The assessee, Trinity Educational Trust, formed in the year 1991 for the charitable purpose of education and running a school, filed an application for registration under section 12AA of the Income-tax Act in the year 2012. The Commissioner (Exemptions) rejected the application on four grounds: (i) the application was filed over twenty years after execution of the trust deed; (ii) a clause in the deed allowed lineal descendants of the founder trustee to become life trustees and one among them to be managing trustee; (iii) additional powers were given to trustees through a supplementary deed executed in 2009; and (iv) surplus income indicated the trust was being run on commercial lines.<\/p>\n
On appeal, the Tribunal directed grant of registration. The revenue filed an appeal with the High Court, who in turn upheld the Tribunal\u2019s order, observing that gap in applying for registration is not a bar as there is no statutory time limit stipulated under the Act. The clause regarding family trusteeship did not negate the public charitable nature of the trust. The supplementary deed issued by the original trustees should be read as part of the original deed as there was no amendment to the original deed as a result, no prior approval of the Commissioner was required. Further, there is no provision requiring a trust to spend over 50% of its income to qualify for registration, and mere surplus does not imply commercial intent, especially when charitable activities are undisputed and no diversion of funds to trustees was shown. Accordingly, the High Court dismissed the Revenue\u2019s appeal and directed that registration under section 12AA be granted.<\/p>\n","protected":false},"excerpt":{"rendered":"
S. 12AA: Procedure for registration-Trust or institution-Registration of Educational Trust-Delay in Application, Family Trustee Clause, Supplementary Deed, and Surplus Income-Registration cannot be denied.[S.11, 12, 260A] <\/p>\n","protected":false},"author":3,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"jetpack_post_was_ever_published":false,"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[21],"tags":[],"class_list":["post-59519","post","type-post","status-publish","format-standard","hentry","category-income-tax-act"],"acf":[],"jetpack_featured_media_url":"","jetpack_shortlink":"https:\/\/wp.me\/p9S2Rw-ftZ","jetpack-related-posts":[],"jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/posts\/59519","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/comments?post=59519"}],"version-history":[{"count":1,"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/posts\/59519\/revisions"}],"predecessor-version":[{"id":59520,"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/posts\/59519\/revisions\/59520"}],"wp:attachment":[{"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/media?parent=59519"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/categories?post=59519"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/tags?post=59519"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}