M/s. Vijaya Vidhyashramam, CHENNAI V. CIT, CHENNAI

ITA 2306/CHNY/2012

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 1209 (ITAT-CHENNAI)
• Duration Of Justice: 2 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-03-2013
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2012-2013
• Appeal Filed On: 24-12-2012
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: DR S MOHARANA IRS
• Assessee Lawyers: K MEENAKSHI SUNDARAM
• Section: 12AA

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, CHENNAI BEFORE DR. O.K. NARAYANAN, VICE-PRESIDENT AND SHRI S.S.GODARA, JUDICIAL MEMBER I.T.A.NO. 2306/MDS/2012 M/S. VIJAYA VIDHYASHRAMAM, NO.8-B, RAMAMOORTHY ST., KURINJI NAGAR EXTENSION, JAMEEN ROYAPETTAH, CHROMPET,CHENNAI 600044 PAN AABTV5470C VS. THE DIRECTOR OF INCOME-TAX (EXEMPTIONS), CHENNAI. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI K. MEENAKSHISUNDARAM RESPONDENT BY : DR. S. MOHARANA, IRS, CIT DATE OF HEARING : 5 TH MARCH, 2013 DATE OF PRONOUNCEMENT : 5 TH MARCH, 2013 O R D E R PER DR. O.K. NARAYANAN, VICE-PRESIDENT THIS APPEAL IS FILED BY THE ASSESSEE. IT IS FILED AGAINST THE ORDER OF THE DIRECTOR OF INCOME-TAX(EXEMPTIONS) AT CHENNAI, REJECTING THE APPLICATION PUT IN BY THE ASSESSEE FO R OBTAINING REGISTRATION UNDER SEC.12AA AND ALSO REJECTING THE PRAYER FOR APPROVAL UNDER SEC.80G OF THE INCOME-TAX ACT, 1961. ITA 2306/12 :- 2 -: 2. IT IS VERY USEFUL TO EXTRACT THE FULL TEXT OF TH E ORDER OF THE DIRECTOR OF INCOME-TAX(EXEMPTIONS) TO UNDERSTAND TH E FULL PICTURE OF THE BACKGROUND OF THE ASSESSEE : ORDER UNDER SECTION 12AA OF THE INCOME TAX ACT, 1961. THE APPLICANT TRUST, CONSTITUTED BY A TRUST DEED ON 19.05.2012 HAS FILED AN APPLICATION IN FORM 10A ON 28.05.2012 FOR REGISTRATION U/S 12AA OF THE INCOME TAX ACT. 2. WHILE PROCESSING THE APPLICATION IT WAS NOTICED THAT CERTAIN CLARIFICATIONS WERE REQUIRED TO BE FUR NISHED. VIDE THIS OFFICE LETTER DATED 17.08.2012 , THE APPLICANT TRUST WAS REQUESTED TO OFFER ITS EXPLANATION. IT W AS ALSO REQUESTED TO FURNISH ADDITIONAL INFORMATION CALLED FOR IN THE LETTER. THE CASE WAS POSTED FOR HEARING ON 05.09.2012. 3. IN RESPONSE TO THE SAME, THE MANAGING TRUSTEE OF THE APPLICANT TRUST SHRI A. MANOHARAN, HAS SUBMITTE D A LETTER DATED 04.09.2012, GIVING CERTAIN DETAILS ABO UT THE PROPOSED ACTIVITIES OF THE APPLICANT TRUST. WITH R EGARD TO IMMEDIATE PLAN OF ACTION, IT HAS BEEN MENTIONED T HAT THE TRUST PROPOSED TO SET UP A YOGA CENTRE AND TO OFFER ITA 2306/12 :- 3 -: COURSES AND TRAINING IN YOGA AND MEDITATION TO YOUN G AND OLD. 4. HE HAS ALSO ENCLOSED A FEW PHOTOGRAPHS SHOWING ITS MANAGING TRUSTEE IN CERTAIN YOGIC POSTURES. ON E OF THE PHOTOGRAPHS ALSO SHOWN HIM AS TAKING YOGA LESSO NS FROM ANOTHER YOGA TEACHER. A COPY OF THIS PHOTOGRA PH IN WHICH THE MANAGING TRUSTEE IS TAKING LESSONS FROM A YOGA TEACHER IS MADE PART OF THIS ORDER. 