Brand Memorial Charitable Trust, CHENNAI V. CIT, CHENNAI

ITA 1875/CHNY/2015

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 96281 (ITAT-CHENNAI)
• Duration Of Justice: 2 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-10-2015
• Appeal Filed By: Assessee
• Bench Allotted: A
• Assessment Year: misc
• Appeal Filed On: 19-08-2015
• Court: TRIBUNAL
• Department Lawyers: RAJIB KUMAR HOTA
• Assessee Lawyers: A S SRIRAMAN
• Keywords: Charitable institution
• Section: 12AA

Judgement Text

, , IN THE INCOME - TAX APPELLATE TRIBUNAL A BENCH, CHENNAI , . , BEFORE SHRI CHANDRA POOJARI , ACCOUNTANT MEMBER & SHRI DUVVURU RL REDDY , JUDICIAL MEMBER ./ I.T.A.NO. 1875/MDS/2015 M/S . BRAND MEMORIAL CHARITABLE TRUST, NO. 49, WATER TANK ROAD, NAGERCOIL, KANYAKUMARI DISTRICT 629 001. [PAN: A A CTB3862D ] VS. THE COMMISSION E R OF INCOME TAX (EXEMPTIONS) , CHENNAI . ( / APPELLANT ) ( / RESPONDENT ) / APPELLANT BY : SHRI A . S. SRIRAMAN , ADVOCATE / RESPONDENT BY : SHRI RAJIB KUMAR HOTA, CIT DR / DATE OF HEARING : 12 . 1 0 .201 5 / DATE OF P RONOUNCEMENT : 29 . 1 0 .201 5 / O R D E R PER DUVVURU RL REDDY , JUDICIAL MEMBER : TH IS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX ( EXEMPTIONS ) , C HENNAI , DATED 29 . 0 6 .20 1 5 PASSED UNDER SECT ION 12AA OF THE INCOME TAX ACT, 1961 [ ACT IN SHORT]. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE HAS CONSTITUTED BY A TRUST DEED ON 06.05.2014 AND FILED AN APPLICATION IN FORM 10A ON 07.10.2014 SEEKING REGISTRATION UNDER SECTION 12AA OF THE ACT. ACCORDINGLY, THE I.T.A. NO . 1875 /M/ 15 2 ASSESSEE WAS ASKED TO FILE DETAILS AND THE ASSESSEE HAS FILED THE DETAILS. THOUGH THE ASSESSEE HAS FILED ITS APPLICATION FOR REGISTRATION ON 07.10.2014, THE ASSESSEE S APPLICATION SHOULD HAVE BEEN DISPOSED OF BY 30.04.2015 I.E. BEFORE EXP IRY OF SIX MONTHS FROM THE END OF THE MONTH IN WHICH THE APPLICATION WAS RECEIVED AS PROVIDED UNDER SECTION 12AA(2) OF THE ACT. BY FOLLOWING VARIOUS JUDICIAL PRONOUNCEMENTS INCLUDING THE RATIO LAID DOWN BY THE HON BLE ALLAHABAD HIGH COURT IN THE CASE OF CI T V. MUZAFAR NAGAR DEVELOPMENT AUTHORITY (2013) 38 TAXMAN.COM 21 (ALLAHABAD), THE LD. C IT (EXEMPTIONS), PASSED THE ABOVE ORDER UNDER SECTION 12AA OF THE ACT. 3. ON MERITS, THE LD. CIT(EXEMPTIONS), AFTER EXAMINING THE DEED, HAS OBSERVED THAT THE MANAGING TRUSTEE IS THE SOLE - IN - CHARGE OF THE ACTIVITIES OF THE TRUST BY CENTRALIZING ALL POWERS IN THE HANDS OF THE MANAGING TRUSTEE. THE CLAUSE 11 IN PAGE 9 OF THE TRUST DEED READS AS UNDER: 11. ADMINISTRATION 1. THE MANAGING TRUSTEE SHALL HAVE THE POWER OF MANAG EMENT OF THE TRUST PROPERTIES AND FUNDS AND HE SHALL HAVE FULL CONTROL OVER THE FINANCE OF THE TRUST. HE SHALL ALSO HAVE FULL POWER OF SUPERVISION OVER THE CHARITABLE INSTITUTION AND ALL THE ESTABLISHMENTS FALLING WITHIN THE OBJECTS OF THE TRUST. I.T.A. NO . 1875 /M/ 15 3 2. THE MAN AGING TRUSTEE SHALL HAVE ALL AND EVERY POWER OF MANAGEMENT, CONDUCT AND ADMINISTRATION OF THE AFFAIRS OF THIS TRUST. 