Shri Chandra Prabhu Digamber Jain Mandir, Dist.Kheda V. The CIT.,-II, Baroda

ITA 3919/AHD/2008

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 9090 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 2 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-02-2010
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 04-02-2010
• Assessment Year: misc
• Appeal Filed On: 01-12-2008
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SANJEEV KASHYAPDR
• Assessee Lawyers: MK PATELAR
• Keywords: Charitable institution
• Section: 12AA

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH C, AHMEDABAD BEFORE SHRI BHAVNESH SAINI, JM & SHRI A.N. PAHUJA, AM I.T.A. NO.3919/AHD/2008 SHRI CHANDRA PRABHU VS CIT-II, 2 ND FLOOR DIGAMBAR JAIN MANDIR AAYAKAR BHAVAN AT VASO, TAL : NANDIAD RACE COURSE CIRCLE DIST : KHEDA BARODA-390 007 [PAN : AAETS4908F] (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI MK PATEL,AR REVENUE BY : SHRI SANJEEV KASHYAP,DR O R D E R AN PAHUJA : THIS APPEAL BY THE ASSESSEE TRUST DIRE CTED AGAINST AN ORDER DATED 29-09-2008 OF THE LD. COMMISSIONER OF INCOME-TAX-I I, BARODA, DECLINING REGISTRATION U/S 12AA OF THE INCOME-TAX ACT,1961[HE REINAFTER REFERRED TO AS THE ACT], RAISES THE FOLLOWING GROUNDS: 1. THAT THE LEARNED HONORABLE C.I.T.II, BARODA HAS ERR ED IN HOLDING THAT THE POSSIBILITY OF REALIZATION OF THE TRUST FUND BY THE MEMBERS OF THE TRUSTEES FOR THEIR PERSONAL BENE FITS CAN NOT BE RULED OUT IS LEGALLY AND FACTUALLY NOT TENAB LE AND IT SEEMS THAT THE VIEW TAKEN BY HONORABLE C.I.T. IS BA SED ON ASSUMPTION AND PRESUMPTION ONLY AND LIABLE TO REJEC T THIS ASSUMPTION IN TOTO. 2. THAT THE LEARNED HONORABLE C.I.T. II, BARODA HAS ERRED IN CONCLUDING THAT THE TRUST IS MORE A PERSONAL TRUST THAN A CHARITABLE TRUST IS ALSO NOT LEGAL AND FACTUALLY NO T CORRECT AND BASED ON PRESUMPTION AND ASSUMPTION ONLY. 3. THAT THE LEARNED HONORABLE C.I.T. II, BARODA HAS ERRED IN CONCLUDING THAT AS THERE IS NO WINDING UP CLAUSE, T HE TRUST IS A NON CHARITABLE TRUST IS ALSO NOT LEGALLY CORRECT. 4. THE APPELLANT THEREFORE PRAYS THAT THE REGISTRAT ION U/S 12AA OF THE ACT BE GRANTED OR PROPER DIRECTION MAY BE GI VEN TO HON C.I.T- II, BARODA FOR DOING NEEDFUL IN THE MATT ER. ITA NO.3919/AHD/2008 2 2. FACTS, IN BRIEF, AS PER RELEVANT ORDER ARE THE ASSESSEE TRUST, SHRI CHANDRA PRABHU DIGAMBAR JAIN MANDIR, VASO, DIST. KHEDA STAT ED TO HAVE BEEN CREATED ON 11.12.1952, SUBMITTED AN APPLICATION FOR REGIST RATION UNDER SECTION 12A(A) OF THE ACT ON 7.03.2008 . ON VERIFICATION OF THE APPL ICATION AND THE COPY OF THE TRUST DEED , THE LD. CIT NOTICED THAT THAT THE WORKING CO MMITTEE MEMBERS HAD BEEN ENABLED AND EMPOWERED THROUGH THE TRUST DEED TO OWN SHARES, DEBENTURES, FIXED DEPOSITS AND OTHER REAL ESTATE ASSETS IN THEIR OWN NAMES. BESIDES, THERE WAS NO WINDING UP CLAUSE IN THE DEED AS TO WHOM THE TRUST PROPERTY WILL BE TRANSFERRED IN THE EVENT OF WINDING UP. TO A QUERY BY THE LD. CIT , THE ASSESSEE VIDE