Good Samaritan Ministries Trust, CHENNAI V. CIT, CHENNAI

ITA 626/CHNY/2015

• Counselvise Citation: 62621714 RSA 2015
• Duration Of Justice: 4 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-07-2015
• Appeal Filed By: Assessee
• Bench Allotted: C
• Next Hearing Date: 23-07-2015
• Assessment Year: 2014-2015
• Appeal Filed On: 30-03-2015
• Court: TRIBUNAL
• Assessee Lawyers: P V D PAUL; GODWIN DASON
• Section: 11

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, CHENNAI . . . , ! , ' #$ BEFORE SHRI N.R.S.GANESAN, JUDICIAL MMBER AND SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER ./ ITA NO. 626/MDS/2015 / ASSESSMENT YEAR : 2014-15 GOOD SAMARITAN MINISTRIES TRUST, 3B, 4 TH STREET, KRISHNA NAGAR, MANAPAKKAM 600 125. PAN ABYPE5205C APPELLANT) V. THE COMMISSIONER OF INCOME-TAX (EXEMPTIONS), CHENNAI. RESPONDENT) / APPELLANT BY : SHRI GODWIN DASON, ADVOCATE & P.V.D.PAUL, CA / RESPONDENT BY : SHRI DURGESH SUMROTT, CIT ! / DATE OF HEARING : 23.07.2015 '# ! / DATE OF PRONOUNCEMENT: 31.07.2015 / O R D E R PER CHANDRA POOJARI, ACCOUNTANT MEMBER THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME-TAX DATED 29.1.2015. - - ITA 62 6/15 2 2. THE GRIEVANCE OF THE ASSESSEE IN THIS APPEAL IS WITH REGARD TO NON-GRANTING OF REGISTRATION UNDER SEC.12 AA OF THE INCOME-TAX ACT, 1961. 3. THE FACTS OF THE CASE ARE THAT THE ASSESSEE HAS FILED APPLICATION FOR REGISTRATION U/S.12AA OF THE ACT, W HICH WAS REJECTED BY THE CIT BY OBSERVING THAT F ROM THE TRUST DEED FILED , U NDE R THE HEAD 'THE POWERS AND DUTIES OF THE OFFICE BEARERS OF TH E BOARD OF TRUSTEES' (CLAUSE C . 7 TO C .9 ), I T HAS BEEN PROV I DED AS UNDER : '(7) THE MANAGING TRUSTEE HAS FULL AUTHORITY TO TERMINATE (OR ) TO REMO VE ANY MEMBER OF THE BOARD OF TRUSTEES WHO IN HIS INDIVIDUAL OPINION NEITHE R CONTRIBUTORY OF THE TRUST , NOR OFFERING HIS OR HER FULL CO- OPERATION FOR TH E WELFARE OF THE TRUST, AS AND WHEN ADVISED BY THE BOARD O F TRUSTEES . (8) THE MANAGING TRUSTEE SHALL BE ENTITLED TO NOMIN ATE THE NEXT MANAGING TRUSTEE FOR LIFE. SHOULD A VACANCY ARISE IN THE OFFICE OF THE MANAGING TRUS T EE EITHER BY FAILURE TO NOMINATE A SUCCESSOR OR BY NON-ACCEPTANCE TO THE OFFICE BY THE NOMINEE OR OTHERWISE BY EFFLUX OF TIME, THE REMAINING TRUSTEES SHALL ELECT THE NEW MANAGING TRUSTEE ON SUCH TERMS FOR PERIOD AS MAY BE SPECIFIED BY A RESOLUTION OF THE BOARD OF TRUSTEES . - - ITA 62 6/15 3 (9) . THE MANAGING TRUSTEE SHALL BE ENTITLED TO NOMINATE FURTHER MORE MEMBERS TO THE BOARD OF TRUSTEES IN COURSE OF TIME SUBJECT TO A MAXIMUM - O F SEVEN MEMBERS INCLUDING HIM .' 3.1. ACCORDING TO THE CIT, AS PER THE ABOVE CLAUSE , THE MANAGING TRUSTEE HAS THE SOLE AUTHORITY TO APPOINT AND REMOVE ANY MEMBER OF THE BOARD OF TRUSTEES AT HIS DISCRETI ON, WITH NO POWERS GIVEN TO OTHER TRUSTEES. BY KEEPING ALL POWERS OF APPOINTMENT AND REMOVAL OF TRUSTEES WITH HIMSELF, T HE AUTHOR HAS VIRTUALLY TURNED THIS TRUST TO A 'PRIVATE TRUST'. HE HAS ALSO RETAINED THE POWER TO NOMINATE THE NEXT MANAGING TR USTEE FOR LIFE. THI S IS AGAINST THE PRINCIPLES OF A 'PUBLIC CHARITABLE/R ELIGIOUS TRUST', WHICH SHOULD BE