RAMA RASHMI CHHAGANLAL WAGHWALA CHARITABLE TRUST, MUMBAI V. DIT (EXEMPTIONS), MUMBAI

ITA 4509/MUM/2013

• Counselvise Citation: [2015] 121 COUNSELVISE.COM (IT) 0581 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 10 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-04-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 01-01-2015
• Assessment Year: misc
• Appeal Filed On: 05-06-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: B V JHAVERI
• Keywords: Charitable institution
• Section: 12A; 12AA

Judgement Text

1 ITA NO. 4 509 /M/201 3 RAMA RASHMI CHHAGANLAL WAGHWALA CHARITABLE T RUST - , INCOME TAX APPELLATE TRIBUNAL,MUMBAI - D BENCH . , , BEFORE S/SH. D. MANMOHAN , VICE PRESIDENT & RAJENDRA,ACCOUNTANT MEMBER /. ITA NO. 4 509 /MUM/20 13 , / ASSESSMENT YEAR - NOT APPLICABLE RAMA RASHMI CHHAGANLAL WAGHWALA CHARITABLE TRUST FLAT NO.12/12, MAHARAJ MANSION, 298 - SVP ROAD , MUMBAI - 400 004 . PAN:A ACTR 0193 H VS DIRE CTOR OF INCOME TAX (EXEMPTIONS), 6 TH FLOOR, PIRAMAL CHAMBERS, PAREL MUMBAI - 1 2 . ( / ASSESSEE ) ( / RESPONDENT ) /ASSESSEE BY :SHRI B.V. JHAVERI (AR) / REVENUE BY : SHRI SANTOSH KUMAR - (CIT - DR) / DATE OF HEARING : 22 - 0 4 - 2015 / DATE OF PRONOUNCEMENT : 22 - 04 - 2015 , 1961 254 ( 1 ) ORDER U/S.254(1)OF THE INCOME - TAX ACT,1961(ACT) PER RAJENDRA, AM - CHALLENGING THE ORDER DT. 22/04 /2013 OF THE DIRECTOR OF INCOME TAX - EXEMPTIONX MUMBAI (DIT - E) , ASSESSEE HAS RAISED FOLLOWING GROUNDS OF APPEAL: 1) THE LEARNED DIRECTOR OF INCOME TAX (EXEMPTION) ERRED IN REJECTING THE APPLICATION OF REGISTRATI ON UNDER SECTION 12AA OF THE INCOME TAX ACT, 1961 FILED BY THE APPLICANT TRUST. 2) THE LEARNED DIRECTOR OF INCOME TAX (EXEMPTION) ERRED IN NOT CONSIDERING THE PROVISIONS OF BOMBAY PUBLIC TRUST ACT, 1950 WHICH ITSELF PROVIDES FOR THE PROCEDURE TO BE FO LLOWED IF ANY TRUST WANTS TO WIND UP OR DISSOLVE. IT IS STATED IN THE ORDER U/S. 1 2AA(1 )(B )(II) ITSELF THAT 'IF FOR SOME REASON ITS OBJECTS CANNOT BE CARRIED OUT BY THE TRUSTEES WHO DECIDES TO DISSOLVE OR WIND UP THE TRUST THAN AS PER THE PROVISIONS OF BOMBAY PUBLIC TRUST ACT, 1950 ITS NET ASSETS WILL BE GIVEN TO ANOTHER TRUST HAVING SIMILAR OBJECTS AND UNDER NO CIRCUMSTANCES THESE WILL BE DISTRIBUTED AMONG THE TRUSTEES'. 3) THE LEARNED DIRECTOR OF INCOME TAX (EXEMPTION) ERRED IN NOT CONSIDERING THE PROVISIONS OF SECTION 12AA(1 )(B) OF THE INCOME TAX ACT, 1961 WHICH STATES THAT THE LEARNED DIRECTOR OF INCOME TAX (EXEMPTION) SHOULD SATISFY HIMSELF ABOUT THE OBJECT OF THE TRUST AND ABOUT THE GENUINENESS OF ITS ACTIVITIES BEFORE GRANTING REGISTRAT ION TO THE TRUST. HOWEVER ON THE CONTRARY IT IS CLEARLY STATED IN THE ORDER THAT 'AT THIS STAGE NO OPINION IS BEING EXPRESSED ABOUT THE CHARITABLE NATURE OF OBJECTS OF THE APPLICANT TRUST OR THE GENUINENESS OF ITS ACTIVITIES AND SO HE HAS NOT EXAMINE D BOTH AND REJECTED THE APPLICATION. 