CIT, Faridabad V. RKM Educational & Charitable Trust, Faridabad

CO 108/DEL/2010

• Counselvise Citation: [2013] 122 COUNSELVISE.COM (IT) 8685 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 1 month(s) 29 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 28-06-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: F
• Next Hearing Date: 08-05-2013
• Assessment Year: misc
• Appeal Filed On: 29-04-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SATPAL SINGH
• Assessee Lawyers: S D KAPILA; SANJAY KAKKAR
• Keywords: Charitable institution
• Section: 80G; 12A; 12AA; 12; 92

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH : F : NEW DELHI BEFORE SHRI G.D. AGRAWAL, HONBLE VICE PRESIDENT AND SHRI A.D. JAIN, JUDICIAL MEMBER ITA NO.783/DEL/2010 ASSESSMENT YEAR : NA RKM EDUCATIONAL & CHARITABLE TRUST, 1288 PRERNA DHAM, SECTOR 15, FARIDABAD. PAN : AAATR6506Q VS. CIT, FARIDABAD. C.O. NO.108/DEL/2010 (ITA NO.783/DEL/2010) ASSESSMENT YEAR : NA CIT, FARIDABAD VS. RKM EDUCATIONAL & CHARITABLE TRUST, 1288 PRERNA DHAM, SECTOR 15, FARIDABAD. PAN : AAATR6506Q (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI S.D. KAPILA, ADVOCATE & SHRI SANJAY KAKKAR, CA REVENUE BY : SHRI SATPAL SINGH, SR.DR ORDER PER A.D. JAIN, JUDICIAL MEMBER THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDE R PASSED BY THE LD. CIT, FARIDABAD, DATED 22.01.2010 U/S 80G OF THE IT ACT, 1961 READ WITH RULE 11AA (5) OF THE IT RULES, 1962. THE DEPARTMENT HAS FILED THE CROSS OBJECTIONS. ITA NO783/DEL/2010 CO NO.108/DEL/2010 2 2. THE ASSESSEE TRUST FILED AN APPLICATION FOR RENEWAL O F EXEMPTION U/S 80G ON 22.06.2009. THE LD. CIT, VIDE ORDER SHEET ENTRY DATED 04.12.2009, PUT THE ASSESSEE TO SHOW CAUSE AS FOLLOWS:- 1. AS PER DOCUMENTS FURNISHED, IT IS NOTICED THAT A TRU ST WAS REGISTERED WITH THE INCOME TAX DEPARTMENT VIDE ORDER N O. 227/24 R 77-78/E DATED 06-03-1978 (CIT ROHTAK). PLEAS E PRODUCE ORIGINAL CERTIFICATE ALONGWITH TRUST DEED. 2. FROM THE DOCUMENTS FILED, IT IS NOTICED THAT AS PER S OCIETY REGISTRATION ACT, THERE IS A CERTIFICATE IN FAVOUR OF RATTA N KAUR MEMORIAL EDUCATIONAL AND CHARITABLE TRUST, FARIDABAD D ATED 23- 10-1981. PLEASE PRODUCE CERTIFICATE IN ORIGINAL ALON GWITH MOA AND RULES AND REGULATIONS. ALSO PRODUCE CERTIFICATE IN ORIGINAL FOR REGISTRATION OF INSTITUTION U/S 12A WITH INCOME TAX DEPARTMENT. PLEASE EXPLAIN, ONCE IT IS REGISTERED AS TRUST VIDE O RDER DATED 06-03-1978 AND SECONDLY IT WAS REGISTERED UNDER SOCI ETIES ACT VIDE CERTIFICATE DATED 23-10-1981. FURTHER, IT IS NOTICED THAT THE DOCUMENTS INCORPORATING THI S ORGANIZATION IS AMBIGUOUS AND GIVE RISE TO LOT OF CONF USION AS TO WHETHER THE INSTITUTION/ORGANIZATION IS A TRUST OR SOCIETY. THIS MAKES SEVERAL CLAUSES OF THE CONSTITUTION REDUNDANT E.G . POINT 8 ON PAGE 11, CLAUSE XXI, XXII, XXIII THESE CLAUSES RE FER TO 'BOARD OF TRUSTEES' - BUT BOARD OF TRUSTEES DOES NOT EXIST. PLEASE EXPLAIN.' 3. ON 23.12.2009, THE ASSESSEE FILED A REPLY, WHICH IS A S FOLLOWS:- '1. ON 6TH MARCH 1978, RATTAN KAUR MEMORIAL (RKM) EDUCATIONAL AND CHARITABLE TRUST WAS REGISTERED WITH THE INCOME TAX DEPARTMENT VIDE ORDER NO. 227/(24-R) 77-78/E. ORI GINAL CERTIFICATE IS BEING PRODUCE FOR VERIFICATION. 2. THE ABOVE TRUST IS ALSO REGISTERED AS A SOCIETY UNDE R THE SOCIETIES REGISTRATION ACT, 1860 ON 23RD OCTOBER, 1981. IN THIS CONNECTION IT IS SUBMITTED THAT: A PUBLIC CHARITABLE OR RELIGIOUS INSTITUTION CAN BE FO RMED EITHER AS A TRUST OR AS A SOCIETY OR AS A COMPANY REGISTERED U/S 25 OF THE COMPANIES ACT. ITA NO783/DEL/2010 CO NO.108/DEL/2010 3 IT GENERALLY TAKES THE FORM OF A TRUST WHEN IT IS FORMED PRIMARILY BY ONE OR MORE PERSONS. TO FORM A SOCIETY AT LEAST SEVEN PERSONS ARE REQUIRED . INSTITUTIONS ENGAGED IN PROMOTION OF ART, CULTURE, COMMERCE ETC. ARE OFTEN REGISTERED AS NON- PROFIT COMPANIES. THESE FORMS ARE ENUMERATED AS UNDER: 1. CHARITABLE TRUST SETTLED BY A SETTLOR BY A TRUST DEED OR UNDER A WILL. 2. CHARITABLE OR RELIGIOUS INSTITUTION/ ASSOCIATION CAN BE FORMED AS SOCIETY. CHARITABLE INSTITUTION CAN BE FORMED BY REGISTERING AS A COMPANY U/S 25 OF THE COMPANIES ACT, 1956, AS NON PRO FIT COMPANY (WITHOUT ADDITION TO THEIR NAME, THE WORD 'LIMITED' OR 'PRIVATE LIMITED'). PHOTOCOPY OF ABOVE REGISTRATION AND MEMORANDUM ETC AR E ALREADY ON RECORD. ORIGINALS ARE BEING PRODUCED FOR VERIFICATION. 3. FURTHER IT IS AGAIN STATED IN VIEW OF FOREGOING PRO VISIONS THAT THERE IS NO BAR TO A TRUST BEING REGISTERED AS A SO CIETY AND THERE IS NO AMBIGUITY. FURTHER POINT 8 IN THE MEMORANDU M IS A RESTRICTIVE CLAUSE WHICH DEBARS TRUSTEES FROM TAKING U NILATERAL DECISIONS SO THAT AT NO STAGE PROPERTY OF THE TRUST IS NOT JEOPARDIZED. YOUR CONTENTION THAT BOARD OF TRUSTEES DOES NOT EXIST NEEDS TO BE RECONSIDERED BECAUSE IN THE TRUST DEE D BOARD OF TRUSTEES IS DEFINED EXPLICITLY. 