The genuineness of a Trust's objects should be examined at the time of assessment, not at the time of grant of registration.

JUDGMENT

1. This appeal has been filed under Section 260(A) of the Income Tax Act, 1961(for short "the Act") by the Commissioner of Income Tax, Ujjain, assailing the order dated 31.05.2004 passed by the Income Tax Appellate Tribunal ( for short "the Tribunal/ITAT"), Indore, in ITA No. 97/Ind/2003 whereby the appeal filed by the assessee has been partly allowed by setting aside the order of Commissioner of Income Tax(CIT) dated 26.12.2022. The present appeal was admitted on the following substantial questions of law:-

"1.Whether the Hon'ble ITAT erred in directing the CIT, Ujjain to grant registration under Section 12A of the Income Tax Act on the basis of application submitted with the ACIT (Inv.), Ujjain (which is not by any stretch of imagination the part of the Office of the CIT, Bhopal prescribed authority under Section 12A/12AA read with Rules 17A)?

2. Whether Hon'ble ITAT erred in ignoring the facts placed on record and in appreciating the fact on record while deciding the case in favour of the assessee that the provisions of Section 13 (1) (c) was not hit in this case?

3. Whether the Hon'ble Tribunal erred in holding that the CIT was required to see only whether the objects of the Trust are charitable or not and he was not required to see beyond it?

4. Whether Hon'ble ITAT erred in holding that CIT was not at all required to look into the audited accounts and statement of affairs of Trust before taking decision egarding granting / refusing registration under Section 12A / 12AA read with Rule 17A and Form 10A?

5. Whether Hon'ble ITAT erred in holding that Trustees were competent to make amendment to the Trust deed on these facts?

6. Whether Hon'ble ITAT erred in granting registration under Section 12A of the IT Act to the Trust w.e.f. 1998?"

2. The brief facts of the case are that one Seth Malukchand Heeranand in S.Y. 1840 constructed a temple for his family. 11 Persons hailing from Barnagar created a Trust for the temple and the property available with the temple was made a part of the Trust. A Trust deed was framed and got registered with the sub-Registrar on 26.09.1956 with certain objects. Thereafter, certain amendments were made in the Trust deed on 30.10.1989. The basic aim and object of the Trust was religious for the purpose of Digambar Jain Society and for their religious, cultural and social upliftment. As per Clause-5 of the Trust deed, it was the duty of the Trust to protect and manage the entire movable and immovable properties of temple and whenever necessary to extend and renovate the same from time to time. Vide Clause-12 of the deed, the Trustees were also empowered to constitute other rule, aim or planning for the progress of the Trust. As per Clause No.13, neither the Trustees nor any other person has any personal right over the movable or immovable property of the Trust nor would they be able to use the property of the Trust for their personal benefit but they will have their right on these properties in the capacity of Trustees only. Some amendments in the objects and in the procedures related to Trustees were carried out on 31.10.1989 and the amended Trust deed was got registered on 20.11.2001 under the provisions of Madhya Pradesh Lok Nyas Adhiniyam, 1951. In the said amended Trust deed, a new provision was introduced that all other persons will have also place in the Trust besides the Trustees mainly from the Digmabar Jain Beas Panthi Khandelwal Community.

3. Learned CIT rejected the application for registration on the following grounds:-

(i) Deviation from the original Trust deed frustrates the objects and purpose of the original Trust deed dated 26.09.1956 which is impermissible.

(ii) During Assessment year 1989-1990, the immovable property of the Trust situated at 25, Abbas Tayyab Ali, No.3, Badanagar,Ward-III was sold to the Trustees and their relatives below the market price.

(iii) The assessee for the A.Y. 1984-1985 and 1985-1986 was assessed under Section 143(3) of the Act vide order dated 29.12.1986 a