TARA EDUCATIONAL AND CHARITABLE TRUST, MUMBAI V. DIT (E), MUMBAI

ITA 1247/MUM/2013

• Counselvise Citation: 124719914 RSA 2013
• Duration Of Justice: 1 year(s) 5 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-07-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: E
• Next Hearing Date: 14-07-2014
• Assessment Year: 2012-2013
• Appeal Filed On: 13-02-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAJESH RANJAN PRASAD
• Assessee Lawyers: RESHMARANI J NATHANI
• Keywords: Charitable institution
• Section: 12A; 12AA; 12; 11

Judgement Text

E IN THE INCOME TAX APPELLATE TRIBUNAL E BENCH, MUMBAI BEFORE S/SHRI H.L. KARWA, HONBLE PRESIDENT AND P.M . JAGTAP, AM .. , .. , ./ I.T.A. NO.1247 /MUM/2013 ( / ASSESSMENT YEAR : 2012-2013 TARA EDUCATIONAL AND CHARITABLE TRUST, B-9, MAYOOR COLLEGE LANE, MTNL MARG, DADAR (W), MUMBAI 400 028. / VS. DIRECTOR OF INCOME TAX (EXEMPTIONS), PIRAMAL CHAMBERS, MUMBAI 400 028. ./ PAN : AABTT5973G ( ! / APPELLANT ) .. ( '#! / RESPONDENT ) A PPELLANT BY MS. RESHMARANI J. NATHANI R E SPONDENT BY : SHRI RAJESH RANJAN PRASAD ' ( / DATE OF HEARING : 14-07-2014 ' ( / DATE OF PRONOUNCEMENT : [ / O R D E R PER P.M. JAGTAP, A.M . : .. , THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAIN ST THE ORDER OF LD. DIRECTOR OF INCOME TAX (EXEMPTIONS), MUMBAI DATED 2 7-12-2012 PASSED U/S 12AA OF THE INCOME TAX ACT, 1961 WHEREBY HE REJECTE D THE APPLICATION FILED BY THE ASSESSEE FOR REGISTRATION U/S 12A OF THE ACT. 2. THE ASSESSEE IN THE PRESENT CASE IS A PUBLIC CHA RITABLE TRUST WHICH HAS BEEN DULY CONSTITUTED UNDER THE DEED OF TRUST DTD. 15-05-2008 AND REGISTERED WITH THE CHARITY COMMISSIONER MUMBAI ON 8-10-2008 U/S 18 OF THE BOMBAY PUBLIC TRUSTS ACT, 1950. IT FILED AN AP PLICATION WITH THE DIRECTOR OF INCOME TAX (EXEMPTIONS) FOR REGISTRATION U/S 12A OF THE ACT IN THE ITA 1247/M/13 2 PRESCRIBED FORM NO. 10A ON 27-06-2012. FROM THE PER USAL OF THE TRUST DEED OF THE ASSESSEE, IT WAS NOTICED BY THE DIT (EXEMPTI ONS) THAT THE SAME DID NOT CONTAIN DISSOLUTION CLAUSE TO THE EFFECT THAT TRU ST IS IRREVOCABLE AND THAT IF FOR SOME REASON ITS OBJECTS CANNOT BE CARRIED OUT, THEN AS PER THE PROVISIONS OF THE BOMBAY PUBLIC TRUSTS ACT, 1950, ITS NET ASSE TS WILL BE GIVEN TO ANOTHER TRUST HAVING SIMILAR OBJECTS AND UNDER NO CIRCUMSTA NCES, THESE WILL BE DISTRIBUTED AMONG THE TRUSTEES. WHEN THIS ASPECT WA S CONFRONTED BY THE DIT (EXEMPTIONS) TO THE ASSESSEE, THE LATER OFFERED ITS EXPLANATION VIDE LETTER DATED 27-12-2012 SUBMITTING THEREIN THAT IT IS REGISTERED U/S 18 OF THE BOMBAY PUBLIC TRUSTS ACT, 1950 UNDER WHICH DISSOLUTION CLA USE IS NOT REQUIRED TO BE MENTIONED IN THE TRUST DEED. IT WAS ALSO SUBMITTED THAT THE ASSESSEE TRUST IS FORMED FOR CHARITABLE PURPOSE AND ON DISSOLUTION OF THE TRUST, THE NET ASSETS COULD NOT COME BACK TO THE TRUST. 