MOTIWALA UPLIFTMENT SOCIAL TRUST, MUMBAI V. DIT (E), MUMBAI

ITA 5213/MUM/2013

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 3037 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 1 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-09-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 09-09-2016
• Assessment Year: 2013-2014
• Appeal Filed On: 23-07-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: G NANTHAKUMAR
• Assessee Lawyers: VIJAY JOSHI
• Keywords: Charitable institution; Benefit of exemption
• Section: 12A; 12AA; 56; 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES B, MUMBAI BEFORE SHRI R.C.SHARMA (AM) AND SHRI RAM LAL NEGI (JM ) ITA NO. 5213/MUM/2013 ASSESSMENT YEAR: - MOTIWAL A UPIFTMENT SOCIAL TRUST , NO. 1, 1 ST FLOOR, 56 MOTIWALA MANSION, DONTED STREET, MASJID BUNDER (W), MUMBAI- 400 009. PAN: AADTM1706E VS. D IRECTOR OF I NCOME T AX (EXEMPTION), MUMBAI. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI. MR. VIJAY JOSHI RESPONDENT BY : SHRI. G. NANTHAKUMAR DATE OF HEARING: 0 9/09/2016 DATE OF PRONOUNCEMENT: 21/09/20 16 O R D E R PER RAM LAL NEGI, JM THE PRESENT APPEAL HAS BEEN FILED BY THE APPELLANT MOTIWALA UPIFTMENT SOCIAL TRUST, MUMBAI, AGAINST ORDER DATED 24/05/201 3 PASSED BY THE DIRECTOR OF INCOME TAX (EXEMPTIONS), MUMBAI, HEREINAFTER REF ERRED TO AS DIT (E) WHEREBY THE LD. DIT(E) REJECTED THE APPLICATION OF THE APPELLANT TRUST FILED U/S 12A OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT ) FOR GRANT OF REGISTRATION. 2. BRIEF FACTS WHICH NEED NECESSARY MENTION FOR TH E PURPOSE OF DECIDING THE PRESENT APPEAL ARE THAT THE APPELLANT TRUST FILED A N APPLICATION FOR REGISTRATION U/S 12A OF THE ACT IN THE PRESCRIBED FORM AS THE TR UST HAD BEEN CREATED BY A DEED OF TRUST DATED 19/03/2012 AND REGISTERED WITH THE CHARITY COMMISSIONER, MUMBAI ON 03/11/2012. IN RESPONSE TO THE NOTICE ISSUED BY 2 ITA NO. 5213/MUM/2013 ASSESSMENT YEAR: - THE DIT (E), THE REQUISITE DOCUMENTS WERE SUBMITTED BY THE APPELLANT TRUST FOR VERIFICATION. THE LD. CIT(E) AFTER PERUSING THE DOC UMENTS IN THE LIGHT OF THE SUBMISSIONS OF THE APPELLANT REJECTED THE APPLICATI ON ON THE FOLLOWING GROUNDS:- I) THAT THE TRUST DEED DOES NOT HAVE A PROPER DIS SOLUTION CLAUSE TO THE EFFECT THAT THE TRUST IS IRREVOCABLE AND THAT IF FOR SOME REASON ITS OBJECTS CANNOT BE CARRIED OUT BY THE TRUSTEES, THEN AS PER THE PROVIS IONS OF THE BOMBAY PUBLIC TRUSTS ACT, 1950 