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I-T - Specific portion of object clause in Trust deed is not determinative to conclude that Trust is not charitable in nature so as to deny registration u/s 12A: HC

 

By TIOL News Service

MUMBAI, APR 03, 2019: THE ISSUE BEFORE THE DIVISION BENCH IS - Whether a specific portion of the object clause in the trust deed can be read in isolation to conclude that the Trust is not charitable in nature and hence disregard the application for registration u/s 12A. NO IS THE VERDICT.

Facts of the case:

The assessee is a trust seeking registration as a Charitable Trust u/s 12A, which was however rejected on the grounds that some of the objects of the trust were not in the nature of charitable purposes. The Commissioner also recorded that the trust deed gave full discretion to the trustees to utilize the income of the trust for any of the objects. In his opinion, therefore, the trustees could as well have utilized the income of the trust for non-charitable purposes.

On appeal, the Tribunal held that none of the objects of the trust were in the nature of charitable purposes. If the trust was not following its objectives, then it was always open for the AO to examine the same while granting exemption u/s 11.

High Court held:

++ this Court has perused the objects of the trust with a special focus on the objects which the Commissioner has referred to for holding that they are not charitable in nature. The Commissioner has referred to clause (f) of the objects but reproduced only part of it to contend that the object is "to convert plays into ..........episodes on T.V......." and this cannot be termed as charitable. In the opinion of this Court, the Commissioner has wholly misread the objects. Clause (e) is of the objects is to create a culture among the elite class of the society for considering work of art an asset than can be passed on to the next generation with pride and prestige. Immediately, following clause (f) which has not been fully reproduced by the Commissioner in his order is to write through or with the help of literary persons, of different aptitudes or classes, plays in art and culture and other languages on different topics, to translate plays written different languages into other languages, or to convert plays into drams in to short plays or episodes or T.V or radio plays. The Commissioner, thus, picked a portion of this clause in isolation to argue that the same was not charitable.

(See 2019-TIOL-729-HC-MUM-IT)


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