5. SUBSEQUENTLY, ON 26.11.2012, THE MANAGING TRUSTEE HAS APPEARED ALONG WITH HIS AUTHORISED REPRESENTATIVE SHRI A. AREEF. ON THIS DAY, HE HA S SUBMITTED A CERTIFICATE ISSUED BY PATANJALI YOGA TR UST WORLD, CERTIFYING THAT THE MANAGING TRUSTEE OF THE APPLICANT TRUST HAS PARTICIPATED IN A YOGA CAMP AND HAS COMPLETED AN ADVANCED COURSE ON 06.08.2010. TWO MORE PHOTOGRAPHS, SHOWING PARTICIPATION BY THE MANAGING TRUSTEE IN SOME YOGA PROGRAMMES, WERE FURNISHED. HOWEVER, NO PROOF OF ANY ACTIVITY BEING UNDERTAKEN BY THE MANAGING TRUSTEE IN FURTHERANCE O F THE OBJECTS OF THE TRUST, HAS BEEN PROVIDED. MERE PARTICIPATION OF THE MANAGING TRUSTEE IN YOGA CAMPS AND HIS OBTAINING A CERTIFICATE OF AN ADVANCED COUR SE IN YOGA, DOES NOT PROVE THAT HE HIMSELF IS ENGAGED IN ANY CHARITABLE ACTIVITY AS PROPOSED IN THE TRUST DEED. ITA 2306/12 :- 4 -: 6. IN THE ABSENCE OF ANY SUCH PROOF, THERE IS NO WA Y THE UNDERSIGNED COULD HAVE SATISFIED HIMSELF ABOUT THE GENUINENESS OF THE ACTIVITIES OF THE APPLICANT TRUS T, WITHOUT WHICH THE TRUST DOES NOT BECOME ELIGIBLE FO R REGISTRATION. IN THIS REGARD, RELEVANT PROVISION O F SECTION 12AA IS REPRODUCED HEREUNDER : - PROCEDURE FOR REGISTRATION : SECTION 12AA: (1) THE COMMISSIONER, ON RECEIPT OF AN APPLICATION FOR REGISTRATION OF A TRUST OR INSTI TUTION MADE UNDER CLAUSE (A) [OR CLAUSE (AA) OF SUB-SECTIO N (1)] OF SECTION 12A, SHALL (A) CALL FOR SUCH DOCUMENTS OR INFORMATION FROM THE TRUST OR INSTITUTION AS HE THINKS NECESSARY IN ORDER TO SATISFY HIMSELF ABOUT THE GENUINENESS OF ACTIVITIES OF THE TRUST OR INSTITUTION AND MAY ALSO MAKE SUCH INQUIRIES AS HE MAY DEEM NECESSARY IN THIS BEHALF 7. THE OTHER DEFICIENCY NOTED IN THE TRUST DEED IS THAT THE FOUNDER HAS NOT ACCOUNTED ANY OTHER TRUSTE E EXCEPT HIMSELF AS MANAGING TRUSTEE. BUT AT PARA 5. 3 & 5.4 OF THE TRUST DEED, THERE IS A MENTION OF SECOND DECLARANT AND THIRD DECLARANT. THE RELEVANT PROVIS IONS READ AS UNDER:- ITA 2306/12 :- 5 -: 5.3: THE SECOND DECLARANT SHALL BE THE SECRETARY WHO IS ALSO EMPOWERED TO CARRY ON THE DAY TO DAY ADMINISTRATIVE ACTIVITIES OF THE TRUST. 5.4: THE THIRD DECLARANT SHALL BE THE TREASURER WHO SHALL BE ENTITLED TO CARRY OUT THE DAY TO DAY FINANCIAL AND ACCOUNTS TRANSACTION AND SHALL BE RESPONSIBLE FOR THE MAINTENANCE OF THE ACCOUNTS ON BEHALF OF THE TRUST. 