ADMINISTERED IN ITS TRUE SP IRIT AND NOT FUNCTION AT THE SOLE DISCRETION OF A SINGLE FOUNDER , WHO HAS ANOINTED HIMSELF ALSO AS THE MANAGING TRUSTEE. THE BENEFITS OF REGISTRATION U/S.12AA ARE TO BE EXTENDED ONLY TO 'P UBLIC CHARITABLE/RELIGIOUS TRUST U/S.12A/12AA OF THE INCO ME TAX ACT, NOT TO 'PRIVATE TRUSTS' LIKE THE PRESENT ONE. 3.2. FURTHER, ON A PERUSAL OF THE TRUST DEED FILED , IT IS SEEN THAT CLAUSE B.3 READS AS UNDER: - - ITA 62 6/15 4 'TO OPEN AND OPERATE A CC O UNT S OF DESCRIPTION WITH ANY BANK (OR ) BANKS FO R THE TRUST . ' 3.3. AS PER THE ABOVE CLAUSE, IT IS OBSERVED BY T HE CIT THAT THE TRUST CAN OPEN ACCOUNTS WITH 'ANY BANK'. T HIS IS IN VIOLATION OF SECTION 11 (5)(III) OF THE I.T. ACT, W HICH READS AS UNDER:- 'SECTION 11(5)(III): DEPOSIT IN ANY ACCOUNT WITH A SCHEDULED BANK OR A CO-OPERATIVE SOCIETY ENGAGED IN CARRYING ON THE BUSINESS OF BANKING (INCLUDING A CO - OPERATIVE LAND MORTGAGE BANK OR A CO-OPERATIVE LAND DEVELOPMENT BANK) . ' AS PER THIS SECTION, A PUBLIC TRUST CAN OPEN ACCOUN TS WITH ONLY A SCHEDULED BANK AND NOT WITH 'ANY BANK'. THIS IS ANOTHER REASON FOR DENIAL OF REGISTRATION TO THE APPLICANT TRUST. 3.4. FURTHER, AS PER CLAUSE D - HONORARIUM FOR THE OFFICE BEARERS OF THE TRUST OF THE TRUST DEED, THE TRUSTEES ARE ENTITLED TO BE PAID SALARY OR HONORARI UM ETC. AS, MAY BE FIXED AS REASONABLE FROM TIME TO TIME BY THE BOARD OF TRUSTEES. WHILE THERE IS NO BAR ON PAYMENT OF SALAR Y, REMUNERATION OR HONORARIUM TO THE TRUSTEES UNDER TH E ACT, SECTION 13(2)(C) PROVIDES THAT SUCH SALARY / REMUNE RATION HAS TO - - ITA 62 6/15 5 BE PAID (I) FOR SERVICES RENDERED AND (II) SHOULD B E REASONABLE AND NOT EXCESSIVE. BUT, IN THIS CASE, THERE IS NO R ESTRICTIVE CLAUSE SPECIFYING THAT THE SALARY SO PAID WOULD BE PAID FO R SERVICE RENDERED. THUS, THE AFORESAID CLAUSE IS VIOLATIVE O F SECTION 13(1)(C) R.W.S. 13(2)(C) OF THE INCOME TAX ACT. AC CORDING TO THE CIT, THIS IS ANOTHER REASON FOR DENIAL OF REGISTRAT ION IN THE PRESENT FORM. THEREFORE, THE CIT HELD THAT THE ASSESSEE TR UST DOES NOT QUALIFY FOR REGISTRATION U/S.12AA OF THE ACT AND RE JECTED ITS APPLICATION FILED IN FORM 10A. AGAINST THIS, THE ASSESSEE IS IN APPEAL BEFORE US. 4. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE M ATERIAL ON RECORD. THE LD. AR SUBMITTED THAT IN VIEW OF CE RTAIN OBJECTIONABLE CLAUSES OF THE TRUST DEED AS NOTED BY CIT, CORRESPONDING AMENDMENT WAS MADE VIDE SUPPLEMENTARY TRUST DEED DATED 29.4.2015. THUS, THE CIT HAS NO OCCASIO N TO EXAMINE THE SAME. IN THE INTERESTS OF JUSTICE, IT IS APPROPRIATE TO REMIT THE ENTIRE ISSUE TO THE FILE OF THE CIT FOR F RESH CONSIDERATION DE NOVO. WITH THIS OBSERVATION, THE APPEAL OF THE A SSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. - - ITA 62 6/15 6 5. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED ON FRIDAY, THE 31 ST OF JULY, 2015 AT CHENNAI. SD/- SD/- ( $ . . $ . %& ) ( ' ( ) * ) N.R.S.GANESAN + ,-./01.2334.15+ 6 78 /JUDICIAL MEMBER ! 789::3;/<./<=>?@>1 '6 /CHENNAI, A7 /DATED, THE 31 ST JULY, 2015. MPO* 7& BCDC /COPY TO: 1. /APPELLANT 2. /RESPONDENT 3. E+ /CIT(A) 4. E /CIT 5. CF% G /DR 6. %HI /GF.