THEIR LETTER DATED 22-09-2008 STATED THAT THE CLAUSE REL ATING TO INVESTMENT IN SHARES ETC.IS TO BE READ WITH SUBSEQUENT CLAUSE NAMELY FU ND AND INVESTMENT WHEREIN IT IS MENTIONED THAT THE AMOUNT (IF SURPLUS) IS NOT ALLOTTED INTO INVESTMENT SHOULD BE DEPOSITED IN TO RECOGNIZED BANK UNDER THE NAME O F THE TRUST AND THEREFORE, ALL INVESTMENT OR PURCHASE OF ASSETS MADE IN THE NAMES OF THE TRUSTEE ARE GIVEN AS PART OF PROCEDURE AND SMOOTH FUNCTIONING. REGARDIN G THE WINDING UP CLAUSE, THE ASSESSEE STATED THAT THE TRUST IS REGISTERED UNDER BOMBAY PUBLIC TRUST ACT AND IT CAN NOT BE WOUND UP WITHOUT THE PERMISSION OF THE C HARITY COMMISSIONER. HOWEVER, THE LD. CIT DID NOT ACCEPT THESE SUBMISSIO NS OF THE ASSESSEE AND DECLINED TO REGISTER THE TRUST U/S 12AA OF THE ACT ON THE GROUND THAT THE APPLICANT TRUSTS EXPLANATION REGARDING THE INVESTMENT OF FUN DS IN SHARES, DEBENTURE, FIXED DEPOSITS AND OTHER REAL ESTATE ASSETS IN THE NAMES OF TRUSTEES IS NOT FOUND TO BE SATISFACTORY WHILE THEIR EXPLANATION REGARDING THE WINDING UP CLAUSE IN THE DEED DOES NOT SATISFY THE REQUIREMENTS UNDER THE ACT AND THEREFORE, THE GENUINENESS OF OBJECTS AS WELL AS ACTIVITIES OF THE APPLICANT T RUST HAD NOT BEEN ESTABLISHED. 3. THE ASSESSEE TRUST IS NOW IN APPEAL BEFORE US AGAINST THE AFORESAID FINDINGS OF THE LD. CIT. AT THE OUTSET, THE LD. AR ON BEHALF OF THE TRUST WHILE INVITING OUR ATTENTION TO RESOLUTIONS NO. 116 & 117 DATED 5.9.2009 PASSED IN THE AGM OF THE TRUST SUBMITTED THAT THE TRUST DEED H AS BEEN AMENDED AND NOW INVESTMENTS WOULD BE MADE ONLY IN THE NAME OF THE T RUST AND WINDING UP CLAUSE HAS ALSO BEEN PROVIDED. ACCORDINGLY, THE LD. AR PLE ADED THAT MATTER MAY NOW BE ITA NO.3919/AHD/2008 3 RESTORED TO THE FILE OF THE LD. CIT FOR ALLOWING R EGISTRATION IN THE LIGHT OF THESE AMENDMENTS. ON THE OTHER HAND, THE LD. DR DID NOT OPPOSE THESE SUBMISSIONS ON BEHALF OF THE TRUST. 4. WE HAVE HEARD BOTH THE PARTIES AND GONE T HROUGH THE FACTS OF THE CASE. IN THE LIGHT OF AMENDMENTS IN TERMS OF THE AFORESAID R ESOLUTIONS NO. 116 & 117 DATED 5.9.2009 PASSED IN THE AGM OF THE TRUST, WE F IND MERIT IN THE UNDISPUTED CONTENTIONS OF THE LD. AR ON BEHALF OF THE TRUST A ND ACCORDINGLY, RESTORE THE MATTER TO THE FILE OF THE LD. CIT WITH THE DIRECTIO NS TO RE-EXAMINE THE MATTER IN THE LIGHT OF AFORESAID AMENDMENTS IN THE TRUST DEED AN D AFTER SATISFYING HIMSELF ABOUT THE GENUINENESS OF OBJECTS OF THE TRUST AND ITS ACTIVITIES, PASS APPROPRIATE ORDERS IN ACCORDANCE WITH LAW AFTER ALLOWING SUFFIC IENT OPPORTUNITY TO THE ASSESSEE TRUST. WITH THESE DIRECTIONS GROUND NOS. 1 TO 4 IN THE APPEAL ARE DISPOSED OF 5. IN THE RESULT, APPEAL IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED ON THIS 4 TH DAY OF FEBRUARY, 2010. SD/- SD/- (BHAVNESH SAINI) (A.N. PAHUJA) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD, DATED :4TH FEBRUARY, 2010 PK/- COPY TO: 1. THE ASSESSEE 2. CIT-II,BARODA 3. DR, C BENCH BY ORDER DEPUTY REGISTRAR, ITAT, AHMEDABAD