While allowing the appeal filed by the Assessee Paramount Charity Trust, Ahmedabad bench of Income Tax Appellate Tribunal comprising of Judicial member Rajpal Yadav and Accountant Member Pramod Kumar recently ruled that failure of explicit communication of amended trust deed before the department would not be a ground for withdrawal of registration till the activities of the firm remaining charitable in nature.
In the present case, the Assessee the Assessee Paramount Charity Trust is a registered trust under section 12A of the Income Tax Act, 1961.
During the course of assessment proceedings, the Assessing Officer (AO) has noticed that the Assessee is running a medical diagnostic center but the same was not communicated to the department in the original trust deed. Therefore the AO issued a show cause notice for withdrawal of approval granted to the assessee under section 12A of the Act by holding 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 under section 12A.
The Assessee raised objections against the order passed by the assessing officer and also carried the matter before the Tribunal.
After considering the facts and circumstances of the issue the Tribunal bench observed that if amended objects of the trusts are not non-genuine and charitable in nature, then mere failure on the part of the assessee to intimate this amended objects to the department would not goad the Commissioner to cancel the registration.
The division bench further observed that the Assessee Trust in the instant case has established the diagnostic center for advancing medical relief to the needy. It is also a charitable activity. Thus it is clear that the objective of the Assessee is still remaining charitable in nature.
The bench also observed 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. It can be in the form of finance, medial, education etc. Thus, the establishment of a diagnostic center is in the line or coherent to its existing objects. It is not something alien or some different activities have been started, which would disentitle it for getting registration under section 12AA of the Act. Furthermore, failure of explicit communication before the department could not be a reason to withdraw or cancel the registration.
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