ITS NET ASSETS WILL BE GIVEN TO AN OTHER TRUST HAVING SIMILAR OBJECTS AND UNDER NO CIRCUMSTANCES, THESE WILL BE D ISTRIBUTED AMONG THE TRUSTEES. II) THE APPELLANT TRUST HAS BEEN FORMED WITH BOTH C HARITABLE AND RELIGIOUS OBJECTS AND SINCE THE OBJECTS ARE SUCH AS ESTABLISH MENT AND MAINTENANCE OF MADARSA AND MASJID, CONSTRUCTION AND MAINTENANCE OF DARGAH, SENDING NEEDY AND POOR PERSONS ON HAJ AND UMRAH AND OTHER RELIGIO US PLACES, THE SAME IS HIT BY SECTION 13(1)(B) OF THE ACT. UNDER SECTIONS 11 A ND 12 THE EXPRESSION USED IS CHARITABLE OR RELIGIOUS PURPOSES WHICH CANNOT BE CONSTRUED TO MEAN CHARITABLE AND RELIGIOUS PURPOSES. 3. BEFORE US THE LD. AUTHORIZED REPRESENTATIVE (AR ) SUBMITTED THAT IN VIEW OF THE RATIO LAID DOWN BY THE HONBLE SUPREME COURT IN COMMISSIONER OF INCOME TAX, UJJAN V. DAWOODI BOHARA JAMAT [2014]43 TAXMANN .COM 243(SC) AND HONBLE HIGH COURT OF GUJARAT IN DIRECTOR OF INCOME TAX (EXEMPTION) V. VANCHHARA TIRTHAADHIPATI-CHINTAMANI PARASWAPRWABHU [2015] 59 TAXMANN.COM 417 (GUJARAT) THE IMPUGNED ORDER IS BAD IN LAW AND LIABLE TO BE S ET ASIDE. ON THE OTHER HAND THE LD DEPARTMENTAL REPRESENTATIVE ( DR) RELYING ON THE ORDER OF DIT(E) SUBMITTED THAT THE AUTHORITY BELOW HAS PASSE D THE IMPUGNED ORDER IN ACCORDANCE WITH THE LAW LAID DOWN BY THE HONBLE SU PREME COURT IN STATE OF KERALA V. M.P. SHANTI VERMA JAIN 231 ITR 787 (SC), CIT V. PALGHAT SHDI MAHAL 3 ITA NO. 5213/MUM/2013 ASSESSMENT YEAR: - TRUST 254 ITR 212 (SC) AND HONABLE HIGH COURT OF J &K IN GHULAM MOHIDIN TRUST V. CIT 248 ITR 587 (J&K). 4. WE HAVE HEARD THE RIVAL SUBMISSIONS AND ALSO PER USED THE MATERIAL PLACED BEFORE US INCLUDING THE CASE LAWS RELIED UPON BY TH E PARTIES. FROM THE LANGUAGE OF SECTION 12A OF THE ACT IT IS CLEAR THAT AT THE S TAGE OF REGISTRATION UNDER SECTION 12A OF THE ACT THE AUTHORITY CONCERNED IS R EQUIRED TO SEE WHETHER THE APPLICATION IS MADE IN ACCORDANCE WITH THE REQUIREM ENTS OF SECTION 12A READ WITH RULE 17A AND WHETHER FORM NO. 10A HAS BEEN PRO PERLY FILLED UP. THE AUTHORITY MAY ALSO SEE WHETHER THE OBJECTS OF THE T RUST ARE CHARITABLE OR NOT. IN THE PRESENT CASE THE DIT(E) HAS HELD THAT THE APPEL LANT TRUST IS NOT ELIGIBLE FOR REGISTRATION FIRSTLY IN VIEW OF THE FACT THAT THE T RUST DEED DOES NOT HAVE THE SPECIFIC DISSOLUTION CLAUSE SO AS TO TRANSFER THE N ET ASSETS OF THE TRUST TO ANOTHER TRUST HAVING SIMILAR OBJECTS AS PER THE PRO VISIONS OF MUMBAI PUBLIC TRUST ACT 1950 IF