Super Gas Foundation, Nalgonda V. DIT (Exemptions), Hyderabad

ITA 1116/HYD/2013

• Counselvise Citation: 111622514 RSA 2013
• Duration Of Justice: 5 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-01-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: misc
• Appeal Filed On: 01-08-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: D SUDHAKAR RAO
• Assessee Lawyers: Y R RAO
• Keywords: Charitable institution; Wholly owned subsidiary
• Section: 12AA

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES B : HYDERABAD BEFORE SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER AND SHRI SAKTIJIT DEY, JUDICIAL MEMBER ITA.NO.1116/HYD/2013 SUPER GAS FOUNDATION HYDERABAD PANAAKTS7581C VS. DIRECTOR OF INCOME TAX (EXEMPTIONS), HYDERABAD. (APPELLANT) (RESPONDENT) FOR APPELLANT : SHRI Y.R. RAO FOR RESPONDENT : SHRI D.SUDHAKAR RAO DATE OF HEARING : 26.11.2013 DATE OF PRONOUNCEMENT : 17.01.2014 ORDER PER SAKTIJIT DEY, J.M. THIS APPEAL OF THE ASSESSEE IS DIRECTED AGAINST T HE ORDER DATED 31.05.2013 PASSED BY THE DIT(E), HYDERA BAD REFUSING TO GRANT REGISTRATION UNDER SECTION 12AA O F THE ACT. 2. BRIEFLY THE FACTS ARE THAT THE ASSESSEE STATED TO BE A CHARITABLE TRUST WAS FORMED ON 24.06.2011 BY M/S. SHV ENERGY INDIA PVT. LTD. AS ITS AUTHOR WITH THE OBJEC T OF GRANTING EDUCATIONAL AID, COMMUNITY SUPPORT PROGRAMMES AND S UPPORT TO POOR. THE AUTHOR OF THE TRUST IS 100% SUBSIDIARY OF A MULTINATIONAL COMPANY FROM NETHERLANDS VIZ., M/S. S HV CALOR ASIA B.V. THE ASSESSEE APPLIED FOR REGISTRATION UND ER SECTION 12AA OF THE ACT BEFORE THE DIT(E) ON 09.09.2011. TH E DIT(E) TAKING UMBRAGE TO THE FACT THAT CLAUSE 10 OF THE TR UST DEED MAKES THE TRUST REVOCABLE AS ITS CONTINUITY IS SUBJ ECT TO THE WILL OF ITS AUTHOR, WHICH IN TURN, IS CONTROLLED BY THE DUTCH MULTINATIONAL COMPANY, HELD THAT IT CANNOT BE TREAT ED AS A 2 ITA.NO.1116/HYD/2013 SUPER GAS FOUNDATION, HYDERABAD WHOLLY PUBLIC CHARITABLE TRUST. HENCE, HE REFUSED T O GRANT REGISTRATION UNDER SECTION 12AA OF THE ACT. 3. BEING AGGRIEVED OF DENIAL OF REGISTRATION UNDER SECTION 12AA, THE ASSESSEE PREFERRED AN APPEAL BEFO RE THE ITAT. THE ITAT VIDE ORDER DATED 27.09.2012 IN ITA.NO.906/HYD/2012 AGAIN REMITTED THE MATTER BACK TO THE DIT(E) WITH THE FOLLOWING DIRECTION : 7. WE HAVE HEARD BOTH THE PARTIES AND PEURSED THE MATERIAL ON RECORD. IN THIS CASE AN ABSOLUTE POWER HAS BEEN GIVEN TO THE AUTHOR/FOUNDER TO REVOKE THE TRUST DEED ACCORDING TO HIS WISHES. IN OUR OPINION, IT WILL AFFECT THE VERY EXISTENCE OF THE TRUST ITSELF. AS SUCH WE ARE NOT INCLINED TO UPHOLD THE ARGUMENTS OF THE ASSESSEES COUNSEL. HOWEVER, AS CONCEDED BY THE AR ON MAKING APPROPRIATE AMENDMENT TO THE TRUST DEED TO THE SATISFACTION OF THE DIT(E), THE REGISTRATION WILL BE GRANTED. ACCORDINGLY, THE ENTIRE ISSUE IS REMITTED BACK TO THE FILE OF THE DIT(E) FOR FRESH CONSIDERATION. 