M/s. NSHM Academy, Durgapur V. CIT, Durgapur, Durgapur

ITA 1395/KOL/2010

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 54679 (ITAT-KOLKATA)
• Duration Of Justice: 1 year(s) 4 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-11-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: misc
• Appeal Filed On: 02-07-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R K SAHA D R
• Assessee Lawyers: S M SURANA; ASHISH RASTOGI
• Keywords: Charitable institution
• Section: 12; 11; 80G; 12A

Judgement Text

, C , , IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH : KOLKATA ( ) . . , , . . . . !' # !' # !' # !' # , , ) [BEFORE SRI S.V. MEHROTRA, A.M. & SHRI N. VIJAYA K UMARAN, J.M.] $ $ $ $ / I.T.A NO. 1395/KOL/2010 M/S. NSHM ACADEMY, DURGAPUR -VS.- COMMISSIONER OF INCOME TAX, (PAN : AAATN 2471 L) DURGAPUR ( %& /APPELLANT ) ( '(%& / RESPONDENT ) FOR THE APPELLANT : S/SHRI S.M. SURANA AND ASHISH RASTOGI, A.R. FOR THE RESPONDENT : SHRI R.K. SAHA , D.R. # ) * + # ) * + # ) * + # ) * + /DATE OF HEARING : 19.10.2011 ,- * + ,- * + ,- * + ,- * + /DATE OF PRONOUNCEMENT : 18.11.2011 . / ORDER PER SHRI S.V. MEHROTRA, ACCOUNTANT MEMBER/ . . , :- THE ASSESSEE HAD FILED AN APPLICATION DATED 26.10.2 009 BEFORE LD. COMMISSIONER OF INCOME TAX, DURGAPUR FOR APPROVAL UNDER SECTION 80G (5)(VI) OF THE INCOME TAX ACT, 1961. THE ASSESSEE HAD ALSO ENCLOSED THE DEED OF TRUST DATED 05.08.1999 ALONGWITH THE APPLICATION. 2. LD. CIT NOTICED THAT CLAUSE 9 OF THE TRUST DEED ABUNDANTLY MADE IT CLEAR THAT THE TRUSTEES COULD INVEST AND KEEP INVESTED THE TRUST F UND IN ANY BUSINESS UNDERTAKING WHETHER AUTHORIZED BY THE INDIAN TRUST ACT OR NOT AS THEY S HALL IN THEIR ABSOLUTE DISCRETION THINK FIT. FURTHER CLAUSE 17 OF THE TRUST DEED EMPOWERED THE T RUSTEES TO MODIFY THE TRUST DEED AND/OR PROVISION, RULES OR REGULATIONS IN AN ABSOLUTE MANN ER. THUS, HE CONCLUDED THAT BOTH THE CLAUSES GAVE THE TRUSTEES A FREE HAND WHEREBY INCOME OR ASS ETS OF THE TRUST AT ANY TIME COULD BE TRANSFERRED OR APPLIED FOR ANY NON-CHARITABLE PURPO SE. HE OBSERVED THAT FOR APPROVAL UNDER SECTION 80G(5)(VI) OF THE INCOME TAX ACT, THE TRUST MUST FULFILL THE CONDITION MENTIONED AT SECTION 80G(5)(I) TO 80G(5)(V) OF THE INCOME TAX AC T. HE OBSERVED THAT SECTION 80G(5)(II) REQUIRES THAT NO CLAUSE OF THE TRUST DEED SHOULD CO NTAIN ANY PROVISION FOR THE TRANSFER OR APPLICATION AT ANY TIME OF THE WHOLE OR ANY PAT OF THE INCOME OR ASSETS OF THE INSTITUTION OR FUND FOR ANY PURPOSE OTHER THAN A CHARITABLE PURPOSE. CO NSEQUENT TO THE AFOREMENTIONED CLAUSES, HE OBSERVED THAT THE ASSESSE-TRUST DID NOT SATISFY THE CONDITION AS