FOR SOME REASON ITS OBJECTS CANNO T BE CARRIED OUT BY THE TRUSTEES. HOWEVER, AS POINTED OUT BY THE LD. AR CLA USE 37 OF THE TRUST CONTEMPLATES THE ARRANGEMENT REGARDING HANDING OVER OF THE CORPUS OF THE TRUST TO SOME OTHER TRUST, SOCIETY OR INSTITUTION H AVING SIMILAR OBJECTS IN CASE THE TRUSTEES IN FUTURE DECIDE UNANIMOUSLY. CLAUSE 3 7 OF THE TRUST READS AS UNDER:- THE TRUST SHALL BE AND REMAIN IRREVOCABLE FOR ALL TIMES TO COME BUT IN CASE THE TRUSTEES TO DECIDE UNANIMOUSLY, THEY MAY H ANDOVER THE CORPUS OF THE TRUST FUND TO ANY OTHER TRUST OR INST ITUTION OR SOCIETY BEING A SOCIETY REGISTERED UNDER THE SOCIETIES REGI STRATION ACT HAVING IDENTICAL OR SIMILAR OBJECTS AND PURPOSES ON SUCH T ERMS AND CONDITIONS AS THE TRUSTEES MAY THINK FIT TO IMPOSE AT THE TIME OF HANDING OVER THE TRUST FUND TO THE INTENT AND PURPO SE THAT THEREAFTER THE TRUST FUND SHALL BE OWNED AND MANAGED BY SUCH T RUST, INSTITUTION OR SOCIETY FOR THE PURPOSE OF THEIR OBJ ECTS. 4 ITA NO. 5213/MUM/2013 ASSESSMENT YEAR: - 5. HENCE, IN OUR CONSIDERED VIEW IT IS NOT CORRECT TO SAY THAT THE APPELLANT TRUST HAS NO DISSOLUTION CLAUSE TO TRANSFER THE COR PUS OF THE TRUST IN ACCORDANCE WITH THE BOMBAY PUBLIC CHARITABLE TRUST ACT, 1950. EVEN IF IT IS NOT SPECIFICALLY MENTIONED IN THE TRUST DEED THAT THE P ROPERTY SHALL BE TRANSFERRED IN ACCORDANCE WITH THE SAID ACT, THE SAID ACT SHALL AUTOMATICALLY COME INTO OPERATION IN CASE THE TRUST IS DISSOLVED. MOREOVER, THE HONABLE GUJARAT HIGH COURT IN DIRECTOR OF INCOME TAX (EXEMPTION) V. VANCHHARA TIR THAADHIPATI- CHINTAMANI PARASWAPRWABHU (SUPRA) HAS HELD THAT REFUSAL TO GRANT REGISTRATIO N TO ASSESSEE TRUST ON THE GROUND OF ABSENCE OF DISSO LUTION CLAUSE IN TRUST DEED WAS UNJUSTIFIED WHERE TRUST DEED SPECIFICALLY PROVI DED THAT IN CASE OF CLOSURE, PROPERTY OF TRUST BE HANDED OVER TO OTHER TRUST HAV ING SIMILAR OBJECTS. IN VIEW OF THE LAW LAID DOWN BY THE HONABLE HIGH COURT OF GUJARAT AFORESAID, THE FINDINGS OF THE LEARNED DIT(E) ARE ERRONEOUS AND NO T SUSTAINABLE IN THE LAW. 6. SO FAR AS THE SECOND GROUND OF REJECTION OF THE APPLICATION IS CONCERNED, THE HONABLE SUPREME COURT IN COMMISSIONER OF INCOME TAX, UJJAN V. DAWOODI BOHARA JAMAT (SUPRA) HAS HELD THAT WHERE ASSESSEE TRUST IS FORM ED WITH BOTH RELIGIOUS AND CHARITABLE OBJECTS, IN TERMS OF SECTI ON 13(1)(B) OF THE ACT, ITS CLAIM FOR REGISTRATION UNDER SECTION 12AA CAN BE DENIED O NLY IN CASE WHEN SUCH OBJECTS ARE