a) Assessee-trust had been formed with 100 per cent aid and finances from State and Central Government. It filed application for registration under section 12A so as to be able to claim exemption under section 11.

b) CIT(E) rejected registration on the ground that in absence of dissolution clause, there was a reasonable presumption that the assets and liabilities of society will be distributed amongst members of society in case society is dissolved.

c) On appeal to the Tribunal, the assessee submitted that dissolution clause having now been added in the ‘MOA’, the assessee-Trust be granted registration under section 12A.

1) A perusal of the amended Memorandum of Association reveals that vide clause 4(a) of the MoA, whereby four persons had to be admitted as members of the trust and who had put their signatures against their names conveying their consent for admitting them to membership of Trust , were themselves signatories to the said amended resolution.

2) The file revealed that the said resolution was not a valid resolution as the persons who were proposed to be admitted as members of the trust were themselves signatories to the amended ‘MoA’ making whole of the documents as invalid and illegal.

3) Since facts revealed that after accumulating funds from Government, members of trust by not extending term of Board of Governors had conveniently entrusted unto themselves control and management of trust.

4) CIT(E) had a valid and reasonable apprehension that in case of dissolution, properties of trust, might be shifted and distributed amongst private individual members of trust. Thus, there was no infirmity in order of rejecting application of trust for registration under section 12A.

  –  [2018] 100 taxmann.com 373

       (Chandigarh – Trib)