LAID DOWN UNDER SECTION ITA NO. 1395/KOL./2010 2 80G(5)(II). HE, THEREFORE, REJECTED THE ASSESSEES APPLICATION FOR GRANTING REGISTRATION UNDER SECTION 80G(5) OF THE ACT. 3. LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT IN O RDER TO FIND OUT WHETHER THE TRUST DEED IS IN CONFORMITY WITH THE REQUIREMENTS OF SECTION 8 0G OR NOT, IT HAS TO BE READ IN FULL TO FIND OUT THE TRUE IMPORT OF THE TRUST DEED AND NOT BY READIN G SOME SPECIFIC CLAUSES IN ISOLATION. LD. COUNSEL REFERRED TO PAGE 2 OF THE PAPER BOOK, WHERE IN THE TRUST DEED IS CONTAINED AND REFERRED TO CLAUSE 3 OF THE TRUST DEED WHICH READS AS UNDER :- 3. NOTWITHSTANDING ANYTHING HEREINBEFORE OR HEREIN AFTER CONTAINED, THE INCOME AS ALSO THE CORPUS OF THE TRUST FUNDS SH ALL BE APPLIED AND BE APPLICABLE ONLY TO OR FOR SUCH TRUST PURPOSES AND O BJECTS AND SUBJECT TO SUCH CONDITIONS OR LIMITATIONS IF ANY AS MAY FROM T IME TO TIME BE LAID DOWN IN THE INCOME TAX ACT, 1961, OR ANY OTHER ACT GOVER NING THE TAXATION OF INCOME AS WILL ENSURE OR MAKE THE TRUST HEREBY ESTA BLISHED AND ITS INCOME AS ELIGIBLE FOR EXEMPTION FROM TAXATION UNDER THE I NCOME TAX ACT, 1961, OR ANY REPLACEMENT OR RE-ENACTMENT THEREOF OR MODIF ICATION THEREOF OR UNDER ANY OTHER GOVERNMENT TAXATION FOR THE TIME BE ING IN FORCE IN INDIA. AND FURTHER SO THAT THE TRUST HEREBY ESTABLISHED SH ALL BE ONE TO WHICH THE PROVISIONS OF SECTION 80G OF THE INCOME TAX ACT, 19 61, OR ANY REPLACEMENT, REENACTMENT OR THE MODIFICATION THEREO F FOR THE TIME BEING IN FORCE SHALL APPLY SO THAT ANY DONATION THERETO BE R ECOGNIZED ELIGIBLE FOR EXEMPTION OR RELIEF FROM TAX IN REGARD TO THE DONOR . LD. COUNSEL FURTHER REFERRED TO CLAUSE 9, SUB-CLAUS E (D) WHICH READS AS UNDER :- 9. THE GENERAL MANAGEMENT AND CONTROL OF THE TRUST FOR THE PURPOSE OF MANAGING THE TRUST AFFAIRS AND PROPERTIES AND CA RRYING OUT THE OBJECTS OF THE TRUST AFORESAID SHALL BE VESTED IN THE TRUST EES AND WITHOUT PREJUDICE TO THE GENERALITY OF THE OBJECTS AND POWERS ABOVE M ENTIONED THEY SHALL HAVE POWER TO DO ALL OR ANY OF THE FOLLOWING THINGS THAT IS TO SAY :- (D) TO INVEST AND KEEP INVESTED THE TRUST FUNDS EIT HER IN THE PURCHASE OR MORTGAGE OF IMMOVABLE PROPERTIES OR IN SHARES DEBENTURES OR OTHER SECURITIES OF ANY BUSINESS UNDE RTAKING AND INVESTMENTS WHETHER AUTHORIZED BY THE INDIAN TRUSTS ACT OR NOT AND TO ALTER, VARY OR TRANSPOSE SUCH INVESTMENTS FR OM TIME TO TIME AS THE TRUSTEES SHALL IN THEIR ABSOLUTE DISCRE TION THINK FIT. LD. COUNSEL FURTHER REFERRED TO CLAUSE 13 & 13.1, W HICH READS AS UNDER :- 13. IT IS EXPRESSLY DECLARED THAT NO PART OF THE T RUST PROPERTY OR ITS INCOME SHALL BE