S.S.Research & Educational Trust, Salem V. CIT, CHENNAI

ITA 1905/CHNY/2015

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 96320 (ITAT-CHENNAI)
• Duration Of Justice: 2 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-11-2015
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 11-11-2015
• Assessment Year: misc
• Appeal Filed On: 27-08-2015
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: DR U ANJANEYULU IRS
• Assessee Lawyers: S SRIDHAR
• Keywords: Principle of natural justice

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, CHENNAI , ! , ' #$ BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER & SHRI CHALLA NAGENDRA PRASAD, JUDICIAL MEMBER ./ I.T.A. NO. 1905/MDS/2015 S.S. RESEARCH & EDUCATIONAL TRUST NO.165/8, FRIENDS GARDEN, CONVENT ROAD, FAIRLANDS, SALEM 636 016. [PAN: AAMTS 0018E] ( %& /APPELLANT) VS THE COMMISSIONER OF INCOME TAX (EXEMPTIONS) CHENNAI. ( !'%& /RESPONDENT) / APPELLANT BY : SHRI.S. SRIDHAR, ADVOCATE / RESPONDENT BY : DR. U. ANJANEYULU, IRS, CIT /DATE OF HEARING : 11.11.2015 /DATE OF PRONOUNCEMENT : 11.11.2015 ( / O R D E R PER CHANDRA POOJARI, ACCOUNTANT MEMBER THIS APPEAL BY ASSESSEE IS DIRECTED A GAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (EXEMPTIONS), CHENNAI, D ATED 20.07.2015. I.T.A.NO. 1905/MDS/2015 :- 2 -: 2. THE ASSESSEE HAS RAISED THE FOLLOWINGS GROUNDS:- 01. THE ORDER OF THE LEARNED COMMISSIONER OF INCOME T AX IS BAD AND ERRONEOUS IN LAW AND AGAINST THE PRINCIPLES OF NATURAL JUSTICE. 02. THE LEARNED COMMISSIONER OF INCOME TAX ERRED IN RE JECTING THE APPLICATION FOR REGISTRATION U/S.12AA WITHOUT GOING THROUGH THE TRUST DEED PROPERLY ON THE SOLE REASON THAT THE TRU ST DEED DID NOT CONTAIN AUTHOR OR FOUNDER. 03. THE LEARNED CIT ERRED IN NOT CONSIDERING THE PAGES 2 & 3 OF THE TRUST DEED DATED 03.09.20143, MORE PARTICULARLY CLA USES (A) TO (E) WHICH CLAUSES SPECIFICALLY MENTION ABOUT FOUNDE R. 04. THE LEARNED CIT ERRED IN NOT AT ALL CONSIDERING THE DETAILS FILED IN THE COURSE OF THE PROCEEDINGS BEFORE HIM. 3. THE FACTS OF THE CASE ARE THAT THE ASSESSEE APPLIED FOR REGISTRATION U/S.12AA VIDE HIS APPLICATION DATED 2 8.11.2014. THE COMMISSIONER OF INCOME TAX (EXEMPTIONS) ON MERIT OB SERVED THAT IT IS SEEN FROM THE TRUST DEED FILED THAT THERE IS NO AUTHOR/FOUNDER/SETTLER OF THE TRUST. THE NAMES OF S RI S. SELVARAJAN, SRI. S. RAJENDRAN, SRI. S. LATHA, SRI. K. DURAISAMY AND SRI. A. R. PRABHAKARAN ARE MENTIONED AS 1 ST PART, 2 ND PART, 3 RD PART, 4TH PART AND 5 TH PART RESPECTIVELY. FURTHER, IT IS ALSO MENTIONED T HAT THE ABOVE PARTIES WOULD BE COLLECTIVELY CALLED AS 'BOAR D OF TRUSTEES' OR 'BOARD'. HENCE, FROM THE TRUST DEED IT IS NOT CLEAR AS TO WHO IS THE AUTHOR OF THE TRUST. IT IS A COMMON KNOWLEDGE THAT A TRUST HAS THREE PARTIES TO IT. THE Y ARE - (I) AUTHOR (II) I.T.A.NO. 1905/MDS/2015 :- 3 -: TRUSTEES AND (III) BENEFICIARIES. IN THE ABSENCE OF ANYONE OF THESE PA RTIES, A TRUST, IN THE TRUE SENSE, CANNOT BE SAID TO HAVE BEEN