Shri Gema Education Trust, RAJKOT-GUJARAT V. The Commissioner of Income Tax, Rajkot-II, RAJKOT-GUJARAT

ITA 55/RJT/2013

• Counselvise Citation: 5524914 RSA 2013
• Duration Of Justice: 1 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-04-2013
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 11-04-2013
• Assessment Year: misc
• Appeal Filed On: 05-03-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: AVINASH KUMAR
• Assessee Lawyers: AMIT N LAKHANI
• Keywords: Charitable institution
• Section: 12; 12A; 12AA

Judgement Text

: : IN THE INCOME TAX APPELLATE TRIBULAL: RAJKOT BENCH: RAJKOT . . , . . , BEFORE SHRI T K SHARMA, JM AND SHRI D K SRIVASTAVA, AM ITA NO. 55 /RJT /2013 ASSESSMENT YEAR: 2013 - 14 SHRI GEMA EDUCATION TRUST, V. C OMMISSIONER OF INCOME - TAX GURUKRUPA , PUNITNAGAR, SR. NO.2 , RAJKOT II B/H. PRESS COLONY, NAVAL STREET, CORNER, JAMNAGAR ROAD, RAJKOT PAN : AALTS3173K DATE OF HEARING : 11 - 0 4 - 201 3 DATE OF PRONOUNCEMENT : 15 - 0 4 - 201 3 ASSESSEE BY : SHRI AMIT N. LAKHANI, CA REVENUE BY : SHRI AVINASH KUMAR, DR / ORDER THE APPEAL FILED BY THE ASSESSEE - TRUST IS DIRECTED AGAINST THE ORDER PASSED BY THE LD. CIT , RAJKOT - II U/S 12AA OF THE INCOME - TAX ACT ON 21 . 01 .201 3 , ON THE FOLLOWING GROUNDS: - 1. THE LD. CIT - II, RAJKOT HAS ERRED IN LAW AND ON THE FACTS IN REJE CTING THE APPLICATION MADE U/S 12A(1)(AA) OF THE INCOME TAX ACT, 1961 ON ACCOUNT OF GENUINENESS OF THE TRUEST. 2. THE TRUST DEED IS MADE IN GUJARATI LANGUAGE. THUS, MEANING OF THE EACH AND EVERY CLAUSE SHOULD BE INTERPRETED ACCORDINGLY. THE WORD VEST IS A WORD OF VARIABLE IMPORT. IT HAS NOT GOT FIXED CONNOTATION. THE WORD VEST IS NOT USED IN ALL CASES OF TRANSFERENCE OF COMPLETE OWNERSHIP. THEREFORE, IT HAS TO BE CONSTRUED IN THE CONTEXT OF THE PROVISIONS OF A PARTICULAR STATUTE. (SIDHESHWAR PRASAD V. RAMSAROOP , AIR 1963 PAT. 412 (F.B.)). THUS WHEN WE SPEAK OF TRUSTEE OF A CHARITABLE TRUST, IT CANNOTES NOT THAT PROPERTY IS VESTED IN HIM AS OWNER BUT VESTS ONLY IN THE MANAGEMENT (T.D. VARIKAN V. CIT, AIR 1964 MAD 483). 3. THE LD. CIT - II, RAJKOT HAS ERRE D IN LAW AND ON THE FACTS IN REJECTING THE APPLICATION AND HAS NOT INTERPRETED ALL THE CLAUSES OF THE TRUST DEED BUT READ ONLY A PART OF THE DEED AND CONSTRUED ACCORDINGLY. 4. THE LD. CIT - II, RAJKOT HAS ERRED IN LAW AND ON THE FACTS IN REJECTING THE APPL ICATION AS THERE ARE CASES OF APPROVED REGISTRATION U/S 12A(1)(AA) OF THE 2 ITA 55 /RJT/2013 INCOME TAX ACT, 1961 BY COMMISSIONER OF INCOME TAX, RAJKOT ONLY WHERE THERE IS SAME CLAUSE OF VESTING OF THE ASSETS OF THE TRUST. 2. THE ASSESSEE - TRUST IS REGISTERED WITH THE CHARI TY COMMISSIONER ON 03.02.2012. IT APPLIED FOR REGISTRATION IN FORM NO.10A U/S 12A OF THE INCOME - TAX ACT ON 03.07.2012. THE LD COMMISSIONER OF INCOME - TAX , HOWEVER, DECLINED TO REGISTER THE TRUST WITH THE FOLLOWING OBSERVATIONS: - 3. THEREFORE, BEFORE REJEC TING THE APPLICATION OF THE TRUST FOR REGISTRATION U/S 12AA OF THE INCOME TAX ACT, 1961, A SHOW - CAUSE NOTICE DATED 03.01.2013 WAS ISSUED TO THE TRUST