APPLIED FOR ANY PURPOSE WHICH IS NO T TRUST PURPOSE. ITA NO. 1395/KOL./2010 3 13.1. ALL THE POWERS AND PROVISIONS HEREOF SHALL BE CONSTRUED AS BEING SUBJECT TO THE RESTRICTION AND LIMITATION HEREIN CO NTAINED AND CONTAINED IN INCOME TAX ACT, 1961, AND STATUTORY MODIFICATION TH EREOF. WITH REFERENCE TO AFOREMENTIONED TWO CLAUSES, LD. C OUNSEL SUBMITTED THAT THE POWER GIVEN UNDER CLAUSE 9 WAS SUBJECT TO DIRECTION CONTAINED I N CLAUSE 3 & 13 QUOTED ABOVE AND, THEREFORE, THE ASSESSEE-TRUST COULD NOT MAKE ANY INVESTMENT IN VIOLATION TO THE PROVISION OF INCOME TAX ACT, PARTICULARLY BECAUSE OF THE PROVISIONS CONTAIN ED UNDER SECTION 11 TO 13 AND SECTION 80G OF THE INCOME TAX ACT. HE, THEREFORE, SUBMITTED THAT C LAUSE 9 CANNOT BE READ IN ISOLATION AND THE SAME ALONE CANNOT DECIDE THE TRUE IMPORT OF TRUST D EED. 4. LD. COUNSEL FURTHER REFERRED TO PAGE 22 OF THE P APER BOOK, WHEREIN THE ORDER UNDER SECTION 10(23C)(VI) OF THE INCOME TAX ACT DATED 28. 01.2011 PASSED BY THE CHIEF COMMISSIONER OF INCOME TAX IS CONTAINED. PARA 5 OF THE SAID ORDER READS AS UNDER :- 5. I HAVE CAREFULLY GONE THROUGH THE SUBMISSIONS M ADE BY THE ASSESSEE- TRUST AND THE VARIOUS JUDICIAL PRONOUNCEMENTS RELIE D UPON BY THE ASSESEE- TRUST IN SUPPORT OF ITS CONTENTION. I AM SATISFIED THAT THE MAIN ACTIVITY OF THE ASSESSEE-TRUST IS IMPARTING EDUCATION AND THE OVERA LL OBJECT OF THE ASSESSEE- TRUST IS IMPARTING EDUCATION AND NOT MAKING ANY PRO FIT. EARLIER VIDE ORDER DATED 28.05.2010 THE CLAIM OF THE ASSESSEE-TRUST WA S DENIED ONLY ON THE GROUND THAT THE ASSESSEE-TRUST HAD ADVANCED LOAN TO ANOTHER TRUST WHICH WAS VIOLATIVE TO CLAUSE (4) OF THE TRUST DEED. IN ITS S UBMISSIONS ASSESSEE-TRUST HAS CLARIFIED THAT LOAN OR ADVANCE BY ONE CHARITABL E TRUST OR INSTITUTION TO ANOTHER CHARITABLE TRUST OR INSTITUTION HAVING SIMI LAR ACTIVITIES IS NOT VIOLATIVE OF THE RELEVANT PROVISIONS OF THE INCOME TAX ACT. IT WAS FURTHER CLARIFIED BY THE ASSESSEE-TRUST THAT HANDING OVER O F ACCUMULATED INCOME TO ANOTHER TRUST HAVING OBJECTS SIMILAR TO THE PURPOSE FOR WHICH THE INCOME WAS ACCUMULATED SHALL BE CONSIDERED AS PROPER APPLI CATION OF INCOME OR FUNDS. 5.1. I HAVE ALSO GONE THROUGH THE VARIOUS JUDGMENTS RELIED UPON BY THE ASSESSEE-TRUST. RELIANCE IN THIS REGARD IS MADE TO THE CASE OF DIRECTOR OF INCOME TAX (EXEMPTION) VS.- MOTI BAGH MUTUAL AID E DUCATION (2007) 163 TAXMAN 490 (DELHI) WHEREIN IT HAS BEEN HELD THAT EV EN IF IN ASSESSMENT YEAR IN QUESTION THERE WERE MINOR CONTRADICTIONS OR DEVI ATIONS IN THE ACCOUNTS OF THE ASSESSEE THAT BY ITSELF WOULD NOT ESTABLISH THA T THE ASSESSEE DID NOT EXIST SOLELY FOR EDUCATIONAL PURPOSES OR THAT IT EXISTED PARTLY FOR ANOTHER OBJECTIVE. AT THIS STAGE, IT IS ALSO TO BE NOTED TH AT ASSESSEE HAS BEEN GRANTED EXEMPTION IN EARLIER ASSESSMENT YEARS AND BESIDES H ARI CHARAN GARG CHARITABLE TRUST WAS ALSO GRANTED APPROVAL UNDER SE CTION. 