4. IN THE LAST SUBMISSION FINANCIAL STATEMENTS FOR THE Y EAR ENDING 31-3-2009 WERE FILED. WE ARE ALSO NOW ENCLOS ING FINANCIAL STATEMENTS FOR THE YEAR ENDING 31-3-2008. AS YOU WILL OBSERVE THAT EXPENSES INCURRED ARE FOR THE BENEFIT OF G ENERAL PUBLIC AND ARE CHARITABLE IN NATURE AND NO BENEFIT AC CRUES TO ANY PARTICULAR SECTION OF SOCIETY OR ANY SPECIFIC CLASS O F PERSONS. 5. THE PROVISIONS CONTAINED IN CLAUSE VB OF MEMORAND UM AND ARE ADMINISTRATIVE IN NATURE AND ONLY DETERMINE H OW THE ACTIVITIES OF TRUST ARE TO BE CONDUCTED AND IN NO WAY ARE CONTRARY TO PROVISIONS IN SECTION 2(15) OF THE ACT WHI CH ONLY DEFINES CHARITABLE PURPOSES.' ITA NO783/DEL/2010 CO NO.108/DEL/2010 4 4. ADDITIONAL INFORMATION WAS ASKED FOR FROM THE ASSESSEE BY THE LD. CIT, AS FOLLOWS:- '1. WHETHER YOU ARE IN POSSESSION OF ORIGINAL TRUST DE ED AND PRODUCE THE SAME FOR VERIFICATION. YOU ARE ALSO REQU ESTED TO PRODUCE ORIGINAL MOA/RULES AND REGULATION WHICH WERE PRODUCED BEFORE THE REGISTRAR OF SOCIETIES WHILE OBTAINING REGI STRATION CERTIFICATE DATED 23- 10- 1 981 . 2. ON PERUSAL OF REPLY DATED 23-12-2009 IT IS NOTICED THAT STILL THERE IS AN AMBIGUITY BECAUSE NO TRUST IS REGISTERED AS SOCIETY, ONLY SOCIETY IS REGD. A SOCIETY UNDER THE SOCIETY ACT. T HERE IS NO BOARD OF TRUSTEES, PRESENT ENTITY IS NOT A TRUST. 3. FURNISH/PRODUCE COPY OF RESOLUTION TO DISBAND THE TR UST WHICH WILL GIVE ITS ALL ASSETS AND LIABILITIES; WHICH SOCIE TY/TRUST WAS ENTRUSTED THOSE ASSETS AND LIABILITIES. 5. THE ASSESSEE FILED REPLY DATED 11.01.2010, WHICH IS A S UNDER:- 1.1) 'WHETHER YOU ARE IN POSSESSION OF ORIGINAL TRU ST DEED. PLEASE PRODUCE THE MEMORANDUM OF ASSOCIATION, RULES A ND REGULATIONS, WHICH WERE PRODUCED BEFORE THE REGISTRAR OF SOCIETIES, CHANDIGARH WHILE OBTAINING REGISTRATION DATED 23 OCT. 1981. 1.2) ON PERUSAL OF REPLY DATED 23-12-2009, IT IS NOTIC ED THAT STILL THERE IS AN AMBIGUITY BECAUSE NO TRUST IS REGISTER ED AS SOCIETY. ONLY A SOCIETY IS REGISTERED AS SOCIETY UNDER THE ACT. THERE IS NO BOARD OF TRUSTEES; PRESENT ENTITY IS NOT A TRUST. 1.3) PLEASE FURNISH/PRODUCE COPY OF RESOLUTION TO DIS BAND THE TRUST WHICH WILL GIVE IT ALL ASSETS/ LIABILITIES, WHICH SOCIETY/TRUST WAS ENTRUSTED WITH THE ASSETS AND LIABILITIES. 2.1) AS REGARDS QUERY NO.1), IT IS SUBMITTED THAT THE APP LICANT IS IN POSSESSION OF THE ORIGINAL TRUST DEED DATED 14/04/19 76 (ITS COPY WAS SUBMITTED TO THE CIT, ROHTAK IN THE PROCEEDINGS UNDER SECTION 12A OF THE INCOME TAX ACT, 1961 IN 1978. SUBSEQUENTLY A FRESH COPY WAS SUBMITTED ALONG WITH THE ASSESSEE'S APPLICATION DATED 18/2/1981 SEEKING EXEMPT ION IN TERMS OF SECTION 80G OF THE IT. ACT, 1961 FOR THE PERIO D 1/4/1981 ONWARDS). THE ORIGINAL IS PRODUCED HEREWITH THE CAVEAT THAT PAGES 6&7 ARE MISSING FROM THE ORIGINAL, WH ICH WAS IN THE CUSTODY OF LATE SH. BALWANT SINGH AHLUWALIA THE A UTHOR OF THE TRUST, WHO EXPIRED IN 1999. SINCE THEN IT HAS BEEN LYING IN HIS PERSONAL ALMIRAH, WHICH WAS NOT OPENED BY HIS SO N, TILL A SEARCH FOR IT WAS LAUNCHED AFTER RECEIVING YOUR REQUI SITION FOR IT ITA NO783/DEL/2010 CO NO.108/DEL/2010 5 PAGE 6& 7 ARE, HOWEVER, AVAILABLE IN THE COPY OF THE DEED FILED IN YOUR PREDECESSOR'S OFFICE ON 18/2/1981, AS AFORE SAID; 2.2) COPIES OF MEMORANDUM OF ASSOCIATION & RULES & REGULATIONS, WHICH WERE PRODUCED BEFORE THE REGISTRA R OF SOCIETIES, CHANDIGARH HAVE BEEN FILED BEFORE YOU AND BASED ON THOSE SEVERAL QUESTIONS WERE RAISED ON 04/12/2009. CO PIES OF THE SAME ARE AGAIN PRODUCED HEREWITH. IT IS TO CONFIRM THAT THESE VERY DOCUMENTS WERE PRODUCED BEFORE THE REGISTRAR OF SOCIETIES, CHANDIGARH WHILE OBTAINING REGISTRATION DATE D 23/10/1981. 3) QUERIES NO. 2 & 3 (EXTRACTED ABOVE) ARE PRIMA FAC IE BASED ON CERTAIN ASSUMPTIONS, PRESUMPTIONS AND TECHNICAL VI EW OF LAW. BEFORE REPLYING TO THEM IT MAY BE USEFUL TO NOTE THE PAST HISTORY OF THE APPLICANT. 4.1)(I) THE RKM TRUST WAS BROUGHT INTO BEING VIDE THE T RUST DEED DATED 14/04/1976 BY THE LATE SH. BS AHLUWALIA F OR THE BENEFIT OF THE NEEDY PEOPLE IRRESPECTIVE OF CASTE & CR EED WITH THE FOLLOWING OBJECTS NAMELY, A) TO AWARD SCHOLARSHIPS & ADVANCE LOANS FOR THE EDUCATI ON OF INDIGENT, NEEDY & DESERVING STUDENTS B) TO SUPPORT POOR PATIENTS IN HOSPITAL FOR THEIR TREATMENT AND C) AWARD PRIZES TO THE STUDENTS FOR DISTINCTION IN STUDIES AN D OTHER CO CURRICULAR ACTIVITIES. (II) CLAUSE L(D) OF THE DEED STIPULATED AS FOLLOWS 'I N THE LIGHT OF EXPERIENCE GAINED, THE FOUNDER IN HIS LIFE TIME AND THE BOARD AFTERWARDS, MAY AMEND THE DEED PROVIDED THE AMENDMENT DOESN'T DEROGRATE FROM THE FUNDAMENTAL OF THE TRUST AS A N IRREVOCABLE PUBLIC CHARITABLE TRUST'. 