Registration of Trust u/s 12A of Income Tax cannot be Rejected due to Delay Occured to Approve Amendment in Memorandum and Bye Laws: Kerala HC [Read Order]

In a recent case, the Kerala High Court ruled that registration of a trust under Section 12A of the Income Tax Act, 1961 cannot be rejected due to a delay occured to approving the amendment in the memorandum and Bye-laws.

The petitioner, Thrissur Canine Club, claimed to be a charitable society registered under the Travancore-Cochin Literary Scientific and Charitable Societies Registration Act 12 of 1955. Petitioner was granted a provisional registration under Sections 12A and 80G of the Income Tax Act, 1961 ('the Act') on 10.03.2022.

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Subsequently, certain defects were pointed out which required amendments to the Bye laws and Memorandum of Association. Those amendments were carried out, but as it had to be approved by the Registrar of Societies, delay occurred and approval was given only on 30.09.2022.

In the meantime, petitioner's application for approval of registration under the Income Tax Act was rejected by order dated 30.09.2022 stating that the mandatory clauses were not seen included in the documents. Approval of amendments was obtained on the same day as rejection of the applications for registration under Section 12A and 80G of the Act. Hence petitioner has challenged the orders rejecting its applications for registration/ approval under Sections 12A and 80G of the Act.

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A counter affidavit has been filed by the respondent pointing out that if the petitioner has obtained approval from the Registrar of Societies after amendment of the Bye laws and Memorandum of Association, it can file a fresh application under Form IOAB to regularise the existing provisional registration under Section 12 of the Act. The petitioner's application for registration under Section 80G of the Income Tax Act was rejected as a consequence of rejecting the application under Section 12A of the Act.

Since petitioner's approval for the amendments to the Bye laws and Memorandum of Association was obtained on 30.09.2022 as evident from orders were issued on the same day itself, it is only appropriate that the application for registration under Sections 12A and 80G of the Act be reconsidered, as otherwise prejudice will be caused to the petitioner.

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A single bench of Justice Bechu Kurian Thomas set aside the orders and directed the respondent to re-consider the applications afresh, as expeditiously as possible, at any rate, within a period of two months.

To Read the full text of the Order CLICK HERE

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