10(23C)(VI) OF THE INCOME TAX ACT BY CCIT, KOLKATA VIDE ORDER DATE D 23.09.2009. ITA NO. 1395/KOL./2010 4 HE FURTHER REFERRED TO THE CONDITIONS SUBJECT TO WH ICH EXEMPTION UNDER SECTION 10(23C)(VI) WAS GRANTED, WHICH INTER ALIA, READS AS UNDER :- 6. IN VIEW OF THE AFORESAID FACTS AND CIRCUMSTANCE S OF THE CASE APPROVAL FOR GRANT OF EXEMPTION UNDER SECTION 10(23 C)(VI) IS ACCORDED TO THE ASSESSEE-TRUST FOR ASSESSMENT YEAR 2009-10 SUBJ ECT TO THE CONDITIONS MENTIONED HEREUNDER:- . (C) THE INSTITUTION WILL NOT INVEST OR DEPOSIT ITS FUNDS (OTHER THAN VOLUNTARY CONTRIBUTIONS RECEIVED AND MAINTAINED IN THE FORM O F JEWELLERY, FURNITURE, ETC.) FOR ANY PERIOD DURING THE PREVIOUS YEARS RELE VANT TO THE ASSESSMENT YEARS MENTIONED ABOVE OTHERWISE THAN IN ANY ONE OR MORE OF THE FORMS OR MODES SPECIFIED IN SUB-SECTION (5) OF SECTION 11 OF THE I.T. ACT, 1961. HE, THEREFORE, SUBMITTED THAT IN ORDER TO AVAIL EXE MPTION UNDER SECTION 10(23C(VI), THE ASSESSEE COULD NOT UTILIZE THE TRUST FUND SOLELY AS PER CLAU SE 9 OF THE TRUST DEED. LD. COUNSEL REFERRED TO THE DECISION OF THE HONBLE PUNJAB & HARYANA HIGH C OURT IN THE CASE OF SONEPAT HINDU EDUCATIONAL & CHARITABLE SOCIETY VS.- CIT & ANOTHE R REPORTED IN [2005] 278 ITR 262], WHEREIN IT HAS BEEN, INTER ALIA, HELD THAT REAL PUR POSE OF ESTABLISHMENT OF TRUST IS TO BE FOUND OUT. LD. COUNSEL FURTHER REFERRED TO PAGE 1 OF THE PAPER BOOK, WHEREIN THE REGISTRATION GRANTED UNDER SECTION 12A DATED 03.04.2003 IS CONTAINED. HE SUBMI TTED THAT ON INTERPRETATION OF SAME TRUST DEED, THE ASSESSEE HAS BEEN GRANTED REGISTRATION UN DER SECTION 12A AND 10(23C)(VI) BY TREATING THE TRUST ESTABLISHED FOR CHARITABLE PURPOSES AND, THEREFORE, REGISTRATION UNDER SECTION 80G COULD NOT BE DENIED. LD. COUNSEL FURTHER REFERRED T O EXPLANATION 2 TO SECTION 80G AND SUBMITTED THAT THE SAID EXPLANATION HAS BEEN AMENDED WITH EFF ECT FROM 1 ST APRIL, 1989 BY THE DIRECT TAX (LAWS AMENDMENT) ACT, 1989 IN ORDER TO ENSURE THAT DEDUCTION UNDER SECTION 80G IS NOT DENIED MERELY ON THE GROUND THAT THERE WAS NON-COMPLIANCE OF THE PROVISIONS OF SECTION 11, 12, 12A AND 13(1)(C). 