FORMED. IN THIS C ONTEXT ONE MAY BENEFICIALLY REFER TO SECTION 3 OF INDIA TR UST ACT, 1882, WHICH D EFINES THE TERM 'TRUST' AS WELL AS OTHER TERMS SUCH AS 'AUTHOR' OF THE TRUST, 'TRUSTEE' AND 'BENEFICIAR Y'. WHILE THE 'AUTHOR' OF THE TRUST HAS BEEN DEFINED AS THE P ERSON, WHO REPOSES OR DECLARES THE CONFIDENCE IN RELATION TO SOME PROPERT IES, THE TRUSTEE IS THE PERSON WHO ACCEPTS THE CONFIDENCE OF THE AUTHOR OF THE TRUST. THE PERSON, FOR WHOSE BENEFIT THE CONFIDENCE IS ACCEPTED, IS CA LLED THE 'BENEFICIARY. IN THE ABOVE BACKGROUND, WHEN THE DEE D OF THE APPLICANT TRUST WAS GONE THROUGH, IT WAS FFOUND THAT WHILE TR USTEES ARE APPOINTED IN THE TRUST, THERE IS NO AU THOR'. IN THE ABSENCE OF 'AUTHOR' OR 'FOUNDER', NO TRUST CAN EVER COME INTO EXISTENCE NOT GRANTED THE REGISTRATION U/S.12AA OF THE ACT. AGAINST THIS, THE ASSESSEE IS IN APPEAL BEFORE US. 4. WE HAVE HEARD BOTH THE SIDES AND PERUSED THE MATER IAL ON RECORD. WE HAVE GONE THROUGH THE COPY OF THE TRUST DEED FURNISHED BEFORE US. ADMITTEDLY REFERENCE OF FOUNDERS WAS MAD E IN CLAUSE (A) AND CLAUSE (D) IN PAGE NOS.2 AND 3 OF THE TRUST DEE D RESPECTIVELY AND THE OBJECT OF THE TRUST AS CHARITABLE UNDER THE P ROVISIONS OF THE I.T.A.NO. 1905/MDS/2015 :- 4 -: INCOME TAX ACT,1961 AS PER CLAUSE (V) PAGE NO.6 OF THE TRUST DEED. HOWEVER, THERE IS CONFUSION REGARDING THE AUTHOR, T RUSTEES AND BENEFICIARIES IN THE MIND OF THE COMMISSIONER OF IN COME TAX (EXEMPTIONS). HE WOULD HAVE SUGGESTED NECESSARY AM ENDMENTS IN THE TRUST DEED. WITHOUT GIVING THE ASSESSEE ANY CH ANCE TO AMEND THE TRUST DEED WITH REGARD TO AUTHOR, TRUSTEES AND BENE FICIARIES OUT RIGHTLY REJECTED THE REGISTRATION U/S.12AA OF THE ACT. IN OUR OPINION, IT IS APPROPRIATE TO GIVE ONE MORE OPPORTUNITY TO THE ASS ESSEE TO MAKE NECESSARY AMENDMENTS TO THE SATISFACTION OF THE COM MISSIONER OF INCOME TAX (EXEMPTIONS) SO AS TO FULFIL NECESSARY R EQUIREMENTS U/S.12AA OF THE ACT. ACCORDINGLY, WE REMIT THE ENT IRE FILE TO THE COMMISSIONER OF INCOME TAX (EXEMPTIONS) TO CONSIDER THE CASE OF THE ASSESSEE FOR GRANTING REGISTRATION U/S.12AA OF TH E ACT, AND THE ASSESSEE IS ALSO DIRECTED TO CARRY OUT NECESSARY AM ENDMENTS IN THE TRUST DEED TO THE SATISFACTION OF THE COMMISSIONER OF INCOME TAX (EXEMPTIONS) AND ALSO THE ASSESSEE HAS TO SATISFY R EGARDING GENUINENESS OF THE ACTIVITIES CARRIED ON BY THE AS SESSEE . WITH THESE OBSERVATIONS, WE REMIT THE ISSUE BACK TO THE FILE O F THE COMMISSIONER OF INCOME TAX (EXEMPTIONS) FOR FRESH CONSIDERATION. I.T.A.NO. 1905/MDS/2015 :- 5 -: 5. IN THE RESULT, THE APPEAL OF THE ASSESSEE IN ITA NO.1905/MDS/2015 IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT AT THE TIME OF HEARING ON WEDNESDAY, THE 11 TH OF NOVEMBER, 2015 AT CHENNAI SD/- SD/- ( ! ) (CHALLA NAGENDRA PRASAD) ' / JUDICIAL MEMBER ( ) (CHANDRA POOJARI) / ACCOUNTANT MEMBER /CHENNAI. !' /DATED: 11.11.2015. KV '# $%& '& /COPY TO: 1. ( APPELLANT 2. / RESPONDENT 3. ) ( )/CIT(A) 4. ) /CIT 5. &* + $$,- /DR 6. + ./ 0 /GF.