8. HOWEVER, ON A READING OF THE OTHER PROVISIONS OF THE TRUST DEED, IT IS FOUND THAT NOWHERE THERE IS A MENTION OF ANY OTHER PERSON AS SECOND DECLARANT OR THIRD DECLARANT. WHEN THIS DEFICIENCY IN THE TRUST DEED WAS POINTED OUT, ON 26.11.2012, THE MANAGING TRUSTE E HAS SUBMITTED AN UNILATERAL DECLARATION OF THE FOU NDER, WHEREIN HE HAS APPOINTED BOTH HIS SONS AS TRUSTEES ALONG WITH HIMSELF TO ADMINISTER THE TRUST. IN HIS UNILATERAL DECLARATION, THE FOUNDER HAS ALSO MENTIO NED THAT THE WORD DECLARANTS APPEARING IN THE TRUST D EED SHOULD REFER TO THE TWO TRUSTEES NOW APPOINTED. HOWEVER, THIS UNILATERAL DECLARATION IS NOT REGISTE RED. HENCE, IT HAS NO EXISTENCE IN THE EYE OF LAW. MORE OVER, SUCH UNILATERAL DECLARATION IS ONLY AN AFTERTHOUGHT TO OVERCOME THE DEFICIENCIES IN THE TRUST DEED. 9. FOR ALL THE REASONS MENTIONED HEREIN ABOVE AND KEEPING IN VIEW OF THE FACT THAT NO ACTIVITY IN FUR THERANCE OF THE OBJECTS OF THE TRUST HAS BEEN STARTED SO FAR AND ITA 2306/12 :- 6 -: THERE ARE SERIOUS DEFICIENCIES IN THE WAY THE TRUST DEED HAS BEEN DRAFTED, REGISTRATION U/S.12AA CANNOT BE GRANTED TO THE APPLICANT TRUST. HENCE, THE APPLICA TION FILED BY THE TRUST FOR REGISTRATION U/S 12AA IS HER EBY REJECTED AND THE REGISTRATION U/S 12AA IS DENIED. 3. THE ORDER IS SELF SPEAKING ONE. THE ASSESSEE HA S NOT STARTED ANY ACTIVITY OR CONTEMPLATE TO START ANY AC TIVITY IN THE IMMEDIATE FUTURE SO THAT THE DIRECTOR OF INCOME-TAX (EXEMPTIONS) MAY ASSESS THE BONA FIDES OF THE INTENTIONS DECLARE D IN THE TRUST. MOREOVER, THE ASSESSEE HAS UNILATERALLY ADOPTED HIS TWO SONS AS TRUSTEES AND THE AMENDED DEED HAS NOT BEEN REGISTER ED. AT THE SAME TIME, IN THE REGISTERED TRUST DEED, THE ASSEES SEE IS MENTIONING ABOUT THE SECOND DECLARANT OR THIRD DECL ARANT. EVEN AT THE FIRST INSTANCE, THE ASSESSEE WAS THE SOLE TRUST EE. 4. WE AGREE WITH THE FINDING OF THE DIRECTOR OF INC OME- TAX(EXEMPTIONS) AND THIS IS NOT A FIT CASE FOR GRAN TING REGISTRATION UNDER SEC.12AA OF THE ACT, AS WELL AS APPROVAL UNDE R SEC.80G. LET THE ASSESSEE RECTIFY ALL THE OMISSIONS AND COMM ISSIONS POINTED OUT BY THE DIRECTOR OF INCOME-TAX(EXEMPTION S) AND ALSO START SOME ACTIVITY TO PROVE THE GENUINENESS AND TH EREAFTER, IF HE DESIRES, HE WILL FILE A FRESH APPLICATION BEFORE TH E COMPETENT ITA 2306/12 :- 7 -: AUTHORITY FOR AVAILING REGISTRATION. ANYHOW, THAT IS ONLY A FUTURE EVENT. 5. FOR THE PRESENT, WE CONFIRM THE ORDER OF THE DIR ECTOR OF INCOME-TAX(EXEMPTIONS) AND DISMISS THE APPEAL FILED BY THE ASSESSEE. ORDER PRONOUNCED IN THE OPEN COURT AT THE TIME OF H EARING ON TUESDAY, THE 5 TH OF MARCH, 2013 AT CHENNAI. SD/- SD/- (S.S.GODARA) (DR.O.K.NARAYANAN) JUDICIAL MEMBER VICE-PRESIDENT CHENNAI, DATED THE 5 TH MARCH, 2013 MPO* COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR 6. GF.