4.2)(A)THE AFOREMENTIONED TRUST DEED WAS SUBMITTED TO THE C.I.T, ROHTAK ON 22/07/1977 ALONG WITH THE APPLICATION UNDER SECTION 12A OF THE IT ACT, 1961 AND THE SAID APPLICATIO N WAS ENTERED BY THE SAID C.I.T ON 06/03/1978 AT SERIAL NO 2 4-R IN THE REGISTER OF APPLICATION UNDER SECTION 12A(A) MAINTAINED IN HIS OFFICE AND INTIMATION IN THIS REGARD WAS SENT TO THE SEC RETARY OF R.K.M. EDUCATIONAL & CHARITABLE TRUST AND TO THE SECRETAR Y OF R.K.M. EDUCATIONAL & CHARITABLE TRUST AND TO THE ITO COM PANY WARD, ROHTAK AND LAC ROHTAK RANGE, ROHTAK COPY OF THE T RUST DEED AND STATEMENT OF ACCOUNTS FROM 14/04/1976 TO 31/03/1977 OF THE TRUST WERE FORWARDED BY THE CIT ROHTAK , TO THE I.T.O, COMPANY WARD ROHTAK. ITA NO783/DEL/2010 CO NO.108/DEL/2010 6 (B) AS PER THE LAW THEN STANDING, THERE WAS NO REQUIREM ENT OF PASSING AN ORDER GRANTING REGISTRATION TO THE TRUST, SEC TION 12M STIPULATING THAT AN ORDER BE PASSED GRANTING REGISTRATION CAME ON THE STATUTE BOOK WITH EFFECT FROM 01/04/1997 VIDE FINA NCE (NO. 2) ACT, 1996. THE ENTERING OF THE APPLICATION AT TH E SR. NO 24-R IN THE REGISTER OF APPLICATIONS AMOUNTED TO REGISTRA TION OF THE TRUST BY THE C.I.T. 5) EXEMPTION U/S 80G OF THE IT ACT, 1961 WAS GRANTED TO THE ASSESSEE ON 19/X/1978 FOR THE PERIOD 1ST APRIL 1977 TO 31ST MARCH 1978. THEREAFTER IT WAS EXTENDED FOR A PERIOD OF 3 YEARS FROM 1ST APRIL 1978 TO 31ST MARCH 1981 VIDE C.I.T ROH TAK ORDER DATED 13TH JUNE 1979 (COPIES OF THE ORDER ENCLOSED FOR READY REFERENCE). 6) ON 4TH JULY 1991, THE LEARNED C.I.T (ROHTAK) EXTEND ED EXEMPTION U/S 80G FOR ONE YEAR, FROM 01/04/1981 TO 31/03/1982 VIDE FILE NO. 228(18R) 79-80/3 (COPY ENC LOSED) 7.1) BY VIRTUE OF THE AUTHORITY GRANTED VIDE CLAUSE L( D) OF THE TRUST DEED DATED 14TH APRIL 1976, THE CONSTITUTION OF THE TRUST WAS AMENDED AND A DETAILED MEMORANDUM OF ASSOCIATION , RULES AND REGULATION WERE DRAFTED IN SEPTEMBER - OCTOBE R 1981 (APPROXIMATE PERIOD), WHICH WERE SUBMITTED TO THE REGISTR AR OF FIRMS AND SOCIETIES, HARYANA, CHANDIGARH, WHO REGIS TERED THE SAME ON 23/X/1981, CLAUSE 1 OF THE MEMORANDUM READ INTERALIA AS BELOW 'THE NAME OF PUBLIC CHARITABLE TRUST IS RATTAN KAUR MEM ORIAL EDUCATIONAL & CHARITABLE TRUST. FOR WORKING CONVENIEN CE IT WOULD BE KNOWN AS RKM EDUCATIONAL & CHARITABLE TRUST. THE TRUST IS PURELY A PUBLIC TRUST & PUBLIC SERVICE ORGANIZ ATION'. 7.2) CLAUSE (5) OF THE MEMORANDUM OF ASSOCIATION PROV IDED FOR THE 'GOVERNING BODY' FIRST MEMBERS OF WHICH WERE NAME D THEREIN, TOTAL NO. BEING 17. SEVEN OF THESE WERE ALSO M EMBERS OF THE 'FIRST BOARD OF TRUSTEES' (NAMED IN THE TRUST DE ED DATED 14/04/1976) 7.3) INTRODUCTION TO THE 'RULES & REGULATIONS' ACCOMPA NYING THE AFORESAID MEMORANDUM OF ASSOCIATION STATED INTER ALI A AS BELOW: 'RKM EDUCATIONAL & CHARITABLE TRUST, 1288, SECTOR 15, FARIDABAD CAME INTO BEING ON APRIL 14TH, 1976 AS A RE SULT OF AN INITIAL DONATION OF RS. 31393.50/- BY PROF BALWANT SI NGH AHLUWALIA (RETIRED DIRECTOR OF PUBLIC INSTRUCTION) AND SUBSEQUENT DONATIONS BY OTHER FOUNDER MEMBERS. 7.4) THE TERM 'FOUNDER MEMBERS' IN SUB SECTION (A) OF CLAUSE 3 OF THE SAID RULES & REGULATIONS READ AS FOLLOWS: ITA NO783/DEL/2010 CO NO.108/DEL/2010 7 A) FOUNDER MEMBERS ARE THOSE WHO HAVE BEEN ACTIVELY AND CLOSELY ASSOCIATED WITH THE SETTING UP OF THE TRUST AND I TS SUBSEQUENT GROWTH. 7.5) CLAUSE (4) OF THE RULES DESCRIBED THE 'TRUST ORGA NIZATION' AS BELOW: THE TRUST ORGANIZATION IT HAS TWO WINGS: A) GENERAL BODY B) BOARD OF TRUSTEES SUB CLAUSE (A) OF THIS CLAUSE DEFINES, 'GENERAL BODY ' AND SUB CLAUSE (H) DEFINES 'BOARD OF TRUSTEES: THE MANAGEMENT OF THE TRUST VESTS IN THE BOARD OF TRUSTEES CONSISTING OF 11 TO 2 1 MEMBERS ELECTED BY GENERAL BODY .. 7.6) CLAUSE V(B) SPELLS OUT THE FUNCTIONS OF THE BOARD OF TRUSTEES, CLAUSE (VII)(B) LAYS DOWN THE TERMS OF THE BO ARD OF TRUSTEES. CLAUSE XI PRESCRIBES 'OFFICE BEARERS OF THE BOARD OF TRUSTEES' & CLAUSE XIX TALKS OF 'TRUST CORPUS' 8) THE AFORESAID DOCUMENTS, NAMELY, THE MEMORANDUM OF ASSOCIATION & RULES & REGULATIONS WERE SUBMITTED TO THE REGISTRAR OF FIRMS AND SOCIETIES, HARYANA CHANDIGARH FOR REGISTRATION, WHO GRANTED REGISTRATION TO THE ASSESSEE TR UST IN THE FOLLOWING NAME 'RATTAN KAUR MEMORIAL EDUCATIONAL A ND CHARITABLE TRUST, FARIDABAD. A COPY OF CERTIFICATE OF THE REGISTRAR DATED 23/10/1981 HAS ALREADY BEEN PLACED ON RECORD. 