COMMISSIONER OF INCOME TAX V. SHANTI DEVI EDUCATIONAL TRUST

ITA/281/2012

AI Insights

The case revolves around the Commissioner of Income Tax, Rohtak's appeal against the decision of the Income Tax Appellate Tribunal, New Delhi, which ordered the registration of Shanti Devi Educational Trust as a Charitable Trust. The appellant argued that the Trust was not charitable as it was managed by family members for their personal benefit and had received questionable donations. The respondent countered that the Trust's activities, including running educational institutions, were charitable, and the concerns about the trustees' familial ties and the nature of donations were irrelevant to the Trust's charitable status. The High Court upheld the Tribunal's decision, focusing on the Trust's charitable activities rather than the management or funding sources.

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 736566 (HC-CHANDIGARH)
• Appeal Type: Others
• Pronouncement Date: 29-09-2014
• Assessment Year: misc
• Result in Favour of: Respondent
• Court: HIGH COURT
• Department Lawyers: VED JAIN
• Assessee Lawyers: INDERPREET SINGH
• Keywords: Charitable Trust; Educational trust; Income tax appellate tribunal; Registration; Wealth Accumulation

Judgement Text

"ITA No.281 of 2012 (O&M) 1 IN THE HIGH COURT OF PUNJAB & HARYANA AT CHANDIGARH ITA No.281 of 2012 (O&M) Date of decision: 29.09.2014 The Commissioner of Income Tax, Rohtak ... Appellant Vs. Shanti Devi Educational Trust, Rewari ... Respondent CORAM: HON'BLE MR. JUSTICE RAJIVE BHALLA HON'BLE MR. JUSTICE AMIT RAWAL Present: Mr. Inderpreet Singh, Advocate, for the appellant. Mr. Ved Jain, Advocate, for the respondent. RAJIVE BHALLA, J. (ORAL) The revenue challenges order dated 29.02.2012 passed by the Income Tax Appellate Tribunal, New Delhi (hereinafter referred to as the Tribunal), directing the Commissioner of Income Tax, Rohtak (hereinafter referred to as the “CIT”) to register the respondent as a Charitable Trust. Counsel for the appellant submits that the respondent is not a Charitable Trust as the trustees are members of the same family. The Trust has been set up for the personal benefit of these family members. The CIT, Rohtak, therefore, rightly rejected the application for registration as a Charitable Trust. Counsel for the appellant further submits that he presses only question of law 4 (v), as a perusal of the record, reveals that the respondent has SAVITA DEVI KADIAN 2014.10.27 11:39 I attest to the accuracy and authenticity of this document High Court Chandigarh ITA No.281 of 2012 (O&M) 2 generated huge wealth by receiving donations from agriculturists and other organizations, which are neither charitable nor in consonance with the objects of the Trust. The cash donations are not only doubtful but appear to be illegal and therefore, are by themselves sufficient to deny registration. The Tribunal has, however, in an arbitrary and illegal manner reversed the order passed by the CIT and directed the Commissioner of Income Tax, Rohtak, to register the respondent as an Educational Trust. Counsel for the respondent/assessee, however, submits that the Tribunal has after a considered appraisal of the facts and the order passed by the Commissioner of the Income Tax, rightly directed registration of the respondent as a Charitable Trust. The fact that trustees are members of the same family or that certain properties were transferred to their individual names, as leases are irrelevant as the question that required an answer was whether activities carried out by the trust are charitable. The CIT denied registration as family members are trustees, assets were transferred to trustees and on account of receipt of donations etc. which as held by the Tribunal are entirely irrelevant. The Tribunal has, therefore, rightly set aside the order passed by the CIT. We have heard counsel for the parties and perused the impugned order. The substantial question of law pressed by the revenue reads as follows:- SAVITA DEVI KADIAN 2014.10.27 11:39 I attest to the accuracy and authenticity of this document High Court Chandigarh ITA No.281 of 2012 (O&M) 3 “4(v) Whether Hon'ble ITAT is justified in law in directing to grant registration when the assessee trust is generating wealth by accumulating huge surpluses over the years in guise of a charitable trust, this accumulation of wealth can not at all be said to be charitable in nature which serve any charitable purpose to the society at large.” Apart from the fact that the question so raised is a question of fact, the mere fact that the assessee generated wealth by accumulating surpluses from donations, which are said to be doubtful etc. cannot be a ground to deny registration as a Charitable Trust. The charitable nature of an institution depends upon its activities. It is not denied that the respondent runs three different educational institutions. Thus, the mere fact that the Trust may have received donations, which as per the revenue are doubtful, though without referring to any material much less prima facie material cannot be a ground to reject registration, as a Charitable Trust. Consequently, we find no merit in the instant appeal and answer the question of law against the revenue with liberty, however, to assess the respondent as directed by the Tribunal. (RAJIVE BHALLA) JUDGE September 29, 2014 (AMIT RAWAL) savita JUDGE SAVITA DEVI KADIAN 2014.10.27 11:39 I attest to the accuracy and authenticity of this document High Court Chandigarh "