4) THE LEARNED DIRECTOR OF INCOME TAX (EXEMPTION) ERRED IN INSISTING ONLY ON 'DISSOLUTION CLAUSE' TO BE INSERTED IN TRUST DEED OTHERWISE TREATING THE TRUST AS NOT VALIDLY CONSTITUTED. 5) THE LEARNED DIRECTOR OF INCO ME TAX (EXEMPTION) ERRED IN NOT CONSIDERING THE FACT THAT THE TRUST IS IRREVOCABLE AND SO DISSOLUTION CLAUSE CANNOT BE ADDED. 6) THE LEARNED DIRECTOR OF INCOME TAX (EXEMPTION) ERRED IN NOT APPRECIATING FULLY ALL THE SUBMISSIONS MADE VIDE LETTER DATED 22 .02.13 AND LETTER DATED 15.04.213. 7) YOUR APPLICANT CRAVES LEAVE TO ADD, ALTER OR AMEND ANY OF THE GROUNDS OF APPEAL STATED ABOVE . 2 . EFFECTIVE GROUND OF APPEAL IS ABOUT REJECTING THE APPLICATION OF REGISTRATION FILED BY THE ASSESSEE. VIDE ITS APPLI CATION,DATED 4.10.2012, THE ASSESSEE REQUESTED THE DIT - E TO GRANT REGISTRATION. BY HIS NOTICE,DT.9.1.2013, HE DIRECTED ASSESSEE TO FURNISH CERTAIN DETAIL/DOCUMENTS INCLUDING THE NOTE ON ACTIVITIES UNDERTAKEN BY IT. HE ALSO DIRECTED THE MANAGING TRUSTEE TO ATTE ND HIS OFFICE ON 5.10.2013. A FTER CONSIDERING THE SUBMISSION OF THE ASSESSEE,THE DIT - E HELD THAT IN ORDER TO BE ELIGIBLE FOR REGISTRATION THE ASSESSEE HAD TO BE VALIDLY CONSTITUTED PUBLIC CHARITABLE TRUST, THAT PERUSAL OF THE 2 ITA NO. 4 509 /M/201 3 RAMA RASHMI CHHAGANLAL WAGHWALA CHARITABLE T RUST - TRUST DEED REVEALED THAT THERE WAS NO DISSOLUTION - CLAUSE TO THE EFFECT THAT TRUST WAS IRREVOCABLE, THAT THE ABSENCE OF DISSOLUTION CLAUSE WAS AGAINST THE PROVISIONS OF BOMBAY PUBLIC TRUST ACT, 1950, THAT CLAUSE 1 3(F) OF THE TRUST DEED DECLARED THE APPLICANT TRUST TO BE IRREVOCABLE FOR A LL TIMES, THAT THE IRREVOCABILITY WAS ALWAYS QUA THE SETTLER, THAT THE SAID CLAUSE COULD NOT BE TREATED A SUBSTITUTE FOR PROVISION IMPOSING AN EMBARGO ON THE TRUSTEE ON DISTRIBUTION OF TRUST PROPERTY AMONG THEMSELVES IN CASE OF DISSOLUTION/WIND ING UP OF TH E TRUST,THAT IN THE TRUST - DEED THERE HAD TO BE A SPECIFIC MENTION ABOUT THE DISSOLUTION OF THE PROPE RTY ON WINDING UP OF THE TRUST.THE DIT - E MAD E A REFERENCE TO CLAUSE 13(A) OF THE DEED AND HELD THAT AS PER THE PROVISION OF BOMBAY PUBLIC TRUST ACT A TRUST WAS A PERPETUAL ENTITY, THAT IF THE TRUSTEES WERE UNABLE TO CARRY OUT THE OBJECTS OF THE TRUST IT H AD TO BE DISSOLVED OR WOUND UP, THAT ON ITS WINDING UP ITS CORPUS AND PROPERTY HAD TO BE TRANSFERRED TO ANOTHER TRUST HAVING SIMILAR OBJECTS WITH SANCTION OF T HE CHARITY COMMISSIONER, THAT NO SUCH CLAUSE WAS FOUND TO BE IN THE TRUST DEED, THAT THE ASSESSEE COULD NOT BE SAID TO HAVING CONSTITUTED AS A VALID PUBLIC CHARITABLE TRUST .AS A RESULT, THE APPLICATION FILED BY THE ASSESSEE FOR REGISTRATION U/S. 12AA WAS RE JECT ED . 