9.1) AS THE ORDER GRANTING EXEMPTION IN RESPECT OF SECT ION 80G VIDE ORDER DATED 04/07/1981 WAS VALID UP TO 31/03/198 2 ONLY THE ASSESSEE APPLIED FOR FURTHER EXTENSION OF THE SAID BENEFIT, WHICH WAS GRANTED BY THE LD. C.I.T. ROHTAK, VIDE HIS O RDER DATED 23/04/1982. THIS ORDER WAS TO REMAIN IN VOGUE F OR A PERIOD OF THREE YEARS I.E. FROM 01/04/1982 TO 01/03/1 985. THE ASSESSEE'S APPLICATION SEEKING THE BENEFIT OF SECTION 80G AND DOCUMENTS FILED ALONG WITH IT ARE PRESENTLY NOT TRACEABL E IN ASSESSEE'S RECORDS. IT HAS THEREFORE, MOVED AN APPLI CATION FOR THE INSPECTION OF THE RECORD OF C.I.T. FARIDABAD. HOWE VER, IN VIEW OF RULE 11AA OF INCOME TAX RULES 1962, THE PRES UMPTION IS THAT ALL THE REQUISITE DOCUMENTS INCLUDING THE AMENDED CONSTITUTION OF THE TRUST MUST HAVE BEEN FILED ALONG WITH THE APPLICATION AND THOSE WOULD BE AVAILABLE IN YOUR OFF ICIAL RECORDS. (PERTAINING TO THIS SUBJECT MATTER THE ORDERS FOR GRANTING INSPECTION ARE AWAITED.) ITA NO783/DEL/2010 CO NO.108/DEL/2010 8 9.2) ON 11/12/1984, THE ASSESSEE MOVED AN APPLICATION FOR FURTHER EXTENSION OF THE BENEFIT BEYOND 31/03/1985. IN PARA 3 OF THE SAID APPLICATION, THE FOLLOWING SUBMISSION WAS MADE 'THE RKM EDUCATIONAL & CHARITABLE TRUST (REGD.) SINCE ITS INCEPTION IN 1976 HAS BEEN STRICTLY FOLLOWING THE RULE S & REGULATIONS LAID DOWN BY THE INCOME TAX DEPARTMENT FRO M TIME TO TIME.. ' (COPY IS ENCLOSED FOR READY REFERE NCE). ONE OF THE DOCUMENTS ATTACHED WITH THAT APPLICATION WAS THE AMENDED CONSTITUTION OF THE TRUST. THE ABOVE FACT WAS REITERATED IN THE ASSESSMENT LETTER DATED 31/01/1985. ON 22/05/1985 THE ASSESSEE AGAIN WROTE TO THE C.I.T. ROHTAK , REITERATING INTER ALIA THE FOLLOWING: 'THE TRUST HAS BEEN ENJOYING THE EXTENSION OF CONCESSIO N SINCE 1976.' 9.3) THE RENEWAL OF EXEMPTION U/S 80G OF THE INCOME T AX ACT, 1961 ON THE BASIS OF THE AFORESAID REPRESENTATION WAS A LLOWED VIDE ORDER OF C.I.T HARYANA-ROHTAK DATED 30/04/1985/ 03/05/1985 FOR A PERIOD OF THREE YEARS FROM 1/04/198 5 TO 31/03/1988. 10.1) AS THE END OF THE PERIOD OF EXEMPTION DREW NEAR ER, THE ASSESSEE MOVED A FRESH APPLICATION SEEKING EXTENSION OF THE BENEFIT. PARA 3 OF THE SAID APPLICATION AGAIN REITERA TED THE SUBMISSION THAT' SINCE ITS INCEPTION IN 1976, THE TRUST HAS BEEN STRICTLY FOLLOWING THE RULES & REGULATIONS LAID DOWN B Y THE INCOME TAX DEPTT. FROM TIME TO TIME' 10.2) IN RESPONSE TO THIS, THE C.I.T., ROHTAK GRANTED R ENEWAL OF EXEMPTION UPTO 31/03/1989 VIDE HIS LETTER DATED 22/09/1 988. 10.3) TO SEEK EXTENSION BEYOND 31/03/1989 THE ASSESSE E AGAIN MOVED AN APPLICATION ON THE BASIS OF WHICH RENEWAL WA S GRANTED UPTO 31/03/1992 VIDE C.I.T. ORDER DATED 04/06/ 1989. 10.4 SIMILAR HAS BEEN THE PATTERN OF APPLICATIONS FOR TH E SUBSEQUENT PERIOD ALSO. EVEN IN ITS APPLICATION DATED 19/05/2009 PRESENTLY, UNDER CONSIDERATION, THE ASSESS EE HAS REITERATED THAT 'SINCE ITS INCEPTION IN 1976, THE TRUST H AS BEEN STRICTLY FOLLOWING THE RULES & REGULATIONS LAID DOWN B Y THE INCOME TAX DEPARTMENT FROM TIME TO TIME.' 11) AS REGARD THE ASSESSMENTS OF INCOME OF THE ASSESSE E, BENEFIT OF SECTION 11 HAS ALL ALONG BEEN GIVEN TO THE A SSESSEE RIGHT FROM THE VERY BEGINNING ON THE BASIS OF THE COMMUNICATION OF C.I.T., ROHTAK IN TERMS OF SECTION 12 A OF THE INCOME TAX ACT, 1961 (KINDLY SEE PARA 4.2(A) SUPRA) DATED 06/03/1978. ITA NO783/DEL/2010 CO NO.108/DEL/2010 9 12) IN THE BACKGROUND OF THE AFORESAID FACTS AND EVENTS , SPANNING OVER A PERIOD OF 31 YEARS, THE ISSUE RAISED BY YOUR HONOR THAT A TRUST CANNOT BE REGISTERED AS A SOCIETY WAS TO BE DECIDED BY THE REGISTRAR OF SOCIETIES, WHO WAS THE COMP ETENT AUTHORITY AND THAT AUTHORITY DULY REGISTERED THE RKM TRUS T UNDER THE SOCIETIES REGISTRATION ACT. THIS ISSUE SHOULD NOT BE RAISED BY THE INCOME TAX DEPARTMENT AT THIS STAGE ESPEC IALLY WHEN FOR THE PURPOSES OF ASSESSMENT OF INCOME TAX, TH IS MERE TECHNICALITY WHETHER THE RKM TRUST IS TO BE ASSESSED AS A TRUST OR A REGISTERED SOCIETY HAS NO REAL SIGNIFICANCE AS THIS DOES NOT JEOPARDIZE THE TAX REVENUES IN ANY MANNER AND THE SPIR IT OF THE LAW GOVERNING THE GRANT OF EXEMPTION CERTIFICATE TO THE RK M TRUST IS NOT DILUTED COMPROMISED OR VIOLATED IN ANY MA NNER. ITS NAME IS 'RKM EDUCATIONAL & CHARITABLE TRUST', THIS NAME HAS BEEN ACCEPTED BY THE REGISTRAR OF SOCIETIES WITHOUT A DE MUR, IT HAS BEEN IN EXISTENCE SINCE 1976, IT HAS BEEN SO ACC EPTED BY THE DEPARTMENT ALL ALONG. REQUIREMENTS U/S 80G(5) HAVE ALL ALONG BEEN FULLY MET, AND THE FACTS CONTINUE TO REMAIN UNCHANGED EVEN NOW. THE ASSESSEE'S REQUEST MAY THEREF ORE KINDLY BE GRANTED SO THAT THE TRUST MAY CONTINUE TO RENDER ITS SERVICES FOR THE POOR AND THE NEEDY. 