5. LD. COUNSEL FOR THE ASSESSEE FURTHER SUBMITTED T HAT IN ANY VIEW OF THE MATTER, THE ASSESSEE-TRUST HAS NOW EXECUTED A SUPPLEMENTARY DEE D DATED 01.04.2010 MODIFYING CLAUSE 9(D) AND 17 TO BRING IT IN CONFORMITY WITH THE PROVISION S OF THE INCOME TAX ACT. A COPY OF THE SAID DEED IS FILED BEFORE US. 6. ON THE OTHER HAND, LD. D.R. RELIED ON THE ORDER OF LD. CIT AND SUBMITTED THAT MERELY ON THE GROUND OF TREATING THE TRUST BEING ESTABLISHED FOR CHARITABLE PURPOSES UNDER SECTION 12 AND ITA NO. 1395/KOL./2010 5 10(23C), THE REGISTRATION UNDER SECTION 80G CANNOT BE CLAIMED. HE SUBMITTED THAT REGISTRATION UNDER SECTION 80G IS NOT AUTOMATIC. HE FURTHER SUBM ITTED THAT SINCE ASSESSEE-TRUST DID NOT FULFILL THE CONDITIONS UNDER SECTION 80G(5)(II), TH EREFORE, REGISTRATION WAS RIGHTLY DENIED. 7. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND HAV E PERUSED THE RECORD OF THE CASE. BEFORE WE CONSIDER THE FACTS OF THE CASE, IT WOULD BE USEFUL TO ANALYSIS THE SCHEME OF THE ACT. SECTION 11 EXEMPTS INCOME FROM PROPERTY HELD FOR CH ARITABLE OR RELIGIOUS PURPOSES. FOR GETTING THE EXEMPTION UNDER SECTION 11, AN INSTITUTION IS R EQUIRED TO BE REGISTERED IN ACCORDANCE WITH THE PROVISIONS OF SECTION 12 READ WITH SECTION 12A. ONCE THE TRUST OR INSTITUTION IS REGISTERED UNDER SECTION 12A, ASSESSING OFFICER IS REQUIRED TO EXAMINE UTILIZATION OF INCOME AND APPLICATION OF FUND IN TERMS OF SECTIONS 11 TO 13 O F THE ACT. IF HE FINDS THAT THE INCOME HAS NOT BEEN APPLIED FOR CHARITABLE PURPOSES, THEN TO THAT EXTENT, HE CAN DENY EXEMPTION UNDER SECTION 11. THUS, PRIMARILY SECTION 11 DEALS WITH THE TAXAB ILITY OF INCOME PART OF TRUST OR INSTITUTION. WHEREAS SECTION 80G DEALS WITH THE DEDUCTION TO BE GRANTED TO A DONOR IN RESPECT OF DONATIONS GIVEN TO THE TRUST OR INSTITUTION. SECTION 80G(5) L AYS DOWN VARIOUS CONDITIONS FOR GRANTING REGISTRATION TO TRUST OR INSTITUTION BEFORE IT CAN RECEIVE DONATION, WHICH MAY BE ELIGIBLE FOR DEDUCTION IN THE HANDS OF DONOR. SINCE DONATIONS AR E GIVEN BY THE PUBLIC AT LARGE, WHICH HAS NO KNOWLEDGE OF THE ACTUAL CLAUSES OF THE TRUST DEED, THEREFORE, LEGISLATURE HAS LAID DOWN STRINGENT CONDITIONS BEFORE GRANTING REGISTRATION TO A TRUST OR INSTITUTION UNDER SECTION 80G. IN THIS REGARD, WE MAY FURTHER REFER TO SECTION 12, SUB-SEC TION (3), WHICH READS AS UNDER :- 3. NOTWITHSTANDING ANYTHING CONTAINED IN SECTION 1 1, ANY AMOUNT OF DONATION RECEIVED BY THE TRUST OR INSTITUTION IN TERMS OF CLAUSE (D) OF SUB-SECTION (2) OF SECTION 80G IN RESPECT OF WHICH ACCOUNTS OF INCOME AND EXPENDITURE HAVE NOT BEEN RENDERED TO THE AUTHO RITY PRESCRIBED UNDER CLAUSE (V) OF SUBSECTION 5C OF THAT SECTION, IN THE MANNER SPECIFIED IN THAT CLAUSE, OR WHICH HAS BEEN UTILIZE D FOR PURPOSES OTHER THAN PROVIDING RELIEF TO THE VICTIMS OF EARTHQUAKE IN GUJARAT OR WHICH REMAINS UNUTILIZED IN TERMS OF SUB SECTION (5C) OF SECTION 80G AND NOT