REQUIRING IT TO SHOW CAUSE AS TO W H Y ITS APPLICATION FOR REGISTRATION U/S 12AA OF THE INCOME TAX ACT, 1961 SHOULD NOT REJECTED AS THERE WAS A CLAUSE IN THE TRUST DEED WHICH PROVIDES THAT THE ASSETS OF THE TRUST WOULD BE VESTED TO THE TRUSTEES OF THE TRUST. IN RESPONSE TO THIS NOTICE, THE TRUST VIDE ITS LETTER DATED 15.01.2013 SUBMITTED ITS REPLY WHEREIN IT STA TED THAT . THE PROPERTY OF THE TRUST WILL BE VESTED IN THE NAME OF TRUST ONLY AND THE TRUSTEES OF THE TRUST PRESENT AT THE RELEVANT PERIOD OF TIME WILL BE ONLY THE CUSTODIAN OF THE PROPERTY. AND THERE WILL BE NO RIGHT OF ANY TRUSTEES ON THE PROPERTY OF THE TRUST. 4. I HAVE CONSIDERED THE REPLY OF THE TRUST AND IT IS NOT FOUND TO BE ACCEPTABLE AS THE MERE CONTENTION OF THE ASSESSEE IS NOT ACCEPTABLE UNLESS AND UNTIL THERE IS A CHANGE IN THE TRUST DEED TO THAT EFFECT AND IT IS DULY APPROVED BY THE CHARI TY COMMISSIONER BY. IT IS EVIDENT THAT THERE IS A CLEAR PROVISION IN THE TRUST DEED WHICH VESTS THE ASSETS OF THE TRUST IN THE TRUSTEES OF THE TRUST. THIS IS A CLEAR VIOLATION OF THE PROVISIONS OF SECTION 13(1) (C) OF THE INCOME TAX ACT, 1961. AND THUS THE INCOME OF THE TRUST WOULD NOT BE ELIGIBLE FOR EXEMPTION U/S 11 AND 12 OF THE INCOME TAX ACT, 1961. SINCE THE INCOME OF THE TRUST WOULD NOT BE ELIGIBLE FOR EXEMPTION AB INITIO, THE REGISTRATION U/S 12AA OF THE INCOME TAX ACT, 1961 CANNOT BE GRANTED TO THE T RUST. 3. AT THE TIME OF HEARING, THE LD . AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE SUBMITTED THAT THE ASSESSEE - TRUST WAS IN THE PROCESS OF AMEND ING THE TRUST DEED SO 3 ITA 55 /RJT/2013 AS TO REMOVE THE OBJECTIONS OF THE LD. COMMISSIONER OF INCOME - TAX . HE SUBMITTED THAT TH E MATTER SHOULD, THEREFORE, BE RESTORED TO THE FILE OF THE LD. COMMISSIONER. 4. IN REPLY, THE LD DEPARTMENTAL REPRESENTATIVE DID NOT OBJECT TO THE REQUEST MADE BY THE LD. AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE. 5. WE HAVE HEARD BOTH THE PARTIES AND CAREFULLY CONSIDERED THEIR SUBMISSIONS. NO PREJUDICE WOULD BE CAUSED TO THE REVENUE IF LIB ERTY IS GRANTED TO THE ASSESSEE - TRUST TO AMEND THE TRUST DEED SO AS TO REMOVE THE OBJECTIONS RAISED BY THE LD COMMISSIONER. IN THIS VIEW OF THE MATTER, THE ORDER PASS ED BY THE LD . COMMISSIONER IS SET ASIDE AND THE MATTER IS RESTORED TO THE FILE OF THE LD. COMMISSIONER FOR A FRESH DECISION AFTER THE ASSESSEE - TRUST HAS CARRIED OUT THE REQUISITE AMENDMENT IN THE TRUST DEED AS PER THE OBJECTIONS RAISED BY THE LD COMMISSION ER. APPEAL FILED BY THE ASSESSEE IS TREATED AS ALLOWED FOR STATISTICAL PURPOSES. 15 .04 . 2013 ORDER PRONOUNCED ON 15 .0 4. 201 3 SD/ - SD/ - ( . . / T. K. SHARMA) ( . . / D. K. SRIVASTAVA) / JUDICIAL MEMBER / ACCOUNTANT MEMBER RAJKOT: 15 .04.2013 BT / COPY OF ORDER FORWARDED TO: - 1. / APPELLANT - . SHRI GEMA EDUCATION TRUST, GURUKRUPA, PUNITNAGAR, SR. NO.2, B/ H PRESSCOLONY,NAVAL STREET CORNER,JAMNAGAR ROAD, RAJKOT 2. / RESPONDENT - CIT - I I, RAJKOT 3. / CONCERNED CIT 4 . , , / DR, ITAT, RAJKOT 5 . / GUARD FILE. / BY ORDER , T RUE COPY PRIVATE SECRETARY, ITAT, RAJKOT