13) THE PRESUMPTION THAT THE TRUST WAS DISBANDED IS NOT CORRECT. IT HAS ALL ALONG BEEN A CONTINUING ENTITY. AS E XPLAINED AT PARA 7.1 BEFORE, THE CONSTITUTION OF TRUST WAS MERELY AMENDED AND MADE MORE ELABORATE. IT DID NOT INVOLVE A NY DISBANDMENT OF THE ORIGINAL TRUST. IT MERELY SOLICITED REGISTRATION UNDER SOCIETIES REGISTRATION ACT IN 1981. T HE REGISTRAR OF SOCIETY GRANTED THE REGISTRATION KNOWING IT FULLY WELL THAT IT WAS A TRUST AND IT WAS NAMED AS SUCH. THE V ALIDITY OF THE SAID REGISTRATION HAS NOT BEEN QUESTIONED BY ANY ONE. MOREOVER THE ASSESSMENT OF THE ASSESSEE IS WHOLLY UNAF FECTED, WHETHER IT IS A 'TRUST' OR 'SOCIETY' ITS STATUS U/S 2(31) O F THE IT. ACT. 1961 WILL BE THAT OF 'AN ASSOCIATION OF PERSONS OR BODY OF INDIVIDUALS'. IN NO WAY THEREFORE THE INTEREST OF REVE NUE IS AFFECTED. AS REGARDS THE FUNCTIONING OF THE TRUST, IT REMA INS GOVERNED BY ITS RULES & REGULATIONS. ITS STATUS WHETHER I T IS A TRUST OR SOCIETY HARDLY INTERFERES WITH THE DISCHARGE OF ITS CHARITABLE FUNCTIONS. THUS TAKING AN OVERALL VIEW OF TH E FACTS OF THE PRESENT CASE, THE ASSESSEE REQUEST FOR GRANT OF EXE MPTION U/S 80G MAY KINDLY BE GRANTED, AS HAS BEEN DONE HITHE RTO ALL ALONG. TAKING INTO ACCOUNT ITS DEVOTION AND COMMITMENT TO THE CAUSE OF POOR AND NEEDY THE RKM TRUST FULLY DESERVES TO GET THE REQUISITE EXEMPTION CERTIFICATE, WHICH MAY KINDLY B E GRANTED.' 6. BY VIRTUE OF THE IMPUGNED ORDER, THE LD. CIT, RE JECTED THE CLAIM OF THE ASSESSEE U/S 80G OF THE IT ACT. AGGRIEVED, THE ASSESSE E IS IN APPEAL BEFORE US. ITA NO783/DEL/2010 CO NO.108/DEL/2010 10 7. THE LD. COUNSEL FOR THE ASSESSEE, CHALLENGING THE ORD ER UNDER APPEAL, HAS SUBMITTED THAT THE LD. CIT HAS ERRED IN R EJECTING THE APPLICATION FILED BY THE ASSESSEE TRUST FOR RENEWAL OF E XEMPTION U/S 80G OF THE IT ACT, IGNORING THAT ALL THE CONDITIONS PRESCRIBED IN SECTION 80G OF THE ACT STAND DULY SATISFIED; THAT RIGHT FROM T HE YEAR OF ITS INCEPTION, I.E., 1978, THE ASSESSEE TRUST HAS BEEN GRANTE D EXEMPTION U/S 80G AND THERE WAS NO CHANGE IN THE FACTS DURING TH E YEAR UNDER CONSIDERATION; THAT THE LD. CIT HAS ERRED IN OBSERVING THAT THERE HAS BEEN A CHANGE IN THE LEGAL STATUS OF THE ASSESSEE FROM TH AT OF A TRUST TO THAT OF A SOCIETY; THAT IT WAS UNDER THE AUTHORITY GRANTED BY THE TRUST DEED DATED 14.04.1976 THAT THE CONSTITUTION OF THE ASSESSEE TRUST WAS AMENDED AND A DETAILED MEMORANDUM OF ASSOCIAT ION, RULES AND REGULATIONS WERE DRAFTED IN SEPTEMBER-OCTOBER, 1 981; THAT THESE WERE SUBMITTED TO THE REGISTRAR OF FIRMS AND SOCIETY, HARYANA, CHANDIGARH; THAT THE REGISTRAR OF FIRMS AND SOCIETIES, HARYANA, CHANDIGARH, REGISTERED THE SAME ON 23.10.1981, IN TH E NAME OF RATTAN KAUR MEMORIAL EDUCATIONAL AND CHARITABLE TR UST, FARIDABAD; THAT A CERTIFICATE IN THIS REGARD WAS ISSUED BY THE REG ISTRAR ON 23.10.81; THAT A COPY OF THE CERTIFICATE WAS DULY PL ACED ON RECORD BEFORE THE LD. CIT; THAT THE BENEFIT OF SECTION 11 OF THE ACT HAS ALL ALONG BEEN GIVEN TO THE ASSESSEE TRUST, RIGHT FROM THE VERY BE GINNING, ON THE BASIS OF THE COMMUNICATION DATED 06.03.1978 OF THE CI T, ROHTAK, IN TERMS OF SECTION 12A OF THE ACT; THAT THE ISSUE AS TO W HETHER A TRUST CANNOT BE REGISTERED AS A SOCIETY LIES WITHIN THE EXCLU SIVE PURVIEW OF THE REGISTRAR OF SOCIETIES AND NOT WITH THE INCOME-TA X AUTHORITIES; THAT FOR INCOME-TAX PURPOSES, IT IS A MERE TECHNICALITY WHE THER THE TRUST IS TO BE ASSESSED AS A TRUST OR AS A REGISTERED SOCIETY AND IT S STATUS U/S 2 (31) OF THE ACT REMAINS THAT OF AN ASSOCIATION OF PERSO NS OR BODY OF INDIVIDUALS; THAT THE FUNCTIONING OF THE TRUST REMAIN S GOVERNED BY ITS RULES AND REGULATIONS AND WHETHER IT IS A TRUST OR SOCI ETY MAKES NO DIFFERENCE IN THE DISCHARGE OF ITS CHARITABLE FUNCTI ONS; THAT THE TRUST ITA NO783/DEL/2010 CO NO.108/DEL/2010 11 WAS NEVER DISBANDED AND HAS CONTINUED AS SUCH TRUST ALL THROUGH SINCE ITS INCEPTION; THAT THE MANAGEMENT OF THE TRUST WITH THE BOARD OF TRUSTEES REMAINS SO EVEN AFTER ITS REGISTRATION AS A SOC IETY; THE OBJECTS OF THE TRUST AND THE SOCIETY ARE SIMILAR; THAT THE PR OPERTY OF THE TRUST REMAINS TO BE OF THE TRUST AND IT DOES NOT BELONG TO T HE SOCIETY AFTER REGISTRATION AND, AS SUCH, THERE IS NO TRANSFER OF THE OWNERSHIP OF THE PROPERTY HELD IN TRUST; THAT THIS IS A CASE OF IRREVOC ABLE CHARITABLE TRUST AND THE ASSESSEE CONTINUES TO BE THE INDETERMINATE BENEF ICIARY AND THE LD. CIT HAS ERRED IN HOLDING THAT SINCE IT WAS TH E TRUST WHICH WAS APPROVED U/S 12A OF THE ACT AND NOT THE SOCIETY, THE LATTER IS NOT ELIGIBLE FOR GRANT OF CERTIFICATE U/S 80G (5) OF THE ACT; THAT THE LD. CIT, WHILE ILLEGALLY REJECTING THE APPLICATION OF THE ASSE SSEE, HAS FAILED TO TAKE INTO CONSIDERATION ALL THE ABOVE FACTS. 8. THE LD. DR, ON THE OTHER HAND, HAS PLACED STRONG R ELIANCE ON THE IMPUGNED ORDER. IT HAS BEEN CONTENDED, REITERATING THE CROSS OBJECTIONS RAISED, THAT THE ASSESSEE IS A SOCIETY AND NOT A TRUST; THAT THE LEGAL STATUS OF PUBLIC CHARITABLE TRUST CONTINUED TILL 22.10.1981, WHEREAFTER, A SOCIETY WAS REGISTERED ON 23.10.1981; T HAT A SOCIETY REGISTERED UNDER THE SOCIETIES REGISTRATION ACT, 1860, CANNOT CLAIM TO BE A TRUST; THAT IN THE FORM NO.10G, I.E., THE APPL ICATION FILED BY THE ASSESSEE, THE ASSESSEE ITSELF MENTIONED ITS STATUS TO BE THAT O F A SOCIETY REGISTERED UNDER THE SOCIETIES REGISTRATION AC T, 1860; THAT THE DOCUMENTS ACCOMPANYING THE APPLICATION IN FORM NO.1 0G, AS PER THE ASSESSEE ITSELF, PROVE THE STATUS OF