CARRIED OUT FOR BENEFIT OF A PARTICULAR RELIGIOUS COMMUNITY OR CASTE. HENCE, THE REGISTRATION CANNOT BE REFUSED IN CASE W HERE TRUST IS FORMED WITH BOTH RELIGIOUS AND CHARITABLE OBJECTS UNLESS IT IS ESTABLISHED THAT THE OBJECTS ARE CARRIED OUT FOR BENEFIT OF A PARTICULAR RELIGIO US COMMUNITY OR CASTE. IN THE PRESENT CASE THE INTENTION OF THE SETTLER OF THE TR UST HAS BEEN INCORPORATED IN CLAUSE (A) OF THE TRUST DEED WHICH READS AS UNDER:- THE SETTLER BEING DESIROUS OF CREATING A TRUST CAL LED MOTIWALA UPLIFTMENT SOCIAL TRUST (MUST) (HEREINAFTER REFERRE D AS THE SAID TRUST) FOR CARRYING OUT CHARITABLE OBJECTS AND PUR POSES WIDE ENOUGH TO CONFER BENEFITS THEREOF ON ALL PERSONS IRRESPECT IVE OF CLASS, CREED 5 ITA NO. 5213/MUM/2013 ASSESSMENT YEAR: - AND COMMUNITY AND FOR RELIEF OF POOR, EDUCATION, ME DICAL RELIEF AND ADVANCEMENT OF SIMILAR OBJECTS OF GENERAL AND SOCIA L WELFARE AND SO THAT SUCH BENEFIT MAY BE GIVEN DIRECTLY TO THE SAID TRUST. 7. FROM THE CONTENTS OF CLAUSE (A) OF THE TRUST IT CANNOT BE INFERRED THAT THE TRUST HAS BEEN CREATED FOR THE BENEFIT OF ANY PARTI CULAR RELIGION OR CASTE WITHIN THE MEANING OF SECTION 13(1)(B) OF THE ACT. THE FAC TS OF THE CASES RELIED UPON BY THE LD. DIT(E) ARE DISTINGUISHABLE FROM THE FACTS O F THE PRESENT CASE. IN THE STATE KERALA VS. M.P. SHANTI VERMA JAIN 231 ITR 787 (SC), CIT V. PALGHAT SHADI MAHAL TRUST (254 ITR 212 SC), GULAM MOHIDIN TRUST V S. CIT (248 ITR 587 J& K) AND SHRI. DHAKAD SAMAJ DHARMASHALA BHAWAN TRUST VS. CIT (302 ITR 321 MP ) THE QUESTION TO BE DECIDED BEFORE THE RESPECTIVE CO URTS WAS WHETHER THE TRUST WAS ENTITLED FOR BENEFIT OF EXEMPTION U/S 11 OF THE ACT IN THE LIGHT OF THEIR RESPECTIVE OBJECTS, WHEREAS IN THE PRESENT CASE THE CORE ISSUE TO BE DECIDED IS, WHETHER IN THE LIGHT OF THE FACTS AND CIRCUMSTANCES OF THE CASE, THE APPELLANT TRUST IS ELIGIBLE FOR REGISTRATION U/S 12A OF THE A CT OR IS NOT ELIGIBLE FOR THE SAME. HENCE, IN OUR CONSIDERED OPINION THE IMPUGNED ORDER IS NOT IN ACCORDANCE WITH THE LAW DISCUSSED ABOVE. WE, THEREF ORE, SET ASIDE THE IMPUGNED ORDER AND DIRECT THE LD. DIT(E) TO GRANT R EGISTRATION WITHIN SIXTY DAYS FROM THE DATE OF RECEIPT OF THIS ORDER. 8. IN THE RESULT, THE APPEAL FILED BY THE APPELLAN T TRUST IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT 21 ST SEPTEMBER, 2016. SD/- SD/- ( R.C.SHARMA ) (RAM LAL NEGI) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI; DATED: 21/09/2016