4. PURSUANT TO THE AFORESAID DIRECTION OF THE ITAT , THE DIT(E) TOOK-UP THE PROCEEDING AGAIN BY ISSUING NOTI CE DATED 22.05.2013 TO THE APPELLANT TO PRODUCE THE ORIGINAL TRUST DEED AND AMENDED/SUPPLEMENTARY TRUST DEED, IF ANY, MADE SUBSEQUENTLY. IN RESPONSE TO THE AFORESAID NOTICE, THE APPELLANT SUBMITTED A LETTER DATED 31.05.2013 ENCLO SING A DRAFT AMENDED TRUST DEED SIGNED BY ITS AR. IN THE S AID LETTER THE ASSESSEE REQUESTED THE DIT(E) TO GO THROUGH THE DRAFT TRUST DEED AND ACCORD HIS APPROVAL IF IT IS TO HIS SATISF ACTION. IT WAS 3 ITA.NO.1116/HYD/2013 SUPER GAS FOUNDATION, HYDERABAD FURTHER CONTENDED BY THE APPELLANT THAT THE SETTLER MAY BE PERMITTED TO AMEND THE TRUST DEED WITHOUT THE INTER VENTION OF THE CIVIL COURT IN VIEW OF THE RULING OF THE ITAT, CHENNAI BENCH. THE DIT(E), HOWEVER, PASSED THE IMPUGNED ORD ER AGAIN REFUSING TO GRANT REGISTRATION UNDER SECTION 12AA O F THE ACT OBSERVING AS UNDER : 5. I HAVE DULY CONSIDERED THE SUBMISSIONS OF THE LEARNED A.R. MADE TODAY AND PERUSED THE SAID DRAFT TRUST DEED. THE SAID DRAFT DOCUMENT WITH HEADING AMENDED AND RESTATED TRUST DEED WITH THE FIRST SENTENCE MENTIONED AS THIS AMENDED AND RESTATED TRUST DEED MADE ON THIS THE ___ DAY OF FEBRUARY, 2013 AT HYDERABAD, WHICH IS NOT SIGNED BY ANY TRUSTEE, IS A VAGUE DOCUMENT AND IN MY VIEW, NO COGNIZANCE CAN BE TAKEN THEREOF AT THIS STAGE DURING THE PRESENT PROCEEDINGS. 5.1. AS PER THE OBSERVATIONS MADE BY THE HONBLE ITAT IN PARA 7 OF THEIR ORDER REPRODUCED ABOVE, THE ASSESSEE TRUST WAS REQUIRED TO MAKE NECESSARY AMENDMENT TO THEIR TRUST DEED FOR THE PURPOSE OF REGISTRATION TO THEIR TRUST. IN FACT, AS PER SUCH COMMITMENT GIVEN BY THE ASSESSEE TRUST BEFORE THE HONBLE ITAT, IT WAS REQUIRED TO MAKE NECESSARY AMENDMENT DEED/SUPPLEMENTARY DEED AS PER LAW, SOON AFTER THE SAID ORDER OF HONBLE ITAT. AS MAY NOTICED, AFTER THE MATTER WAS SET ASIDE BY THE HONBLE ITAT, THE ASSESSEE TRUST HAS NOT TAKEN ANY STEP FOR THE PURCHASE OF AMENDMENT TO 4 ITA.NO.1116/HYD/2013 SUPER GAS FOUNDATION, HYDERABAD THEIR TRUST DEED IN THE LIGHT OF SUCH OBSERVATION MADE BY THE HONBLE ITAT. IT HAS NOT INITIATED ANY STEP FOR THAT PURPOSE. SINCE THE ASSESSEE TRUST HAS NOT MADE ANY AMENDMENT DEED SO FAR I.E., TILL DATE I.E., TILL A PERIOD OF 6 MONTHS FROM THE END OF THE MONTH IN WHICH THE SAID ORDER OF THE HONBLE ITAT WAS RECEIVED IN THIS OFFICE, IT CANNOT BE ALLOWED REGISTRATION U/S.12AA OF THE ACT. HENCE, REGISTRATION SOUGHT U/S.12AA OF THE ACT IS REFUSED TO THE ABOVE TRUST. 5. THE LEARNED AR STRONGLY ASSAILING THE ORDER OF THE DIT(E) SUBMITTED THAT ON THE EARLIER OCCASION WHEN THE APPELLANT HAD CHALLENGED THE REFUSAL OF REGISTRATIO N BY THE DIT(E), THE TRIBUNAL IN CLEAR TERMS HAD DIRECTED TH AT IF APPROPRIATE AMENDMENT TO THE TRUST DEED IS MADE TO THE SATISFACTION OF THE DIT(E), REGISTRATION WILL BE GR ANTED. KEEPING IN VIEW THE DIRECTION OF THE TRIBUNAL, THE APPELLAN T, THEREFORE, SUBMITTED THE DRAFT AMENDED TRUST DEED BEFORE THE D IT(E) TO KNOW IF IT IS TO HIS SATISFACTION. IT WAS SUBMITTE D THAT ONCE THE DIT(E) WOULD HAVE APPROVED THE DRAFT TRUST DEED, TH E APPELLANT WOULD HAVE MADE A FINAL DEED INCORPORATING THE AMEN DMENT AND PRODUCED THE ORIGINAL AMENDED DEED WITH SIGNATU RES OF ALL CONCERNED BEFORE THE DIT(E). IN THIS CONTEXT, THE L EARNED A.R. DREW OUR ATTENTION TO THE LETTER DATED 31.05.2013 A DDRESSED TO THE DIT(E) AND THE DRAFT TRUST DEED AT PAGES 20 AND 22 OF THE PAPER BOOK. IT WAS THEREFORE, SUBMITTED THAT THE DI T(E) WAS TOTALLY WRONG IN COMMENTING THAT THE DRAFT TRUST DE ED IS A VAGUE DOCUMENT AND SINCE NO AMENDMENT HAS BEEN CARR IED OUT BY THE ASSESSEE IN TERMS OF THE DIRECTION OF TH E TRIBUNAL, REGISTRATION CANNOT BE GRANTED TO THE ASSESSEE. 5 ITA.NO.1116/HYD/2013 SUPER GAS FOUNDATION, HYDERABAD 6. THE LEARNED D.R. ON THE OTHER HAND, SUBMITTED THAT MATTER MAY BE REMITTED BACK TO THE DIT(E) FOR FRESH CONSIDERATION. 7. WE HAVE HEARD THE PARTIES AND PERUSED THE ORDER OF THE DIT(E) AND OTHER MATERIALS ON RECORD. AS WOU LD BE EVIDENT FROM THE ORDER DATED 29.03.2012 OF THE DIT( E), THE REGISTRATION WAS REFUSED TO THE APPELLANT, AND RIGH TLY SO, BECAUSE CLAUSE 10 OF THE TRUST DEED ALLOWED THE AUT HOR TO TAKE DECISION WITH REGARD TO ITS CONTINUITY WHICH MADE T HE TRUST REVOCABLE. HOWEVER, THE ITAT VIDE ORDER DATED 27.09 .2012 (SUPRA), AS WOULD BE CLEAR FROM THE EXTRACTED PORTI ON HEREINBEFORE, HAD REMITTED THE MATTER BACK TO THE D IT(E) TO GRANT REGISTRATION IF THE ASSESSEE CARRIES OUT AMEN DMENT TO THE TRUST DEED TO THE SATISFACTION OF THE DIT(E). A PER USAL OF THE DRAFT TRUST DEED DOES REVEAL THAT THERE IS AMENDMEN T TO THE TRUST DEED. IT IS THE CONTENTION OF THE LEARNED A.R . THAT THE UNSIGNED DRAFT TRUST DEED WAS SUBMITTED BEFORE THE DIT(E) ONLY FOR THE PURPOSE OF KNOWING WHETHER THE AMENDMENT CA RRIED OUT WAS TO HIS SATISFACTION OR NOT. THIS FACT IS AL SO CLEAR FROM THE LETTER DATED 31.05.2013 BEFORE THE DIT(E). WE A LSO ACCEPT SUCH CONTENTION OF THE ASSESSEE. IN OUR VIEW THE AP PROACH OF THE ASSESSEE IN SUBMITTING THE DRAFT TRUST DEED BEF ORE THE DIT(E) FOR HIS APPROVAL IN THE GIVEN CIRCUMSTANCES WAS CORRECT, SINCE THERE IS CERTAINLY A GENUINE APPREHENSION IN THE MIND OF THE ASSESSEE AS TO WHETHER THE AMENDMENT CARRIED OU T WOULD BE TO THE SATISFACTION OF THE DIT(E). HAD THE ASSES SEE SUBMITTED THE AMENDED TRUST DEED AND THE DIT(E) WOU LD HAVE AGAIN DISAPPROVED IT OR POINTED OUT SOME MORE DEFIC IENCY IT WOULD AGAIN HAVE CREATED A DIFFICULT SITUATION FOR THE ASSESSEE. IN THESE CIRCUMSTANCES, IT WOULD HAVE BEEN PROPER O N THE PART OF THE DIT(E) TO GO THROUGH THE DRAFT TRUST DEED AN D POINT OUT 6 ITA.NO.1116/HYD/2013 SUPER GAS FOUNDATION, HYDERABAD TO THE ASSESSEE WHETHER THE AMENDMENT MADE WAS TO H IS SATISFACTION OR NOT. WITHOUT DOING SO IT WAS INAPPR OPRIATE ON THE PART OF THE DIT(E) TO HAVE REFUSED TO GRANT REG ISTRATION ALLEGING NON-FURNISHING OF AMENDED TRUST DEED. 8. AFTER CONSIDERING THE TOTALITY OF FACTS AND CIRCUMSTANCES OF THE CASE, WE ARE OF THE VIEW THAT THE IMPUGNED ORDER PASSED BY THE DIT(E) IS REQUIRED TO BE SET ASIDE. WE, ACCORDINGLY, DO SO. WE DIRECT THE DIT(E) TO GO THROUGH THE DRAFT TRUST DEED AND INFORM THE ASSESSE E AS TO WHETHER THE PROPOSED AMENDMENT CARRIED OUT BY THE A SSESSEE WITH REGARD TO IRREVOCABILITY OF THE TRUST IS TO HI S SATISFACTION OR NOT. ONCE THE DIT(E) ACCORDS HIS APPROVAL, THE ASSE SSEE SHALL PREPARE A TRUST DEED INCORPORATING THE AMENDED CLAU SE BEING SIGNED BY ALL CONCERNED AND COMPLETE IN ALL RESPECT S AND SUBMIT IT BEFORE THE DIT(E). UPON SUBMISSION OF SUC H AMENDED TRUST DEED THE DIT(E) SHALL GRANT REGISTRATION TO T HE ASSESSEE UNDER SECTION 12AA OF THE ACT. WITH THE AFORESAID D IRECTIONS, WE REMIT THE MATTER BACK TO THE FILE OF THE DIT(E). ACCORDINGLY, THIS APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTI CAL PURPOSES. 8. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWE D FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 17.01.2014. SD/- SD/- (B. RAMAKOTAIAH) (SAKTIJIT DEY) ACCOUNTANT MEMBER JUDICIAL MEMBER HYDERABAD, DATE 17 TH JANUARY, 2014 VBP/- 7 ITA.NO.1116/HYD/2013 SUPER GAS FOUNDATION, HYDERABAD COPY TO 1. SUPER GAS FOUNDATION, SUPER GAS HOUSE, IV FLOOR, SD E SERENE CHAMBERS, 8-2- 334, ROAD NO.7, BANJARA HILLS, HYDERABAD 500 034. 2. DIT(E), HYDERABAD. 3. ADIT(E)-II, HYDERABAD. 4. D.R. B BENCH, ITAT, HYDERABAD.