THE ASSESSEE TO BE THAT O F A SOCIETY AND NOT THAT OF A TRUST; THAT THE ASSESSEE SOCIETY IS NO T REGISTERED U/S 12AA OF THE ACT, WHICH REGISTRATION IS A PREREQUISITE FOR APPROVAL OF EXEMPTION U/S 80G OF THE ACT; THAT IT IS WELL SETTLED THAT THERE IS NO ESTOPPEL AGAINST THE LAW, A CONTINUOUS REPETITION OF A MISTAKE CANNOT BESTOW VALIDITY ON THAT MISTAKE AND, AS SUCH, THE ASSESSEE S CONTENTION OF CONTINUED GRANT OF EXEMPTION U/S 80G D OES NOT VALIDATE ITA NO783/DEL/2010 CO NO.108/DEL/2010 12 THE SAME FOR THE YEAR UNDER CONSIDERATION ALSO; THAT U /S 11 OF THE ACT, ONLY INCOME FROM PROPERTY HELD UNDER A LEGAL OBLIGA TION IS EXEMPT; THAT THE ASSETS AND FUNDS OF ONE ENTITY CANNOT BE SUBJE CTED TO TWO DIFFERENT SETS OF MANDATORY LEGAL CONDITIONS, ONE OPER ATIVE FOR A TRUST AND THE OTHER FOR A REGISTERED SOCIETY; THAT IT WOUL D AMOUNT TO A CRIMINAL BREACH OF TRUST TO CONDUCT THE AFFAIRS OF A TRUST IN ACCORDANCE WITH THE PROVISIONS OF THE SOCIETIES REGISTRATION ACT, 1860; LIKEWISE, CONDUCTING THE AFFAIRS OF A SOCIETY IN A MANNER APPL ICABLE TO A TRUST WOULD BE VIOLATIVE OF THE PROVISIONS OF THE SOCIETIES REGISTRATION ACT, 1860; THAT IN THESE FACTS, THE LD. CIT IS PERFECTLY JU STIFIED IN REJECTING THE APPLICATION FILED BY THE ASSESSEE; AND THAT THERE I S NO MERIT WHATSOEVER IN THE APPEAL FILED BY THE ASSESSEE AND THE SA ME BE REJECTED OUTRIGHT. 9. WE HAVE HEARD THE PARTIES AND HAVE PERUSED THE MAT ERIAL ON RECORD. THE LD. CIT REJECTED THE APPLICATION FILED BY THE ASSESSEE U/S 80G OF THE ACT, OBSERVING AS FOLLOWS:- 8. I HAVE CAREFULLY CONSIDERED THE REPLIES FILED B Y THE APPLICANT TRUST AND FIND THAT THERE ARE TWO SEPARATE ENTITIES RUNNING UNDER THE NAME OF SMT. RATTAN KAUR MEMORIAL EDUCATIONAL AND CHARITABLE TRUST - ONE AS TRUST VIDE TRUST DEED DATED 14-4 -76, SECONDLY, AS SOCIETY VIDE CERTIFICATE OF REGISTRATION D ATED 23/10/1981, ISSUED BY THE REGISTRAR OF SOCIETIES, HARY ANA. NO COPY OF RESOLUTION HAS BEEN FILED IN RESPONSE TO SPEC IFIC QUERY RAISED VIDE ORDER SHEET DATED 23-12-2009 WITH REGARD TO CLOSING OF THE TRUST. AND FURTHER ALL ASSETS AND LIABILITIES WIL L BE HANDED OVER TO WHICH SOCIETY/TRUST. FURTHER, REGARDING THE FIRST QUERY AS TO THE PRODUCTION OF ORIGINAL TRUST DEED, THE COUNSEL HA S STATED THAT THE ORIGINAL TRUST DEED IS NOT AVAILABLE IN ENTIRETY, ONLY PAGES: 1 TO 5 AND PAGE : 8 ARE AVAILABLE WHILE PAGES : 6 & 7 ARE STATED TO BE MISSING. REGARDING THE QUERIES AS TO THE AMB IGUITY IN A TRUST HAVING BEEN REGISTERED AS A SOCIETY AND THE COPY OF RESOLUTION TO DISBAND THE TRUST, THE COUNSEL HAS PROCEED ED TO GIVE THE ENTIRE CHRONOLOGICAL HISTORY OF THE TRUST AND HA S FINALLY REPLIED IN PARA 12 OF HIS REPLY THAT THE QUESTION AS TO HOW A TRUST CAN BE REGISTERED AS A SOCIETY SHOULD NOT BE RAISED BY THE INCOME TAX DEPARTMENT, AS IN THE COUNSEL'S OPINION, TH E REGISTRAR OF SOCIETIES SHOULD HAVE RAISED THIS QUESTI ON BUT HE DID NOT. FURTHER, THE COUNSEL HAS EXPRESSED HIS OPINION THA T THE ITA NO783/DEL/2010 CO NO.108/DEL/2010 13 TECHNICALITY OF THE APPLICANT TRUST HAVING BEEN REGISTER ED AS A SOCIETY IS NOT OF REAL SIGNIFICANCE. 9. ON THIS ISSUE, IT IS OBSERVED THAT THE COUNSEL'S CONTE NTIONS ARE MISFOUNDED. THE ISSUE AS TO WHETHER THE APPLICANT IS A TRUST OR A SOCIETY IS NOT MERELY A TECHNICAL ISSUE, BUT IS A VERI TABLE FOUNDATION OF ANY EXEMPTION U/ S 80G. IN ORDER TO AVA IL SUCH EXEMPTION, IT IS NECESSARY THAT THE INSTITUTION CLAIMING S UCH EXEMPTION SHOULD HAVE A LEGAL STATUS, I.E. IT SHOULD BE CONSTITUTED AS A TRUST OR REGISTERED AS A SOCIETY OR A C HARITABLE COMPANY. THEN, IT SHOULD BE REGISTERED U/ S 12AA OF THE INCOME TAX ACT. ALL THESE PROCESSES OF CREATION OF AN INSTITUTIO N ARE DIFFERENT FROM EACH OTHER AND ALL ARE GOVERNED BY SEP ARATE PROVISIONS OF LAW. IT IS NOT POSSIBLE FOR AN INSTITUTIO N TO COMPLY WITH THE PROVISIONS LAID DOWN BY LAW AND JUDICIAL PRONOUNCEMENTS IN RESPECT OF A TRUST AND SIMULTANEOUSLY , TO ALSO COMPLY WITH THE PROVISIONS LAID DOWN BY SOCIETIE S REGISTRATION ACT, 1860, DUE TO THE SIMPLE REASON THAT THE REQUIREMENTS OF LAW FOR THESE TWO TYPES OF INSTITUTIONS A RE ENTIRELY DIFFERENT. ONE CANNOT IMAGINE A TRUST BEING MA NAGED BY AN ELECTED BODY ON THE PATTERN OF A SOCIETY, AND THE OB JECTS OF THE TRUST BEING AMENDED BY VOTING AND INTIMATION TO REGI STRAR OF SOCIETIES LIKE THOSE OF A SOCIETY. REGARDING THE COUNSE L'S CONTENTION THAT THE REGISTRAR OF SOCIETIES HAD NOT OBJECTED TO THE TRUST BEING REGISTERED AS SOCIETY, IT IS OBSERVED THA T IT IS ONLY THE COUNSEL WHO CONTENDS THAT THE TRUST HAS BEEN REGISTERED AS SOCIETY. OTHERWISE, THE FACTS CLEARLY BEAR OUT THAT THE NEW SOCIETY WAS REGISTERED NOT ON THE STRENGTH OF HALF AVAILABLE TRUST DEED DATED 14-04-1976, BUT ON THE BASI S OF NEWLY PREPARED MOA AND RULES & REGULATIONS. AS SUCH, THE A PPARENT CONCLUSION IS THAT THE LEGAL STATUS OF THE APPLICANT IS NO T CLEAR. AS THE COUNSEL CONTENDS THAT THE TRUST WAS REGISTERED AS S OCIETY, SO THE APPLICANT'S LEGAL STATUS AS TRUST ENDED ON 22-10- 1981 AND INSTEAD OF A TRUST, A NEW SOCIETY CAME INTO EXISTENCE O N 23-10- 1981. 