Trust Registration Denied Over Object Clause Allowing Overseas Fund Use: ITAT Orders Reconsideration After Proposed Amendment [Read Order]
ITAT remanded the denial of Section 12AB registration after the trust offered to amend an object clause suggesting overseas fund use
![Trust Registration Denied Over Object Clause Allowing Overseas Fund Use: ITAT Orders Reconsideration After Proposed Amendment [Read Order]](https://images.taxscan.in/h-upload/2025/06/05/2041328-trust-registration-denied-object-allowing-overseas-fund-use-itat-reconsideration-proposed-amendment-taxscan.webp "Trust Registration Denied Over Object Clause Allowing Overseas Fund Use: ITAT Orders Reconsideration After Proposed Amendment [Read Order]")
The Mumbai Bench of the Income Tax Appellate Tribunal (ITAT) remanded the matter concerning the denial of trust registration under Section 12AB of the Income Tax Act, 1961, after finding that the Commissioner of Income Tax (Exemptions) [CIT(E)] rejected the application based on an interpretation of the trust deed that could have been resolved through amendment. Shree Swatember...
The Mumbai Bench of the Income Tax Appellate Tribunal (ITAT) remanded the matter concerning the denial of trust registration under Section 12AB of the Income Tax Act, 1961, after finding that the Commissioner of Income Tax (Exemptions) [CIT(E)] rejected the application based on an interpretation of the trust deed that could have been resolved through amendment.
Shree Swatember Murtipujak Jain Tapgachh Sangh Tiker, the assessee, is a religious trust that applied for registration under Section 12AB. The CIT(E), while examining the application, pointed to a clause in the trust deed which read, “to do all such other things as are incidental or conducive to the attainment of the above objects or any of them.” The CIT(E) stated that this clause suggested a possible use of funds outside India, which could violate the conditions required for approval under Section 12AB.
Based on this concern, the CIT(E) concluded that the trust might apply its income outside India and denied the registration, considering such an object as non-compliant with the provisions of the Act.
On appeal before the ITAT, the trust’s counsel argued that the object clause had been misunderstood and gave an undertaking to amend the clause to ensure it fully aligned with the Income Tax Act. The trust requested an opportunity to make the necessary changes and have its application reconsidered.
The two-member bench comprising Narendra Kumar Billaiya (Accountant Member) and Sunil Kumar Singh (Judicial Member) considered the submissions made by both parties. The tribunal observed that the CIT(E) had denied the registration based only on the interpretation of a general clause, without providing the assessee a chance to clarify or amend it.
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The tribunal explained that since the assessee had offered to amend the clause, the matter should be reconsidered. It directed the CIT(E) to re-examine the application afresh after verifying whether the proposed amendments had been made. The tribunal remanded the case for fresh adjudication and allowed the appeal for statistical purposes.
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