3. DURING THE COURSE OF HEARING BEFORE US AUTHORISED REPRESENTATIVE (AR) STATED THAT THE TRUST DEED WAS EXECUTED ON 23.5.2011, THAT THE TRUST WAS REGISTERED WITH THE CHARITY COMMISSIONER MUMBAI UNDER BOMBAY PUBLIC TRUST ACT ON 25/5/2005, THAT IT MADE A N APPLICATION F O R REGISTRATION U/S . 12A OF THE ACT ON 4.10. 2012, THAT UNDER THE CLAUSE 13(F) OF THE DEED IT WAS CLEARLY MENTIONED THAT THE TRUST WAS IRREVOCABLE FOR ALL TIME, THAT AS PER CLAUSE 13 ( A ) OF THE DEED THE TRUSTEES WERE EMPOWERED TO TAKE OVER/AMALG AMATE WITH ANY OTHE R TRUST SOCIETY OR INSTITUTION, THAT THERE WAS NO NEED TO PROVIDE FOR A SEPARATE DISSOLUTION CLAUSE IN THE DEED, THAT THE REGISTRATION U/S. 12AA OF THE ACT COULD NOT BE DISALLOWED ON THE BASIS OF ABSENCE OF DISSOLUTION CLAUSE. THE AR RELI ED UPON THE CASE OF TARA EDU - CATION AND CHARITABLE TRUST (ITA/1247/MUM /2013 DT.18.7.2014 AY 2013 - 14). HE ALSO RELIED UPON CASE OF GEETA L ALWANI FOUNDATION (ITA/3566/MUM/2013 AY 2013 - 14 DT. 2.1.2015) . DEPARTMENTAL REPRESENTATIVE(DR) SUPPORTED THE ORDER OF THE D IT(E). 4. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL BEFORE US.WE FIND THAT THE DIT - E HAD DENIED T HE REGISTRATION TO THE ASSESSEE - TRUST BECAUSE HE WAS OF THE OPINION THA T IN ABSENCE OF THE DISSOLUTION - = CLAUSE TRUST WAS NOT ENTITLED FOR REG ISTRATION. W E FIND THAT IN THE CASE OF TARA EDUCATION AND CHARITABLE TRUST AND GEETA LALWANI FOUNDATION (SUPRA), THE TRIBUNAL HAD HELD THAT ABSESNCE OF DISSOLUTION DEED COULD NOT BE THE BASIS FOR REFUSING REGISTRATION TO A TRUST. IN THE CASE OF GEETA LALWAN I FOUNDATION(SUPRA), THE TRIBUNAL HAS HELD AS UNDER : - R EGARDING THER DISSOLUTION CLAUSE NOTHING IS BROUGHT ON RECORD EVEN BEFORE US THAT THE BOMBAY PUBLIC TRUST ACT, 1950 MANDATES FOR INCORPORATION OF MANDATORY CLAUSE OF DISSOLUTION OF ANY IRREVOCABLE TR UST. THEREFORE, IN OUR OPINION, THE DECISION OF THE DIT(E) REJECTING THE REGISTRATION U/S.12A WAS REQUIRED TO BE REVERSED. ACCORDINGLY, GROUNDS RAISED BY THE ASSESSEE ARE ALLOWED. RESPECTFULLY FOLLOWING THE ABOVE REFERRED TWO DECISIONS OF THE TRIBUNAL, WE DECIDE THE EFFECTIVE GROUND OF THE ASSESSEE IN FAVOUR OF THE ASSESSEE AND DIRECT THE DIT(E) TO GRANT REGISTRATION TO THE ASSESSEE - TRUST. AS A RESULT, APPEAL FILED BY THE ASSESSEE STANDS ALLOWED . . ORDER PRO NOUNCED IN THE OPEN COURT ON 22 ND , APRIL , 2015. 22 , 2015 SD/ - SD/ - ( . / D. MANMOHAN ) ( / RAJENDRA) / VICE PRESIDENT / ACCOUNTANT MEMBER / MUMBAI, /D ATE: 22 .04 .2015 JV. / COPY OF THE ORDER FORWARDED TO : 3 ITA NO. 4 509 /M/201 3 RAMA RASHMI CHHAGANLAL WAGHWALA CHARITABLE T RUST - 1. APPELLANT / 2. RESPONDENT / 3. THE CONCERNED CIT(A)/ , 4. THE CONCERNED CIT / 5. DR A BENCH, ITAT, MUMBAI / , , . . . 6. GUARD FILE/ //TRUE COPY// / BY ORDER, / DY./ASST. REGISTRAR , / ITAT, MUMBAI.