10. THIS SOCIETY WAS NEVER REGISTERED U/S 12A, SO WHE RE IS THE QUESTION OF ANY CLAIM U/S 80G? IN THE PRESENT PROCEEDI NGS, THE ISSUE IS WHETHER OR NOT THE APPLICANT INSTITUTION'S CLAIM OF EXEMPTION U/ S 80G JUSTIFIED OR NOT. IF THE LEGAL STATUS IS IN CONFUSION, OR THE TRUST HAVING BEEN CONVERTED INTO SOCIE TY, AND THE SOCIETY NOT BEING REGISTERED U/S 12A, THE APPLICANT INSTITUTION'S CLAIM CANNOT SUCCEED. 11. REGARDING THE LONG CHRONOLOGICAL HISTORY OF THE TRU ST DISCUSSED BY THE COUNSEL, IT IS OBSERVED THAT THERE IS N O RELEVANCE OF WHAT THE APPLICANT INSTITUTION HAS BEEN HI THERTO DOING, OR THAT IT HAS BEEN GRANTED EXEMPTION U/ S 80G TILL NOW, BECAUSE THERE CAN BE NO ESTOPPELS IN LAW. AN ERROR IN LAW CANNOT GAIN THE STRENGTH OF A PRECEDENT AND BE ALLOWED TO CON TINUE IN PERPETUITY. WHATEVER THE APPLICANT INSTITUTION MAY HAVE BEE N ITA NO783/DEL/2010 CO NO.108/DEL/2010 14 DOING HITHERTO, IN THE PRESENT PROCEEDINGS, THE POSITION IS TO BE CONSIDERED STRICTLY IN ACCORDANCE WITH THE PROVISIONS OF LAW, AS THE LAW CONCERNING CHARITY IS ALWAYS TO BE CONSTRUED IN A STRICT MANNER AND ANY DEVIATION THEREFROM WILL OBFUSCATE THE V ERY INTENTION OF THE LEGISLATURE. IN THE PRESENT CASE, AS AL READY DISCUSSED ABOVE, THE APPLICANT INSTITUTION'S STATUS ITSELF IS NOT CLEAR. IT CANNOT BE EXPECTED TO CONFORM BOTH TO THE STIPUL ATIONS OF THE TRUST DEED AS A TRUST AND AT THE SAME TIME, TO THE STIPULATIONS OF MOA AND RULES AND REGULATIONS OF THE SO CIETY READ WITH PROVISIONS OF SOCIETIES REGISTRATION ACT, 186 0. HOW CAN ONE SINGLE INSTITUTION RUN EQUALLY FAITHFULLY UNDER TWO DIFFERENT INSTRUMENTS? MOREOVER, AT THE COST OF REPETITION, IT IS AG AIN MENTIONED THAT THE LATEST ENTITY OF THE SOCIETY IS NOT REGISTE RED U/ S 12AA, WHICH IS PREREQUISITE FOR ALLOWING EXEMPTI ON UNDER SUB-SECTION VI OF SECTION 80G OF THE INCOME TAX ACT, 1961 READ WITH CLAUSE I OF SUB-RULE 2 OF RULE 11AA OF THE INCOM E TAX RULES, 1962. AS SUCH, THE APPLICANT INSTITUTION'S CLAIM OF EXE MPTION U/ S 80G CANNOT BE ACCEPTED. 10. IT IS SEEN THAT THE MAIN BASIS, RATHER THE ONLY BASI S TAKEN BY THE LD. CIT TO REJECT THE APPLICATION OF THE ASSESSEE FOR E XTENSION OF GRANT OF EXEMPTION U/S 80G OF THE ACT HAS BEEN THE REASONING THAT THE ASSESSEE, WHICH WAS INITIALLY INCORPORATED AS A TRUST, CEA SED TO BE SO AFTER 22.10.1981, AS ON 23.10.1981, IT WAS REGISTERED AS A SOCIETY UNDER THE SOCIETIES REGISTRATION ACT, 1860 UNDER THE NAME AND STYLE OF SMT. RATTAN KAUR MEMORIAL EDUCATIONAL & CHARITABLE TRUST, FARIDABAD. IN THE OPINION OF THE CIT, ONCE THE ENT ITY GOT REGISTERED AS A SOCIETY, IT LOST ITS STATUS OF A TRUST. 11. SECTION 12AA OF THE IT ACT PROVIDES FOR THE PROC EDURE FOR REGISTRATION. SECTION 12AA (1) (RELEVANT PORTION) R EADS AS FOLLOWS:- 12AA. 12AA. 12AA. 12AA. (1) THE COMMISSIONER, ON RECEIPT OF AN APPLIC ATION FOR REGISTRATION OF A TRUST OR INSTITUTION MADE UNDER CLAUSE ( A ) OR CLAUSE ( AA ) OF SUB-SECTION (1) OF SECTION 12A , SHALL ( A ) CALL FOR SUCH DOCUMENTS OR INFORMATION FROM THE TRU ST OR INSTITUTION AS HE THINKS NECESSARY IN ORDER TO SATISFY HIMSELF ABOUT THE GENUINENESS OF ACTIVITIES OF THE TRUST OR INSTI TUTION AND MAY ALSO MAKE SUCH INQUIRIES AS HE MAY DEEM NECESSA RY IN THIS BEHALF; AND ITA NO783/DEL/2010 CO NO.108/DEL/2010 15 ( B ) AFTER SATISFYING HIMSELF ABOUT THE OBJECTS OF THE TRUST O R INSTITUTION AND THE GENUINENESS OF ITS ACTIVITIES, HE ( I ) SHALL PASS AN ORDER IN WRITING REGISTERING THE TRUST O R INSTITUTION; ( II ) SHALL, IF HE IS NOT SO SATISFIED, PASS AN ORDER IN WRITING REFUSING TO REGISTER THE TRUST OR INSTITUTION, AND A COPY OF SUCH ORDER SHALL BE SENT TO THE APPLICAN T : 12. REGISTRATION U/S 12AA OF THE ACT IS A PREREQUISITE FOR GRANT OF DEDUCTION U/S 80G. SECTION 80G OF THE ACT TALKS ABOUT DEDUCTION IN RESPECT OF DONATIONS TO CERTAIN FUNDS, CHARITABLE INSTI TUTIONS, ETC. SECTION 80G (5) PROVIDES THAT THE DEDUCTION U/S 80G O F THE ACT WILL APPLY TO DONATIONS TO ANY INSTITUTION OR FUND REFERRE D IN SECTION 80G (2) (A) (IV), ONLY IF IT IS ESTABLISHED IN INDIA FOR A CHA RITABLE PURPOSE AND IF IT FULFILLS THE CONDITIONS LAID DOWN IN SECTION 80G (5). SECTION 80G (5), THEREFORE, IS THE OPERATIVE PORTION SO FAR AS THE GRAN T/CONTINUANCE OF DEDUCTION U/S 80G IS CONCERNED. THERE IS NO DISPUTE T HAT THE ASSESSEE IS AN IRREVOCABLE CHARITABLE TRUST. THIS IS AVAILABLE FROM CLAUSE (D) OF THE TRUST DEED DATED 14.04.1976 (COPY AT APB I, PAGE S 7-13, AT APB I, PAGE 8). THIS CLAUSE SPECIFICALLY STATES THE ASSESSEE TRUST TO BE AN IRREVOCABLE PUBLIC CHARITABLE TRUST. IT IS NOWHERE TH E CASE SET UP BY THE LD. CIT THAT ANY OF THE CONDITIONS LAID DOWN IN SECT ION 80G (5) OF THE ACT HAVE BEEN VIOLATED BY THE ASSESSEE TRUST. HIS ONLY OBJECTION IS THAT THE CHARACTER OF THE TRUST STANDS CHANGED TO THAT OF THE SOCIETY, TAKING ON A NEW ENTITY. 