amended trust-deed and unanimously agreed to delete the word "abroad" to include expression "education and training of students/teachers" in the original trust-deed. It was pointed out to the Commissioner that in 1989-90, there was an acute need for setting up of a centre which could provide medical diagnostic services to public of Baroda because there were no facilities available at the relevant time in the city and patients have to travel far places in Ahmedabad and other places. Thus, an amendment was carried out in the trust deed by way of a resolution. According to the Commissioner, the fact with regard to addition of objects were being noticed by the AO while passing assessment order in A.Y 2010-11, and he formed an opinion that addition of these objects in the trust without communication to the Department would expose the assessee for irregularities in conducting its activities inconsistent to objects originally pursued by the assessee on the basis of registration granted u/s 12A. Thus, he issued a show cause by exercising power u/s 12AA(3) for withdrawal of approval granted to the assessee u/s 12A, and held that diagnostic centre being run by assessee was commercial venture.

Tribunal held that,

++ a perusal of section 2(15) would indicate that this clause contemplates meaning of expression "charitable purpose", and in that stride it illustrates few activities of an institution for falling within the ambit of "charitable purpose" in two categories, viz. in the first category "charitable purpose" would indicate relief to the poor, education, yoga, medical relief, preservation of environment etc and in the second category advancement of any other objects of general public utility. So far as objects performed for activities carried out in the first category are concerned, these activities are per se charitable. The cognizance of this clause has been taken in order to examine the issue whether inclusion of any new objects by an amendment to trust-deed is to be construed as an illegality which would disentitle the assessee from registration u/s 12AA and consequently registration earlier granted to the assessee deserves to be cancelled. Otherwise, it is to be seen whether non-communication of amended trust-deed to the department was a mere irregularity which could have been or which should have been rectified by the Commissioner instead of cancelling the registration. A perusal of Section 12AA(3) would indicate that where a trust or institution was granted registration u/s 12AA and subsequently, the Commissioner is satisfied that activities of such trust or institution are not genuine or are not being carried out in accordance with objects of the trust or institution, as the case may, he shall pass an order in writing cancelling of such trust or institution. As observed earlier, objects of the assessee-trust are concerned, they are per se charitable. Even new objects included by assessee vide amendment is also charitable in nature. A perusal of impugned order would indicate that the Commissioner basically did not examine objects of the assessee-trust. He simply harboured a belief that diagnostic centre is to be categorized as a commercial venture which does not fulfill any philanthropic objects. In his second objection, he further objects that since running of a diagnostic centre was not part of original objects on whose genuineness registration was granted to the assessee, therefore it is to be construed that the assessee-trust has not carried activities in accordance with objects on the basis of which registration u/s 12A was granted to it;

++ it is seen that by way of amendment carried out in April, 1990, the assessee has included one more objects which authorise it to establish diagnostic centre for advancing medical relief to the needy. This object is also per se charitable. The Commissioner has not recorded any adverse finding qua this object. He has made reference at two-three places that it was a commercial venture, but how establishing of diagnostic centre is not to be construed as a medical relief to the public and how it will automatically become a commercial venture is not disernable. It is pertinent to observe that in clause 8 and 9 of the original trust deed, the assessee is having objects to grant relief in any form to disabled and poor and also to grant subscription and donation to the hospitals and dispensaries. Thus, in its original objects, the assessee was having certain objects of providing relief to the poor. As far as non-communication of amended trust deed to the department in form no.10A of the Act is concerned, in the case of Mehta Jivraj, ITAT Mumbai has held that there is no requirement in the Act for furnishing the amended deed; it is being contemplated in the clause of form no.10A under rules, thus worst-to-worst it could be an irregularity. Further, the changes were duly notified and recorded in the Register of Public Trust maintained by the office of Charity Commissioner. The assessee was enjoying registration u/s 80G since 1977 and it had applied for renewal of 80G in form no.10A on Mar 31, 1991;

++ it is mandatory to file various documents along with application for grant of registration u/s 80G viz. (a) copy of Income Tax Registration Certificate, (b) Trust Deed, details of activities since its inception or last three years whichever is less, (c) copy of audited accounts of the institution since its inception or last three years whichever is less. Thus, at the first available occasion, it has supplied amended trust deed to the department. Thereafter, time and again renewal of 80G registration was granted to it and every time it has filed trust deed. Assessment of the assessee has been framed under scrutiny more particular assessments for the A.Y.2003-04, 2005-06 and 2006-07. It means that the AO must have gone through all the records. He must have seen the income from the diagnostic centre. Establishing of a diagnostic center was in the knowledge of the department as impliedly, intimation was given to it. The department did not change status of the assessee continuously for more than 20 years. Therefore, registration granted to the assessee trust u/s 12A is restored.

(See 2018-TIOL-430-ITAT-AHM)