TRANSFERRED TO THE PRIME MINISTERS NATIONAL RE LIEF FUND ON OR BEFORE THE 31 ST DAY OF MARCH, 2004 SHALL BE DEEMED TO BE THE INCOM E OF THE PREVIOUS YEAR AND SHALL ACCORDINGLY BE CHARGED TO TAX. FROM BARE READING OF THE AFOREMENTIONED SUB-SECTION (3), IT IS EVIDENT THAT LEGISLATURE HAS LAID DOWN STRINGENT CONDITIONS IN REGARD TO THE UTILIZAT ION OF FUNDS RECEIVED IN DONATION, WHICH ARE ELIGIBLE FOR DEDUCTION UNDER SECTION 80G. ITA NO. 1395/KOL./2010 6 7.1. ALL THE CONDITIONS LAID DOWN UNDER SECTION 80G (5) ARE CUMULATIVE AND, THEREFORE, ALL CONDITIONS HAVE TO BE FULFILLED. THEREFORE, WE ARE NOT IN AGREEMENT WITH THE SUBMISSIONS OF LD. COUNSEL FOR THE ASSESSEE THAT SINCE ASSESSEE-TRUST HAS BEEN GRANTED REGISTRATION UNDER SECTION 12A AND 10(23C), THEREFORE, IT SHOULD HAVE BEEN GRA NTED REGISTRATION UNDER SECTION 80G(5). LD. COUNSEL HAS RELIED ON THE DECISION OF ITAT, KOLKATA B BENCH IN THE CASE OF BENGAL HOSIERY MANUFACTURERS ASSOCIATION VS.- DIT (EXEMPTION) VI DE I.T.A. NO. 2098/KOL./2010 DATED 28.02.2011. THIS DECISION WAS REGISTERED IN THE CON TEXT OF RENEWAL OF REGISTRATION UNDER SECTION 80G AND NOT IN THE CONTEXT OF FRESH REGISTRATION. T RIBUNAL HELD THAT SINCE THERE WAS NO CHANGE IN CIRCUMSTANCES, THEREFORE, REGISTRATION COULD NOT BE DENIED. THIS DECISION, IN OUR CONSIDERED OPINION, IS OF NO HELP TO ASSESSEE. 8. THE FIRST CONDITION LAID DOWN UNDER SECTION 80G( 5) IS THAT WHERE INSTITUTION OR FUND DERIVES ANY INCOME, SUCH INCOME WOULD NOT BE LIABLE TO INCLUSION IN ITS TOTAL INCOME UNDER THE PROVISIONS OF SECTION 11, 12, 10(23AA) OR 10(23C). THIS IS ONLY ONE CONDITION BUT NOT THE ONLY CONDITION FOR GRANT OF REGISTRATION UNDER SECTION 8 0G. NO DOUBT IT IS THE FIRST AND FOREMOST INGREDIENT FOR GRANT OF REGISTRATION UNDER SECTION 80G(5), BUT NOT THE ONLY CONDITION FOR THE SAME. THE REAL CONTROVERSY IN THE PRESENT APPEAL IS IN REGARD TO SUB-SECTION (II) TO SECTION 80G(5), WHICH READS AS UNDER :- (II) THE INSTRUMENT UNDER WHICH THE INSTITUTION OR FUND IS CONSTITUTED DOES NOT, OR THE RULES GOVERNING THE INSTITUTION OR FUND DO NOT, CONTAIN ANY PROVISION FOR THE TRANSFER OR APPLICATION AT AN Y TIME OF THE WHOLE OR ANY PART OF THE INCOME OR ASSETS OF THE INSTITUT ION OR FUND FOR ANY PURPOSE OTHER THAN A CHARITABLE PURPOSE. FROM THE BARE READING OF THIS CONDITION, IT IS EVID ENT THAT IF THERE IS ANY PROVISION FOR TRANSFER OR APPLICATION AT ANY TIME OF THE WHOLE OR ANY PART OF THE INCOME OR ASSETS OF THE FUND FOR ANY PURPOSE OTHER THAN A CHARITABLE PURPOSE, THEN THE S AID INSTITUTION OR TRUST WOULD NOT BE ELIGIBLE FOR REGISTRATION UNDER SECTION 80G(5) THOUGH IT MAY HAVE