4. IN VIEW OF THE ABOVE CLAUSE IN THE TRUST DEED, THE LD. CIT(E) HAS OBSERVED THAT THE ABOVE CLAUSE IN THE TRUST DEED IS AGAINST THE PRIN CIPLES OF A PUBLIC CHARITABLE/RELIGIOUS TRUST , WHICH SHOULD BE ADMINISTERED IN ITS TRUE SPIRIT AND NOT FUNCTION AT THE SOLE DISCRETION OF A SINGLE FOUNDER, WHO HAS NOMINATED HIMSELF AS THE MANAGING TRUSTEE. SINCE THE BENEFITS OF REGISTRATION UNDER SECTIO N 12AA ARE TO BE EXTENDED ONLY TO PUBLIC CHARITABLE/RELIGIOUS TRUST , THE LD. CIT(E), REJECTED THE APPLICATION FILED BY THE ASSESSEE. 5. AGGRIEVED, THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL. 6. THE LD. COUNSEL FOR THE ASSESSEE HAS SUBMITTED THAT THE LD. CIT(E) WAS NOT JUSTIFIED IN REJECTING THE APPLICATION FILED FOR REGISTRATION SINCE THE ASSESSEE HAS FILED ALL DETAILS BEFORE HIM AND PRAYED THAT THE CIT(E) MAY BE DIRECTED FOR GRANT OF REGISTRATION TO THE ASSESSEE TRUST. 7. ON THE OTHER HAND, THE LD. DR HAS RELIED ON THE ORDER OF THE LD. CIT(E). 8. WE HAVE HEARD BOTH SIDES, PERUSED THE MATERIALS ON RECORD AND GONE THROUGH THE ORDERS OF AUTHORITIES BELOW. SO FAR AS LIMITATION IS CONCERNED, THE LD. CIT(EXEMPTIONS) HAS PASSED THE ORDER AFTER EXPIR Y OF SIX MONTHS FROM THE I.T.A. NO . 1875 /M/ 15 4 END OF THE MONTH IN WHICH THE APPLICATION WAS RECEIVED. BY FOLLOWING VARIOUS JUDICIAL PRONOUNCEMENTS INCLUDING THE RATIO LAID DOWN BY THE HON BLE ALLAHABAD HIGH COURT IN THE CASE OF CIT V. MUZAFAR NAGAR DEVELOPMENT AUTHORITY (SUPRA ), THE LD. CIT (EXEMPTIONS), PASSED THE ABOVE ORDER UNDER SECTION 12AA OF THE ACT. BEFORE US, THE LD. COUNSEL FOR THE ASSESSEE COULD NOT ABLE TO CONTROVERT THE RATIO LAY DOWN BY THE HON BLE ALLAHABAD HIGH COURT OR FILED ANY HIGHER COURT DECISION TO TAKE A DIFFERENT VIEW. THEREFORE, WE FIND NO INFIRMITY IN THE ORDER PASSED BY THE LD. CIT(E) WITH REGARD TO LIMITATION ISSUE. 9. WITH REGARD TO MERITS OF THE CASE, THE LD. CIT(E) REJECTED THE APPLICATION FOR GRANT OF APPROVAL UNDER SECTION 12AA OF THE ACT ON T HE GROUND THAT AS PER CLAUSE 11 IN THE TRUST DEED AS REPRODUCED HEREINABOVE, THE LD. CIT(E) HAS OBSERVED THAT THE ABOVE CLAUSE IN THE TRUST DEED IS AGAINST THE PRINCIPLES OF A PUBLIC CHARITABLE/RELIGIOUS TRUST , WHICH SHOULD BE ADMINISTERED IN ITS TRUE SP IRIT AND NOT FUNCTION AT THE SOLE DISCRETION OF A SINGLE FOUNDER, WHO HAS NOMINATED HIMSELF AS THE MANAGING TRUSTEE. IN THIS CASE, THE ASSESSEE HAS CONSTITUTED TRUST BOARD WITH SEVEN PERSONS OUT OF WHICH THE MANAGING TRUSTEE IS THE FOUN DER OF THE TRUST. THE ABOVE CLAUSE 11 OF THE TRUST DEED EMPOWER S THE MANAGING TRUSTEE TO CENTRALIZE ALL POWERS IN THE HANDS OF THE MANAGING TRUSTEE, VIRTUALLY TURNED THIS TRUST INTO A PRIVATE TRUST. SINCE THE BENEFITS OF REGISTRATION UNDER SECTION 12AA ARE TO I.T.A. NO . 1875 /M/ 15 5 BE EXTENDED ONLY TO PUBLIC CHARITABLE/RELIGIOUS TRUST , THE LD. CIT(E), HAS RIGHTLY REJECTED THE APPLICATION FILED BY THE ASSESSEE AND WE FIND NO INFIRMITY IN THE ORDER PASSED BY THE LD. CIT(E) . ACCORDINGLY, THE APPEAL FILED BY THE ASSESSEE STANDS DISMISSED. 10. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS DISMISSED . ORDER PRONOUNCED ON THE 29 TH OCTOBER, 2015 AT CHENNAI. SD/ - SD/ - ( CHANDRA POOJARI ) ACCOUNTANT MEMBER ( DUVVURU RL REDDY ) JUDICIAL MEMBER CHENNAI, DATED, THE 29 .1 0 .201 5 VM/ - / COPY TO: 1. / APPELLANT , 2. / RESPONDENT , 3. ( ) / CIT(A) , 4. / CIT , 5. / DR & 6. / GF.