13. NOW, AS RIGHTLY CONTENDED, AS PER SECTION 2 (13) OF THE PUBLIC TRUSTS ACT, A SOCIETY REGISTERED UNDER THE PROVISIONS OF THE SOCIETIES REGISTRATION ACT, 1860, IS ALSO INCLUDED IN THE DEFINI TION OF PUBLIC TRUST. IT GOES WITHOUT SAYING THAT THE PROVISIONS OF THE TRUST ACT DO NOT APPLY, SINCE THE TRUST BEFORE US IS A PUBLIC TRUST. HOWEVER, A NY NEW SCHEME ITA NO783/DEL/2010 CO NO.108/DEL/2010 16 RELATING TO THE TRUST CAN BE IMPLEMENTED ONLY AFTER GRANT OF APPROVAL BY THE COURT OF COMPETENT JURISDICTION U/S 92 OF THE CPC. THIS IS SO FAR AS REGARDS THE LEGAL POSITION QUA THE ENTITY PER SE . 14. IT HAS ALSO NOWHERE BEEN DISPUTED BY THE LD. CIT THAT THE OBJECTS OF THE TRUST AND THOSE OF THE SOCIETY ARE SIMILAR. NO W, BE IT A TRUST OR A SOCIETY, THE LEGAL STATUS OF EITHER IS THAT OF A BOD Y OF INDIVIDUALS AND THE BENEFIT IN EITHER CASE INURES TO THE SAME INDETERM INATE PUBLIC. NEITHER THE TRUST NOR THE SOCIETY, BY ITSELF, IS A PE RSON U/S 2 (31) OF THE ACT. 15. MOREOVER, THERE IS NOTHING ON RECORD TO SHOW THAT THE MANAGEMENT OF THE TRUST HAS BEEN TAKEN OVER BY THE SO CIETY, OR THAT THE PROPERTY OF THE TRUST, POST REGISTRATION AS SOCIETY , BELONGS TO THE SOCIETY. UNDISPUTEDLY, THE BOARD OF TRUSTEES ARE THE SAME. THE PROPERTY, AS EARLIER, CONTINUES TO BE HELD UNDER TRUST FOR PRO BONO PUBLICO OR FOR THE BENEFIT OF THE PUBLIC. AS SUCH, THERE IS NO TRANSFER OF OWNERSHIP OF PROPERTY AND THE ASSESSEE CONTINUES TO BE T HE INDETERMINATE BENEFICIARY AND NOT THE TRUST. AND DU E TO THIS REASON, THE LD. CIT HAS FALLEN INTO ERROR IN HOLDING THAT TH E APPROVAL U/S 12A OF THE ACT WAS GRANTED TO THE TRUST AND NOT TO THE SOCIE TY, THE SOCIETY IS NOT ELIGIBLE FOR GRANT OF CERTIFICATE U/S 80G (5) OF THE ACT. UNDENIABLY, THE TRUST IS AN IRREVOCABLE TRUST. CHANGE OVER TO THE STATUS OF SOCIETY MAKES NO DIFFERENCE IN THIS POSITION AND IMPLEMENTATIO N OF THE OBJECTS OF THE TRUST IS STILL A LEGAL OBLIGATION TO BE DISCHARG ED. 16. STILL FURTHER, EVER SINCE THE DATE OF ITS COMING INTO EXISTENCE, THE SOCIETY HAS REMAINED A MERE PAPER ENTITY. AS PER TH E SEQUENCE OF EVENTS (APB II, PAGE 131), NO RETURN OF THE SOCIETY HAS EVER BEEN FILED, NO PAN WAS APPLIED FOR, NOR WAS ANY EVER ALLOTTED TO THE ASSESSEE. ITA NO783/DEL/2010 CO NO.108/DEL/2010 17 THE EXEMPTION U/S 80G OF THE ACT WAS GRANTED TO THE T RUST, FOR THE FIRST TIME, FOR THE PERIOD FROM 1.4.1977 TO 31.3.1978 ON 19.10.78. A COPY OF THE CERTIFICATE DATED 19.10.78, IN THIS REGARD, IS A T APB I, PAGE 63. THEN ONWARDS, THE EXEMPTION U/S 80G WAS REGULARLY GRAN TED TO THE TRUST. THE LATEST ORDER GRANTING SUCH EXEMPTION WAS TH AT PASSED ON 29.01.2004, FOR THE PERIOD FROM 1.4.2004 TO 31.03.2 009 (COPY AT APB I, PAGE 56). THIS POSITION HAS NOT BEEN DENIED BY THE LD . CIT. RATHER, HIS CASE IS THAT GRANT OF FURTHER EXEMPTION WOULD AMOUNT TO PERPETUATING MISTAKE. 17. IN VIEW OF THE PRECEDING DISCUSSION, WE DO NOT FIN D ANY MISTAKE LIKELY TO OCCUR ON GRANT OF FURTHER EXEMPTION U/S 80 G TO THE APPLICANT TRUST. AS SEEN, THERE HAS COME ABOUT NO CHANGE IN FACT S OR CIRCUMSTANCES. MERELY REGISTRATION AS A SOCIETY DOES NO T DISENTITLE THE APPLICANT FROM THE EXEMPTION CLAIMED, HAS DELIBERATE D UPON HEREINBEFORE. 18. THEREFORE, THE GRIEVANCE SOUGHT TO BE RAISED BY T HE ASSESSEE IS FOUND TO BE JUSTIFIED AND IS ACCEPTED AS SUCH. THE ASSESSE E, IN FACT, IN THIS CASE, ARE THE INDETERMINATE BENEFICIARIES. ACCORD INGLY, THE ORDER PASSED BY THE LD. CIT IS CANCELLED. THE APPLICATION FI LED BY THE ASSESSEE TRUST IS ALLOWED. THE LD. CIT IS DIRECTED TO GRANT EXE MPTION U/S 80G OF THE ACT TO THE ASSESSEE IN ACCORDANCE WITH LAW. 19. IN THE CROSS OBJECTIONS FILED BY THE REVENUE, SEVERAL G ROUNDS ARE RAISED. HOWEVER, THEY ARE ALL IN SUPPORT OF THE ORDE R OF THE CIT PASSED U/S 80G. THE SAME HAS BEEN DISCUSSED AT LENGTH WHILE CO NSIDERING THE ASSESSEES APPEAL. THEREFORE, NO SEPARATE ADJUDICATION OF THE C.O. IS REQUIRED. THE SAME STOOD DISPOSED OF IN TERMS OF OUR DE CISION IN THE ASSESSEES APPEAL I.E., THE CO IS DISMISSED. ITA NO783/DEL/2010 CO NO.108/DEL/2010 18 20. IN THE RESULT, THE ASSESSEES APPEAL IS ALLOWED WHILE THE DEPARTMENTS CO IS DISMISSED.. THE ORDER PRONOUNCED IN THE OPEN COURT ON 28.06.20 13. SD/- SD/- [G.D. AGRAWAL] [A.D. JAIN] VICE PRESIDENT JUDICIAL MEMBER DATED, 28.06.2013. DK COPY FORWARDED TO: - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT TRUE COPY BY ORDER, DEPUTY REGISTRAR, ITAT, DELHI BENCHES