By TIOL News Service

MUMBAI, DEC 19, 2018: THE ISSUE BEFORE THE DIVISION BENCH IS - Whether mere non communication of amendment in trust deed is sufficient to invalidate registration granted to trust u/s 12A, when such modification has not resulted in any change in charitable objects enshrined under original trust deed. NO IS THE VERDICT.

Facts of the case

The assessee is a registered charitable trust, which had been granted registration u/s 12A by the CIT after examining the objects of the Trust and the nature of its activities. The Trust Deed under went amendments in the meanwhile which were not communicated to the Commissioner. The ITO was therefore of the opinion that since material changes made in the Trust deed were not communicated to the Commissioner, the registration u/s 12A would be rendered invalid. In absence of such registration, according to the AO, benefit u/s 11 would not be available to the Trust.

On appeal, the CIT(A) negated the conclusion drawn by AO and observed that the registration of Trust which was granted u/s 12A since 40 years, had not been cancelled. Further, the original object of the Trust of providing education to the students which included paying fees, scholarship, prizes, books and loans had not been deleted nor changed. The same was only modified so as to include giving donations to hospitals and charitable dispensaries and to promote and develop rural, socioeconomic welfare and uplift of public in rural areas. These findings of CIT(A) came to be upheld by the Tribunal.

High Court held that,

++ it is seen that the assessee Trust was granted registration u/s 12A on the basis of the objects of the Trust recorded in the original Trust deed. The principal objects of the Trust were education of students for which purpose the Trust grants fees, scholarship, prizes, books and loans without interest. Another object of the Trust was providing medical facilities and helping the poor. The amendments of the Trust added additional object of rural development including the programme of promoting socioeconomic welfare or upliftment of the public in rural areas. The CIT(A) and the Tribunal examined the original objects of the Trust and the changes brought about by successive amendments. The conclusions of the CIT(A) and the Tribunal were that the original objects of the Trust were not altered or even diluted. The additional objects were also in the nature of charitable activities. The foundational characteristics of the Trust, therefore, did not under go any change. Under the circumstances, the Tribunal has committed no error in dismissing the Revenue's appeal.

(See 2018-TIOL-2627-HC-MUM-IT)