3. THE LD. DIT (EXEMPTIONS) DID NOT FIND MERIT IN T HE EXPLANATION OF THE ASSESSEE AND REJECTED ITS APPLICATION FOR REGISTRAT ION U/S 12A OF THE ACT FOR THE FOLLOWING REASONS GIVEN IN PARA 4 OF HIS IMPUGNED O RDER:- I HAVE CONSIDERED THE SUBMISSIONS OF THE APPLICANT BUT THE SAME ARE NOT ACCEPTABLE. SECTION 18 OF THE BOMBAY PUBLIC TR USTS ACT, 1950 ONLY PRESCRIBES THE MANNER OF MAKING AN APPLICATION FOR REGISTRATION AND THE PARTICULARS TO BE FURNISHED IN SUCH APPLICATION. IT IS NOWHERE MENTIONED IN SECTION 18 THAT DISSOLUTION CLAUSE IS NOT REQUIRED IN A TRUST DEED CREATING A PUBLIC TRUST. IN ORDER TO DET ERMINE WHETHER A PARTICULAR TRUST IS A PUBLIC TRUST WITHIN THE MEANI NG OF SECTION 2(13) OF THE BOMBAY PUBLIC TRUSTS ACT, 1950 WE HAVE TO SEE W HETHER THE BENEFICIAL INTEREST IS VESTED IN AN UNCERTAIN AND F LUCTUATING BODY OF INDIVIDUALS AND WHETHER THE TRUST IS OF A PERMANENT CHARACTER[ WAZIR SHAH V. SAN! SHAH AIR 1961 J&K 42]. TO SUM UP, THE APPLICANT HAS NOT GIVEN ANY VALID REASON FOR NOT INCORPORATING TH E DISSOLUTION CLAUSE IN ITS TRUST DEED. AS PER THE BOMBAY PUBLIC TRUSTS ACT, 1950 AND THE SETTLED POSITION OF LAW, A TRUST IS A PERPETUAL TRU ST. THE ESSENCE OF A TRUST FOR PUBLIC CHARITABLE OR RELIGIOUS PURPOSE LI ES IN ITS CHARACTERISTIC OF PERMANENCY. IN CASE THE OBJECTS! ACTIVITIES OF T HE TRUST CANNOT BE CARRIED OUT AND IT HAS TO BE DISSOLVED, ITS CORPUS AND PROPERTIES ETC. REMAINING ON THE DATE OF DISSOLUTION HAVE TO BE TRA NSFERRED TO ANOTHER TRUST HAVING SIMILAR OBJECTS WITH THE SANCTION OF T HE CHARITY COMMISSIONER AS PER THE PROCEDURE LAID DOWN UNDER T HE BOMBAY PUBLIC TRUSTS ACT, 1950. NO SUCH CLAUSE IS FOUND TO BE THERE IN THE ITA 1247/M/13 3 TRUST DEED AND, THEREFORE, THE APPLICANT CANNOT BE SAID TO HAVE BEEN CONSTITUTED AS A VALID PUBLIC CHARITABLE TRUST. ACC ORDINGLY, THE APPLICATION FOR REGISTRATION U/S. I 2A MADE BY THE APPLICANT TRUST IS REJECTED. AGGRIEVED BY THE ORDER OF THE LD. DIT (EXEMPTIONS), THE ASSESSEE HAS PREFERRED THIS APPEAL BEFORE THE TRIBUNAL. 4. WE HAVE HEARD THE ARGUMENTS OF BOTH THE SIDES AN D ALSO PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. IT IS OBSERV ED THAT THE APPLICATION FILED BY THE ASSESSEE U/S 12A OF THE ACT HAS BEEN REJECTE D BY THE LD. DIT (EXEMPTIONS) MAINLY ON THE GROUND THAT THE RELEVANT TRUST DEED DOES NOT CONTAIN THE SO-CALLED DISSOLUTION CLAUSE. AS PER THE PROVISIONS OF SECTION 11 & 12 OF THE ACT, INCOME DERIVED FROM PROPERTY HELD FOR CHARITABLE OR RELIGIOUS PURPOSES AND