REGISTRATION UNDER SECTION 12A, 10(23C), ETC. THE CONTENTION OF LD. COUNSEL IS THAT THE TRUST DEED CANNOT BE READ IN ISOLATION AND IN ORDER TO FIND OUT THE TRUE IMPORT OF THE TRU ST DEED ALL THE CLAUSES HAVE TO BE READ TOGETHER. WE FIND CONSIDERABLE FORCE IN THE SUBMISS IONS OF LEARNED COUNSEL. MERELY IF A PROVISION HAS BEEN INCORPORATED IN THE TRUST DEED, BUT BY READING ALL THE CLAUSES TOGETHER, IT IS EVIDENT THAT THE IMPUGNED CLAUSE CANNOT BE ACTED UPON THEN MERE INCORPORATION OF THE IMPUGNED CLAUSE IN THE TRUST DEED WOULD BE OF NO CO NSEQUENCE ITA NO. 1395/KOL./2010 7 AS FAR AS REGISTRATION UNDER SECTION 80G(5) IS CONC ERNED. PROVISION IN TRUST DEED CONTEMPLATED UNDER SECTION 80G(5)(II) IS SUCH PROVISION WHICH CA N BE ACTED UPON BUT SUCH A PROVISION WHICH HAS BECOME REDUNDANT ON ACCOUNT OF OTHER SUPERSEDIN G CLAUSES. 9. WE FIND CONSIDERABLE FORCE IN THE ARGUMENT OF LD . COUNSEL FOR THE ASSESSEE THAT CLAUSE 9 OF THE TRUST DEED REPRODUCED EARLIER IS SUBJECT TO CLAUSE 3 AND 13 OF THE TRUST DEED. CLAUSE 3 OF THE TRUST DEED MERELY RESTRICTS THE APPLICATION OF FUND FOR TRUST PURPOSES AND OBJECTS AND SUBJECT TO SUCH CONDITIONS OR LIMITATIONS, IF ANY, AS MAY, FROM TIME TO TIME, BE LAID DOWN IN THE INCOME TAX ACT. THIS CLAUSE PRECEDES CLAUSE 9 AND W ILL GET PRECEDENCE OVER CLAUSE 9 OF THE TRUST DEED. WE FIND THAT CLAUSE 13 MAKES IT CLEAR T HAT NO PART OF THE TRUST PROPERTY OR ITS INCOME COULD BE APPLIED FOR ANY PURPOSE OTHER THAN THE PUR POSES OF THE TRUST AND ALL THE POWERS AND PROVISIONS ARE SUBJECT TO THE RESTRICTION AND LIMIT ATION UNDER THE INCOME TAX ACT. THUS, CLAUSE 9 CANNOT BE ACTED UPON IN VIOLATION TO CLAUSE 3 & 13. THEREFORE, CLAUSE 9 COULD NOT BE CONSIDERED IN ISOLATION. CONSIDERING ALL THE CLAUSES TOGETHER, IT IS EVIDENT THAT THE TRUE IMPORT OF THE TRUST DEED WAS TO CARRY OUT ITS ACTIVITIES SUBJECT TO RES TRICTIONS LAID DOWN UNDER THE INCOME TAX ACT. SINCE THE ASSESSEE-TRUST WAS REGISTERED UNDER SECTI ON 12A AS WELL AS UNDER SECTION 10(23C) THERE CANNOT BE ANY DISPUTE THAT THE TRUST WAS ESTA BLISHED FOR CHARITABLE PURPOSES. WE FIND THAT THE HONBLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF SONEPAT HINDU EDUCATIONAL & CHARITABLE SOCIETY VS.- CIT & ANOTHER (SUPRA) HAS OBSERVED AS UNDER :- 14. FROM THE AFORE-EXTRACTED PROVISIONS, IT IS EVI DENT THAT THE FIRST AND FOREMOST REQUIREMENT WHICH THE INSTITUTION OR F UND HAS TO SATISFY IS THAT IT IS ESTABLISHED IN INDIA FOR A CHARITABLE PU RPOSE. THE CONDITIONS CONTEMPLATED BY CLAUSES (I) TO (VI) OF SECTION 80G( 5) ARE THE CONDITIONS WHICH THE INSTITUTION OR THE FUND MUST ADDITIONALLY FULFILL SO AS TO BE ENTITLED TO THE APPROVAL OF THE COMMISSIONER. IT IS WELL SETTLED THAT FOR THE PURPOSE OF CONSTRUING THE PURPOSE OF A TRUST, I T IS NOT NECESSARY THAT ONE REMAINS CONFINED TO THE OBJECTS OF THE SOCIETY OR THE TRUST, AS SET OUT IN THE MEMORANDUM OF ASSOCIATION OR THE TRUST DEED, AS THE CASE MAY BE. WHAT IS REQUIRED TO BE FOUND IS THE REAL PURPOSE OF ESTABLISHMENT OF THE TRUST. THERE CAN BE NO QUARREL WITH THE PROPOSITION THAT THE COMMISSIONER, CONFERRED WITH THE POWER TO GRANT EXE MPTION, IS FULLY COMPETENT TO FIND OUT THE REAL PURPOSE, AS DISTINGU ISHED FROM THE OSTENSIBLE PURPOSE OF ESTABLISHMENT OF THE SOCIETY OR THE TRUST. IF THE COMMISSIONER IS CONVINCED THAT THE PURPOSE OF THE S OCIETY OR THE TRUST IS NOT CHARITABLE, NOTHING DEBARS HIM FROM DENYING THE APPROVAL BUT, AT THE SAME TIME, IF HE IS SATISFIED THAT THE OBJECTS OF T HE TRUST, AS SET OUT IN THE DEED OF DECLARATION, WERE CHARITABLE, THEN HAVING R EGARD TO THE OBJECT OF THE PROVISION, THE APPROVAL SHOULD NOT BE DENIED ON MERE TECHNICALITIES. ITA NO. 1395/KOL./2010 8 AS A MATTER OF FACT, THE POWER TO GRANT OR NEGATIVE THE CLAIM FOR APPROVAL IS COUPLED WITH A DUTY. THUS, COMMISSIONER WAS REQUIRED TO FIND OUT THE REA L PURPOSE, AS DISTINGUISHED FROM THE OSTENSIBLE PURPOSE OF ESTABLISHMENT OF THE SOCIETY OR THE TRUST. HE COULD NOT DENY THE REGISTRATION SOLELY ON THE BASIS OF ONE CLAUSE, WHI CH COULD NOT BE ACTED UPON IN VIEW OF THE RESTRICTION CONTAINED IN OTHER CLAUSES. THE MANDATE OF THE SECTION IS ALSO VERY CLEAR THAT THERE SHOULD BE A PROVISION FOR THE TRANSFER OR APPLICATI ON OF INCOME OR ASSETS OF THE INSTITUTION FOR THE PURPOSES OTHER THAN CHARITABLE PURPOSE. THIS PROVIS ION SHOULD BE CAPABLE OF ACTED UPON BY THE MANAGEMENT, THEN ONLY THE REGISTRATION COULD BE DEN IED IN VIEW OF SECTION 80G(5)(II). HOWEVER NOW, IN ANY VIEW OF THE MATTER, SINCE THE ASSESSEE- TRUST HAS ALREADY AMENDED ITS TRUST DEED, THEREFORE, REGISTRATION IS TO BE GRANTED TO THE ASS ESSEE. IN VIEW OF THE ABOVE DISCUSSION, LD. CIT IS DIRECTED TO GRANT REGISTRATION. 10. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 18/11/2011. SD/- SD/- [N. VIJAYA KUMARAN / . . . . !' # !' # !' # !' # ] [S.V. MEHROTRA/ ( . . )] JUDICIAL MEMBER/ ACCOUNTANT MEMBER/ DATED : 18/ 11/ 2011 COPY OF THE ORDER FORWARDED TO: 1. M/S. NSHM ACADEMY, ARRAH, SHIVTALA, DURGAPUR-12; 2 CIT, DURGAPUR 3. ACIT(APPEALS)- ,KOLKATA 4. DR, KOLKATA BENCHES, KOLKATA (TRUE COPY) BY ORDER ASSISTANT REGISTRAR, I.T.A.T., KOLKATA LAHA, SR. P.S. FIT FOR PUBLICATION SD/- SD/- [N. VIJAYA KUMARAN / . . . . !' # !' # !' # !' # ] [S.V. MEHROTRA/ ( . . )] JUDICIAL MEMBER/ ACCOUNTANT MEMBER/