INCOME OF TRUSTS OR INSTITUTIONS FROM CONTRIBUTIONS ARE EXEMPT FROM TAX PROVIDED SUCH TRUSTS OR INSTITUTIONS ARE R EGISTERED U/S 12A OF THE ACT. THE PROCEDURE FOR REGISTRATION U/S 12A IS PRE SCRIBED IN SECTION 12AA OF THE ACT WHICH PROVIDES THAT THE COMMISSIONER, ON TH E RECEIPT OF AN APPLICATION FOR REGISTRATION OF A TRUST OR INSTITUT ION MADE U/S 12A, SHALL CALL FOR SUCH INFORMATION FROM THE TRUST/INSTITUTION AS HE THINKS NECESSARY IN ORDER TO SATISFY HIMSELF ABOUT THE GENUINENESS OF A CTIVITIES OF THE TRUST/INSTITUTION AND MAY ALSO MAKE SUCH INQUIRIES AS DEEMED NECESSARY ON THIS BEHALF. IT FURTHER PROVIDES THAT AFTER SATISF YING HIMSELF ABOUT THE OBJECTS OF THE TRUST/INSTITUTION AND THE GENUINENESS OF ITS ACTIVITIES, THE COMMISSIONER SHALL PASS AN ORDER IN WRITING REGISTE RING THE TRUST/INSTITUTION U/S 12A AND IF HE IS NOT SO SATISFIED, HE SHALL PAS S AN ORDER IN WRITING REFUSING TO REGISTER THE TRUST/INSTITUTION. THE SCO PE OF ENQUIRY CONTEMPLATED U/S 12AA OF THE ACT THUS IS LIMITED TO THE EXTENT O F COMMISSIONER GETTING HIMSELF SATISFIED ABOUT OBJECT OF THE TRUST AND THE GENUINENESS OF ITS ACTIVITIES SO AS TO GRANT OR REFUSE THE REGISTRATION U/S 12A O F THE ACT. A PERUSAL OF THE IMPUGNED ORDER OF THE LD. DIT (EXEMPTIONS), HOWEVER , SHOWS THAT HE HAS NOT RECORDED ANY ADVERSE COMMENT OR DIS-SATISFACTION AB OUT THE OBJECT OF THE ITA 1247/M/13 4 TRUST OR GENUINENESS OF THE TRUST ACTIVITIES. HE HA S REFUSED TO GRANT THE REGISTRATION U/S 12A OF THE ACT ON THE GROUND THAT ITS TRUST DEED DOES NOT CONTAIN DISSOLUTION CLAUSE. IN OUR OPINION, THE L D. DIT (EXEMPTIONS) THUS HAS CLEARLY GONE BEYOND THE SCOPE OF ENQUIRY CONTEM PLATED U/S 12A OF THE ACT AND HAS REFUSED TO GRANT THE REGISTRATION U/S 12A O F THE ACT TO THE ASSESSEE TRUST ON A TOTALLY IRRELEVANT GROUND WITHOUT POINTI NG OUT AS TO HOW HE WAS NOT SATISFIED EITHER ABOUT THE OBJECT OF THE TRUST OR T HE GENUINENESS OF ITS ACTIVITIES. WE THEREFORE SET ASIDE THE IMPUGNED OR DER OF THE LD. DIT (EXEMPTIONS) AND DIRECT THAT THE REGISTRATION U/S 1 2A OF THE ACT AS APPLIED BY THE ASSESSEE TRUST BE GRANTED. 5. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED . ORDER PRONOUNCED IN THE OPEN COURT ON 18 TH JULY, 2014. ' . / 0 18-7-2014 ' SD/- SD/- (H.L. KARWA) (P.M. JAGTAP ) /PRESIDENT ACCOUNTANT MEMBER MUMBAI ; 0 DATED [ .;../ RK , SR. PS ITA 1247/M/13 5 ' #%& '& / COPY OF THE ORDER FORWARDED TO : 1. ! / THE APPELLANT 2. '#! / THE RESPONDENT. 3. < () / THE DIT(E), MUMBAI 4. < / DDIT (E)-1(2), MUMBAI 5. ? ';;A , ( A , / DR, ITAT, MUMBAI E BENCH 6. / GUARD FILE. / BY ORDER, #? '; //TRUE COPY// / ( DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI