Global Academy of Emergency Medicine, New Delhi V. CIT(E), New Delhi

ITA 6291/DEL/2015

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 0815 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 9 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-09-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: H
• Assessment Year: misc
• Appeal Filed On: 27-11-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: VIJAY VERMA
• Assessee Lawyers: RAJEEV BANSAL
• Keywords: Gift; Residential status; Charitable institution
• Section: 12A; 12AA; 10

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH D NEW DELHI BEFORE SHRI G.D. AGRAWAL, PRESIDENT & SHRI AMIT SHUKLA, JUDICIAL MEMBER I.T.A. NO.6291/DEL/2015 GLOBAL ACADEMY OF EMERGENCY MEDICINE, 401, PRABHAT KIRAN, 17 RAJENDRA PLACE, NEW DELHI. VS. CIT(EXEMPTION), NEW DELHI. TAN/PAN: AABTG9513D (APPELLANT) (RESPONDENT) APPELLANT BY: SHRI RAJEEV BANSAL, CA RESPONDENT BY: SHRI VIJAY VERMA, CIT-DR DATE OF HEARING: 14 06 2018 DATE OF PRONOUNCEMENT: 14 09 2018 O R D E R PER AMIT SHUKLA, J.M.: THE AFORESAID APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST THE IMPUGNED ORDER DATED 28.02.2015 PASSED BY LD. CIT (EXEMPTION), NEW DELHI U/S.12AA. IN THE GROUNDS OF APPEAL, THE ASSESSEE HAS RAISED THE FOLLOWING GROUN DS:- 1. THAT THE LEARNED COMMISSIONER OF INCOME TAX (EX EMPTIONS) NEW DELHI HAS ERRED BOTH ON FACTS AND IN LAW WHILE REJE CTING APPLICATION FOR GRANT OF REGISTRATION U/S 12AA AND EXEMPTION U/S 80 G OF THE INCOME TAX ACT TO THE TRUST. 2. THAT PROPER AND MEANINGFUL OPPORTUNITY WAS NOT P ROVIDED TO THE TRUST WHILE FRAMING ORDER OF REJECTION OF APPLICATI ON FOR GRANT OF REGISTRATION TO THE TRUST U/S 12AA OF THE ACT. THUS , THE ORDER FRAMED IS UNJUSTIFIED ILLEGAL AND VOID. I.T.A. NO.6291/DEL/2015 2 2. THE APPLICANT-ASSESSEE IS A TRUST WHICH WAS FORM ED VIDE TRUST DEED DATED 8 TH MARCH 2013, BY A SETTLER, SHRI SATISH KUMAR IN FAVOUR OF FIVE TRUSTEES. THE MAIN OBJECTS OF THE TRUST AS GIVEN IN THE DEED ARE AS UNDER: - MAIN OBJECTS OF THE TRUST ARE: IN FURTHERANCE, BUT NOT IN LIMITATION, OF THE FOREG OING CHARITABLE AND EDUCATIONAL PURPOSES, THE TRUST SHALL: (1) BE DEDICATED TO PROMOTING AND IMPROVING EMERGENCY MEDICINE AND CARE ON A GLOBAL BASIS THROUGH ADVOCACY, TRAINING, AND EDUCATION OF PHYSICIANS AND ALLIED HEALTH CARE PERSONNEL INTERNA TIONALLY; (2) ALONE OR IN COOPERATION WITH OTHER FOUNDATIONS, IN STITUTIONS, ASSOCIATIONS AND OTHER ORGANIZATIONS, CONDUCT ANY A ND ALL ACTIVITIES AND DO ANY AND ALL ACTS AND THINGS WHICH MAY BE NEC ESSARY, USEFUL, SUITABLE OR PROPER IN CONNECTION WITH OR FOR THE FU RTHERANCE, ACCOMPLISHMENT OR ATTAINMENT OF SUCH CHARITABLE AND EDUCATIONAL PURPOSES AS ARE LAWFUL FOR A TRUST FORMED UNDER THE INDIAN LAWS; (3) TO SOLICIT, COLLECT, ACCEPT, HOLD, INVEST, REINVEST AND ADMINISTER ANY GIFTS, GRANTS, BEQUESTS, DEVISES, BENEFITS OF T RUSTS AND PROPERTY OF ANY SORT, WITHOUT LIMITATION AS TO VALUE OR AMOUNT, FOR SUCH CHARITABLE PURPOSES, AND MAKE GRANTS AND CONTRIBUTIONS OF INCO ME AND PRINCIPAL AS THE BOARD OF TRUSTEES MAY FROM TIME TO TIME DETE RMINE, TO INTERNATIONAL, NATIONAL AND COMMUNITY-BASED FOUNDAT IONS, INSTITUTIONS, ASSOCIATIONS AND OTHER ORGANIZATIONS ORGANIZED FOR THE SAME OR SIMILAR PURPOSES; (4) TO BORROW MONEY OR CONTRACT DEBTS AND MORTGAGE, PLE DGE, CONVEY, ASSIGN IN TRUST OR OTHERWISE ENCUMBER OR DI SPOSE OF, THE PROPERTY OR OTHER ASSETS OF THE TRUST; (5) TO PURCHASE, LEASE OR OTHERWISE ACQUIRE, TO OWN, HO LD, USE, OPERATE, MANAGE, IMPROVE, REPAIR, MAINTAIN, CONTROL , TO SELL, ASSIGN, TRANSFER, CONVEY, EXCHANGE, LEASE OR OTHERWISE DISP OSE OF, TO MORTGAGE OR OTHERWISE ENCUMBER, REAL PROPERTY, WHETHER IMPRO VED OR I.T.A. NO.6291/DEL/2015 3 UNIMPROVED, OR STRUCTURES, BUILDINGS, OR OTHER IMPR OVEMENTS THEREON, AND TO CONSTRUCT, IMPROVE, ALTER OR REMOVE STRUCTUR ES, BUILDINGS OR OTHER IMPROVEMENTS UPON REAL PROPERTY. (6) TO CONSTRUCT AND RUN SCHOOLS, COLLEGES, AND EDUCATIONAL INSTITUTIONS FOR THE BENEFIT OF THE PUBLIC AT LARGE . (7) TO PROVIDE GRANTS, SCHOLARSHIPS, FELLOWSHIPS AND OT HER FORMS OF FINANCIAL ASSISTANCE TO THE NEEDY AND DESERVING STU DENTS FOR PURSUING EDUCATION, VOCATIONAL TRAINING, SKILL DEVELOPMENT E TC. (8) TO GRANT FINANCIAL ASSISTANCE TO ANY EDUCATIONAL I NSTITUTION FOR GRANTING SCHOLARSHIPS, PRIZES, MEDALS, AWARDS FOR E XCELLENCE IN STUDIES, SPORTS AND SCIENTIFIC RESEARCH, DISTRIBUTI ON OF BOOKS AND NOTE BOOKS FOR POOR AND OR DESERVING STUDENTS. (9) TO PROVIDE NECESSARY FACILITIES OR TO CONTRIBUTE TO EDUCATIONAL AND SCIENTIFIC RESEARCH DEVELOPMENT IN ANY PLACE AS THE TRUST FINDS DEEMED FIT. (10) TO CARRY OUT ANY ACTIVITIES WITH THE INTENTION OF S ERVICE BUT NOT OF ANY PROFIT MAKING. (11) TO PRINT, PUBLISH, PURCHASE, SELL, CIRCULATE, DISTR IBUTE OR EXHIBIT EITHER FREE OR FOR A PRICE - BOOKS, PERIODICALS, JO URNALS, BOOKLETS, BULLETINS, CALENDARS, MESSAGE-CARDS, OTHER LITERATU RE, FILMS, DOCUMENTARIES, RECORDS, PAINTINGS AND PHOTOGRAPHS W HICH WILL ASSIST OR PROMOTE THE OBJECTS OF THE TRUST. (12) TO PURCHASE, SELL OR OTHERWISE DISTRIBUTE MATERIALS AND SERVICES IN THE FURTHERANCE OF THE OBJECTIVES OF TH E TRUST. (13) TO ARRANGE AND ORGANIZE LECTURES, DEBATES, DISCUSSI ONS, STUDY TOURS, CONFERENCES, OR RADIO-TALKS FOR THE ADVANCEM ENT OF THE OBJECTS OF THE TRUST. (14) TO ORGANIZE AND RUN RESIDENTIAL EDUCATIONAL PROGRAM . (15) TO ESTABLISH TRAINING CENTRES AND ALLIED EDUCATIONA L INSTITUTIONS. (16) RAISE FUNDS THROUGH DONATIONS AND CONTRIBUTIONS TO SUPPORT ALL THE ABOVE ACTIVITIES, AND SETTING UP APPROPRIATE MA NAGEMENT I.T.A. NO.6291/DEL/2015 4 STRUCTURE, INCLUDING SUBSIDIARY UNITS AS NECESSARY. (17) CREATE ASSETS AND TRANSPORT FACILITIES TO ACCOMMODA TE ANY OF THE ABOVE ACTIVITIES. 3. THE TRUST WAS STATED TO BE ESTABLISHED FOR THE BENEFIT OF HUMANITY AT LARGE AND CLASS OF PEOPLE MENTIONED ABO VE WITHOUT DISCRIMINATION OF CASTE, RELIGION, CREED OR SEX. LOOKING TO ITS OBJECTS WHICH WAS CHARITABLE IN NATURE, TRUS T HAS APPLIED FOR REGISTRATION U/S.12AA BEFORE THE LD. CI T(E) VIDE APPLICATION DATED 26.03.2015 AND ALSO APPLICATION F OR EXEMPTION U/S.80G. 4. LD. CIT (E) ON THE PERUSAL OF THE TRUST DEED NOT ED THAT THERE WERE FIVE INITIAL TRUSTEES, AND ALL WERE NON- RESIDENT INDIAN, I.E., WHO HAVE TAKEN THE CITIZENSHIP OF THE FOREIGN COUNTRY. ACCORDING TO LD. CIT (E) IN TERMS OF EXPLANATION - 1 TO SECTION 60 AND SECTION 73 OF THE THE INDIAN TRUST ACT A NON-RESIDENT CANNOT BE A TRUSTEE OF AN INDIAN RESID ENT TRUST UNLESS HE IS DOMICILED IN INDIA. BASED ON THIS REAS ONING, HE HAS REJECTED THE ASSESSEES APPLICATION FOR GRANT O F REGISTRATION U/S.12AA AND APPLICATION FOR EXEMPTION U/S.80G. THE RELEVANT OBSERVATION OF THE LD. CIT(E) READS AS UND ER: 3. IN THIS CONNECTION, IT IS PERTINENT TO MENTION THAT EXPLANATION 1 TO 60 OF THE INDIAN TRUSTS ACT PROVIDES, INTER AL IA, THAT A PERSON DOMICILED ABROAD OR AN ALIEN ENEMY, I.E. A PERSON N OT DOMICILED/RESIDENT IN INDIA OR A PERSON BELONGING T O A STATE WHICH IS AT WAR WITH INDIA, ARE NOT PROPER PERSONS TO BE TRU STEES AND THEY ARE NOT PERMITTED TO BE TRUSTEES OF INDIAN RESIDENT TRU STS. INDIAN COURTS HAVE HELD THAT A NON- RESIDENT CANNOT BE A TRUSTEE OF AN INDIAN I.T.A. NO.6291/DEL/2015 5 RESIDENT TRUST UNLESS HE IS DOMICILED IN INDIA. THE RATIONALE BEHIND THIS IS THAT THE TRUSTEE AT ALL TIMES MUST BE WITHI N THE REACH OF INDIAN COURTS IN ORDER TO ENSURE THE ENFORCEMENT OF THE TE RMS OF THE TRUST. HOWEVER, IF AN INDIAN TRUST DOES NOT HAVE A RESIDEN T TRUSTEE, THEN A COURT APPLICATION WOULD HAVE TO BE MADE IN ORDER TO INVALIDATE THE TRUST. 3.1. SECTION 73 OF THE INDIAN TRUSTS ACT PROVIDES T HAT WHERE A PERSON APPOINTED AS A TRUSTEE IS ABSENT FOR A CONTINUOUS P ERIOD OF SIX MONTHS, LEAVES INDIA FOR A CONTINUOUS PERIOD OF SIX MONTHS, OR LEAVES INDIA FOR THE PURPOSE OF RESIDING ABROAD, A NEW TRU STEE MAY BE APPOINTED IN HIS PLACE BY A PERSON NOMINATED IN THE TRUST DOCUMENT FOR THAT PURPOSE, IF ANY AND IN THE ABSENCE OF SUCH PERSON, BY THE SETTLER OF THE TRUST, IF ALIVE AND COMPETENT TO CON TRACT OR THE SURVIVING/CONTINUING TRUSTEE , IF ANY, OR THE RETIR ING TRUSTEE HIMSELF WITH THE CONSENT OF THE COURT. ALSO UNDER THE INDIA N EXCHANGE CONTROL REGIME, IT IS NOT POSSIBLE FOR A TRUST HOLDING IMMO VABLE PROPERTY TO HAVE A NON-RESIDENT TRUSTEE. 4. IT IS MENTIONED THAT SATISFACTION OF THE COMMISSION ER OF INCOME TAX REGARDING GENUINENESS OF THE ACTIVITIES OF THE ORGANISATION SEEKING REGISTRATION U/S.12AA IS ONE O F THE ESSENTIAL CONDITIONS FOR GRANT OF REGISTRATION U/S 12AA. BOTH THESE REQUIREMENTS ARE CUMULATIVE AND NOT ALTERNATIVE. IN VIEW OF THE DISCUSSION IN THE PRECEDING PARAS AND THE FACT THAT THE FIVE APPLICANT TRUSTEES ARE FOREIGN CITIZENS/NATIONAL, AND NON-RES IDENTS, I AM UNABLE TO SATISFY MYSELF ABOUT THE STRUCTURE OF THE APPLICANT TRUST WHICH IS A CONDITION PRECEDENT FOR GRANT OF REGISTR ATION SO THAT IT CAN BE HELD TO BE FOR CHARITABLE PURPOSE. 4.1 THUS, THE ENTIRE PREMISE FOR REJECTING THE ASSE SSEES APPLICATION WAS THAT THE APPLICANT-ASSESSEE CANNOT BE HELD TO BE A VALID TRUST UNDER THE INDIAN TRUST ACT, 1882. I.T.A. NO.6291/DEL/2015 6 5. BEFORE US, LD. COUNSEL FOR THE ASSESSEE SUBMITTED T HAT THE CONSTITUTION OF THE TRUSTEES WAS SUBSTITUTED BE FORE FILING OF FORM-10A SEEKING REGISTRATION U/S.12A, WHEREIN ON E, MR. MILAKH RAJ ARORA WHO WAS ORDINARY RESIDENT OF INDIA WAS RESIDING IN LUDHIANA, PUNJAB ON PERMANENT BASIS AND HAS REPLACED BY ONE OF THE NON-INDIAN TRUSTEES. THE LIS T OF THE TRUSTEES WAS ALSO ENCLOSED ALONG WITH COPY OF FORM 10A FILED BEFORE THE LD. CIT (E) DULY SIGNED BY MR. MILAKH RA J ARORA. THUS, HE SUBMITTED THAT EXPLANATION-1 TO SECTION 60 OF THE INDIAN TRUST ACT DOES NOT APPLY IN THE PRESENT CASE , AS ONE OF THE TRUSTEES IS ORDINARY RESIDENT AND INDIAN CITIZE N. HE FURTHER SUBMITTED THAT SECTION 12AA REQUIRES THAT L D. CIT(E) HAS TO SATISFY HIMSELF ABOUT THE OBJECTS WHICH SHOU LD BE IN THE NATURE OF CHARITABLE PURPOSES AND ALSO ABOUT THE GENUINENESS OF THE ACTIVITIES OF THE TRUST. THERE I S NO ADVERSE FINDING OR OPINION OF THE LD. CIT(E) ON THE OBJECTS , THEREFORE, REGISTRATION CANNOT BE CANCELLED. IN SUPPORT, HE ST RONGLY RELIED UPON THE DECISION OF ITAT JAIPUR BENCH IN THE CASE OF SIDHA STHAN SHRI KAPLESHWAR MAHADEV SANYAS ASHRAM TRUST VS. CIT(E), ITA NOS.655 & 656/JP/2017 DATED 28 TH SEPTEMBER 2007, (2018) 162 DTR (JP) (TRIB) 202 . HE FURTHER SUBMITTED THAT ALL THE OTHER TRUSTEES OTHER WISE WERE BASICALLY FROM INDIAN ORIGIN AND THEIR PARENTS WERE STAYING IN INDIA AND DUE TO THEIR PROFESSIONAL ACTIVITIES THEY WERE SETTLED ABROAD. THUS, TRUSTEES WHO ARE WELL REPUTED AND FAM ED DOCTORS ARE DOING GENUINE WORK FOR IMPARTING EDUCAT ION IN MODERN MEDICINE AND MEDICAL SCIENCE AND EDUCATING T HE I.T.A. NO.6291/DEL/2015 7 DOCTORS IN GLOBAL STANDARDS IN MEDICAL FIELDS AND M EDICINE. HE ALSO POINTED OUT THAT PONDICHERRY GOVERNMENT HAS GI VEN GRANT TO THE ASSESSEE TRUST LOOKING TO ITS NOBLE CA USE. THUS, NOT ONLY IT IS A VALID TRUST BUT ALSO ITS OBJECTS W ERE CHARITABLE AND HENCE REGISTRATION U/S.12A SHOULD BE GRANTED. 6. ON THE OTHER HAND, LEARNED CIT-DR RELIED UPON THE O RDER OF THE LD. CIT(E) AND SUBMITTED THAT ALL THE TRUSTE ES WERE NRIS; AND IN TERMS OF SECTIONS 60 AND 73 OF THE IN DIAN TRUST ACT, 1882, THEY CANNOT BE HELD TO BE AS PROPER PERSONS/TRUSTEES FOR THE PURPOSE OF INDIAN TRUST AC T. HE FURTHER SUBMITTED THAT OUT OF THE 4 TRUSTEES THREE OF THEM ARE CITIZENS OF AMERICA WHICH IS EVIDENT FROM PASSPORTS APPEARING IN THE PAPER BOOK AND OTHER IS AUSTRALIAN. THUS, TH ERE IS NO QUESTION OF GRANT OF REGISTRATION U/S.12A. 7. WE HAVE HEARD THE RIVAL SUBMISSIONS AND ALSO PERUSE D THE RELEVANT FINDINGS GIVEN IN THE IMPUGNED ORDERS AS WELL AS MATERIAL REFERRED TO BEFORE US. THE SOLE REASON FOR DENYING THE REGISTRATION U/S.12AA BY THE LD. CIT (E) IS THAT TH E TRUSTEES ARE THE NON-RESIDENT AND THEREFORE, UNDER THE PROVI SIONS OF INDIAN TRUST ACT, 1882 THEY CANNOT BE HELD TO BE A VALID TRUSTEE; AND WHEN THE TRUST AND ITS STRUCTURE ITSEL F IS NOT PROPER, THEREFORE, THE CONDITION PRECEDENT FOR GRAN T OF REGISTRATION IS NOT FULFILLED. 8. WE WILL FIRST EXAMINE THE RELEVANT PROVISIONS OF TH E INDIAN TRUST ACT, 1882. FIRST OF ALL, SECTION 10 OF THE INDIAN I.T.A. NO.6291/DEL/2015 8 TRUST ACT PROVIDES FOR WHO CAN BE THE TRUSTEES. THE RELEVANT SECTION READS AS UNDER: - 10. EVERY PERSON CAPABLE OF HOLDING PROPERTY MAY B E A TRUSTEE; BUT, WHERE THE TRUST INVOLVES THE EXERCISE OF DISCR ETION, HE CANNOT EXECUTE IT UNLESS HE IS COMPETENT TO CONTRACT. NO ONE IS BOUND TO ACCEPT A TRUST. A TRUST IS ACCEPTED BY ANY WORDS OR ACTS OF THE TRU STEE INDICATING WITH REASONABLE CERTAINTY SUCH ACCEPTANCE. INSTEAD OF ACCEPTING A TRUST, THE INTENDED TRUSTEE MAY WITHIN A REASONABLE PERIOD, DISCLAIM IT, AND SUCH DISCLAIMER SHALL PREVENT THE TRUST PROPERTY FROM VESTING IN HIM. A DISCLAIMER BY ONE OR TWO MORE CO-TRUSTEES VESTS T HE TRUST-PROPERTY IN THE OTHER OR OTHERS AND MAKES HIM OR THEM SOLE T RUSTEE OR TRUSTEES FROM THE DATE OF THE CREATION OF THE TRUST . ILLUSTRATIONS (A) A BEQUEATHS CERTAIN PROPERTY TO B AND C, HIS EXECUT ORS, AS TRUSTEES FOR D.B. AND C PROVE AS WILL. THIS IS IN ITSELF AN ACCEPTANCE OF THE TRUST, AND B AND C HOLD THE PROPE RTY IN TRUST FOR D. (B) A TRANSFERS CERTAIN PROPERTY TO B IN TRUST TO SELL IT AND TO PAY OUT OF THE PROCEEDS AS DEBTS. B ACCEPTS THE TRUST AND SELLS THE PROPERTY. SO FAR AS REGARDS B, A TRUST OF THE PROCE EDS IS CREATED FOR AS CREDITORS. (C) A BEQUEATHS A LAKH OF RUPEES TO B UPON CERTAIN TRUS TS AND APPOINTS HIM HIS EXECUTORS. B SERVES THE LAKH FROM THE GENERAL ASSETS AND APPROPRIATES IT TO THE SPECIFIC PURPOSE. THIS IS AN ACCEPTANCE OF THE TRUST. 8.1 THE AFORESAID SECTION CLEARLY PROVIDES THAT EVERY PERSON CAPABLE OF HOLDING PROPERTY MAY BE A TRUSTEE , BUT WHERE TRUST INVOLVES THE EXERCISE OF DISCRETION, HE (TRUSTEE) I.T.A. NO.6291/DEL/2015 9 CANNOT EXECUTE IT UNLESS HE IS COMPETENT TO CONTRAC T. THUS, A PERSON WHO MAY BE TRUSTEE MUST BE CAPABLE OF HOLDIN G A PROPERTY OF WHICH THE TRUST IS DECLARED AND MUST BE COMPETENT TO DEAL WITH THE PROPERTY AS REQUIRED BY THE TRUST OR AS DIRECTED BY THE BENEFICIARIES. THE LD. CIT (E ) IN HIS ORDER HAS ALSO MENTIONED THAT UNDER THE INDIAN EXCHANGE C ONTROL REGIME, IT IS NOT POSSIBLE FOR A TRUST HOLDING IMMO VABLE PROPERTY TO HAVE A NON-RESIDENT TRUSTEE. HOWEVER, H E IS NOT SPECIFIED UNDER WHICH INDIAN CONTROL REGIME THERE I S SUCH A BAR. ON THE CONTRARY, PROVISION OF SECTION 6(5) OF FEMA 1999 , A PERSON RESIDENT OUTSIDE INDIA CAN HOLD, OWN, TRAN SFER OR INVEST IN INDIAN CURRENCY, SECURITY OR ANY IMMOVABL E PROPERTY SITUATED IN INDIA, IF SUCH CURRENCY, SECURITY OR PR OPERTY WAS ACQUIRED, HELD OR OWNED BY SUCH PERSON WHEN HE WAS RESIDENT IN INDIA OR INHERITED FROM A PERSON WHO WAS RESIDEN T IN INDIA. THUS, THERE IS NO SPECIFIC BAR UNDER SECTION 10 OF THE TRUST ACT FOR AN APPOINTMENT OF NRI AS TRUSTEE OF AN INDI AN TRUST. 8.2 HOWEVER, CERTAIN RESTRICTION OF APPOINTMENT OF NRI AS TRUSTEE HAS BEEN GIVEN IN THE ACT, FOR EXAMPLE SECT ION 73 WHICH PROVIDES AS UNDER: - 73 . WHENEVER ANY PERSON APPOINTED A TRUSTEE DISCLAIMS, OR ANY TRUSTEE, EITHER ORIGINAL OR SUBSTITUTED, DIES, OR I S FOR A CONTINUOUS PERIOD OF SIX MONTHS, ABSENT FROM INDIA OR LEAVES I NDIA FOR THE PURPOSE OF RESIDING ABROAD, OR IS DECLARED AN INSOL VENT, OR DESIRES TO BE DISCHARGED FROM THE TRUST, OR REFUSES OR BECO MES, IN THE OPINION OF A PRINCIPAL CIVIL COURT OF ORIGINAL JURI SDICTION, UNFIT OR PERSONALLY INCAPABLE TO ACT IN THE TRUST, OR ACCEPT S AN INCONSISTENT TRUST, A NEW TRUSTEE MAY BE APPOINTED IN HIS PLACE BY I.T.A. NO.6291/DEL/2015 10 (A) THE PERSON NOMINATED FOR THAT PURPOSE BY THE IN STRUMENT OF TRUST (IF ANY), OR (B) IF THERE BE NO SUCH PERSON, OR NO SUCH PERSON A BLE AND WILLING TO ACT, THE AUTHOR OF THE TRUST IF HE BE ALIVE AND COM PETENT TO CONTRACT, OR THE SURVIVING OR CONTINUING TRUSTEES OR TRUSTEE FOR THE TIME BEING, OR LEGAL REPRESENTATIVE OF THE LAST SURVIVING AND C ONTINUING TRUSTEE, OR (WITH THE CONSENT OF THE COURT) THE RETIRING TRU STEES, IF THEY ALL RETIRE SIMULTANEOUSLY, OR (WITH THE LIKE CONSENT) T HE LAST RETIRING TRUSTEE. EVERY SUCH APPOINTMENT SHALL BE BY WRITING UNDER TH E HAND OF THE PERSON MAKING IT. ON AN APPOINTMENT OF A NEW TRUSTEE, THE NUMBER OF T RUSTEES MAY BE INCREASED. THE OFFICIAL TRUSTEE MAY, WITH HIS CONSENT AND BY T HE ORDER OF THE COURT, BE APPOINTED UNDER THIS SECTION, IN ANY CASE IN WHICH ONLY ONE TRUSTEE IS TO BE APPOINTED AND SUCH TRUSTEE IS TO BE THE SOLE TRUSTEE. THE PROVISIONS OF THIS SECTION RELATIVE TO A TRUSTE E WHO IS DEAD INCLUDE THE CASE OF A PERSON NOMINATED TRUSTEE IN A WILL, BUT DYING BEFORE THE TESTATOR, AND THOSE RELATIVE TO A CONTIN UING TRUSTEE INCLUDE A REFUSING OR RETIRING TRUSTEE IF WILLING T O ACT IN THE EXECUTION OF THE POWER. SECTION 73 THUS, DEALS WITH THE APPOINTMENT OF A NE W TRUSTEE ON DEATH, OR IS ABSENT FROM INDIA FOR THE PERIOD OF MORE THAN 6 MONTHS OR DOMICILED OUTSIDE INDIA, ETC. THIS SECTIO N MERELY PROVIDES THAT A NEW TRUSTEE MAY BE UNFIT TO BE APPO INTED IN CASE THE SAID PERSON IS DOMICILED ABROAD FOR A PERI OD OF SIX MONTHS CONTINUOUSLY; OR LEAVES INDIA FOR THE PURPOS E OF RESIDING ABROAD, ETC. IN SUCH A CASE, IT IS CONSIDE RED THAT THERE IS A PERSONAL INCAPACITY TO ACT IN A TRUST BY SUCH I.T.A. NO.6291/DEL/2015 11 PERSON. THIS INTER-ALIA MEANS THAT HE IS CONSIDERED TO BE UNFIT FOR THE OFFICE OF THE TRUSTEE AND THE SAID SECTION PRESUME THAT VACANCY HAS OCCURRED AND THE PROVISION AUTHORIZES T HE APPOINTMENT OF A NEW TRUSTEE IN HIS/HER PLACE. THIS PROVISION ALSO DOES NOT FORBID THE APPOINTMENT OF NRI, ALBEIT ACTS AS AN IMPEDIMENT TO THEIR APPOINTMENT. SECTION 73 PER SE CANNOT INVALIDATE A TRUST, BUT RATHER PROVIDES BAR FOR APP OINTMENT OF NON-RESIDENT AS A TRUSTEE. 8.3 SIMILARLY, SECTION 60 R.W.S. EXPLANATION-1 OF THE INDIAN TRUST ACT READS AS UNDER: - 60. THE BENEFICIARY HAS A RIGHT (SUBJECT TO THE PR OVISIONS OF THE INSTRUMENT OF TRUST) THAT THE TRUST PROPERTY SHALL BE PROPERLY PROTECTED AND HELD AND ADMINISTERED BY PROPER PERSO NS AND BY A PROPER NUMBER OF SUCH PERSONS. EXPLANATION ITHE FOLLOWING ARE NOT PROPER PERSONS WITHIN THE MEANING OF THIS SECTION: A PERSON DOMICILED ABROAD; AN ALIEN ENEMY; A PERSON HAVING AN INTEREST INCONSISTENT WITH THAT OF THE BENEFICIARY; A PERSON IN INSOLVENT CIRCUMSTANCES; AND, UNLESS THE PERSONAL L AW OF THE BENEFICIARY ALLOWS OTHERWISE, A MARRIED WOMAN AND A MINOR. THE AFORESAID SECTION PROVIDES THAT BENEFICI ARY HAS A RIGHT TO PROPER TRUSTEES. THIS SECTION IS BASED ON A PRINCIPLE THAT THE TRUST WHOSE PROPERTY DEPENDS FOR ITS CONTI NUANCE UPON THE FAITH AND INTEGRITY OF THE TRUSTEE SHOULD BE ALLOWED FOR ALL PRACTICAL MEANS TO SECURE HIMSELF AGAINST T HE OCCURRENCE OF ANY ACT OF MISCONDUCT. THE FIRST OF T HE RIGHT OF A BENEFICIARY SECURING HIMSELF AGAINST THE OCCURRENCE OF ANY ACT I.T.A. NO.6291/DEL/2015 12 OF MISCONDUCT IS HIS RIGHT TO HAVE THE CUSTODY AND ADMINISTRATION OF THE ESTATE CONFIDED TO THE CARE O F PROPER PERSONS. THE PROPER PERSONS HAVE BEEN DEFINED WHE REBY A PERSON DOMICILE ABROAD, ETC. HAVE BEEN HELD TO BE N OT A PROPER PERSON. THIS SECTION PROVIDES FOR REMOVAL OF THE TRUSTEE BY THE BENEFICIARY OF THE TRUST IF HE IS NOT A PROP ER PERSON AS GIVEN IN EXPLANATION-I . HOWEVER, THIS SECTION AGAIN DOES NOT IN ANY WAY IMPOSE RESTRICTION ON THE AUTHOR AS HE MAY VERY WELL APPOINT A PERSON WHO IS CONSIDERED NOT PROPER UNDER THIS ACT. BENEFICIARY MAY FIRST CHOOSE TO HAVE NOT A PROPER PERSON AS LONG AS THE CONDITION PRECEDENT IN SECTION 10 IS NO T VIOLATED. THIS SECTION ONLY PROVIDES A RIGHT OF THE BENEFICIA RY TO HAVE PROPER TRUSTEES, BUT IT DOES NOT IMPINGE UPON THE V ALIDITY OF THE TRUST AND NOWHERE THE INDIAN TRUST ACT PROVIDES THAT IF THE TRUSTEE IS NOT A PROPER PERSON, THEN THE ENTI RE TRUST CAN BE DECLARED AS INVALID. 9. IN OUR HUMBLE OPINION, PROVISIONS OF SECTION 60 AND 73 OF THE INDIAN TRUST ACT, 1882 AS RELIED UPON B Y THE LD. CIT(E) TO HOLD THAT ASSESSEE TRUST IS NOT A VALID T RUST, AND THEREFORE, CANNOT BE GRANTED REGISTRATION U/S.12AA CANNOT BE HELD TO BE A VALID REASON. AS POINTED OUT BY THE LE ARNED COUNSEL BEFORE THE LD. CIT (E) IN THE APPLICATION F ILED IN FORM 10A, ASSESSEE-APPLICANT TRUST HAS ALREADY GIVEN TH E LIST OF THE TRUSTEES AND ONE OF THE TRUSTEE WAS CITIZEN OF INDIA AND DOMICILED IN INDIA, AND THEREFORE, IT CANNOT BE HEL D THAT SIMPLY BECAUSE OTHER FOUR TRUSTEES WERE NON-RESIDEN T AND THE I.T.A. NO.6291/DEL/2015 13 ASSESSEE TRUST IS NOT A VALID TRUST. WE ACCORDINGLY , HOLD THAT ASSESSEE IS A VALID TRUST UNDER THE INDIAN TRUST AC T, 1882. 10. NOW COMING TO THE OBJECTS AS GIVEN IN THE T RUST DEED, PRIMA FACIE , IT APPEARS THAT ALL THE OBJECTS ARE OSTENSIBLY FOR THE CHARITABLE PURPOSES. HOWEVER, TH E LD. CIT(E) HAS NOT EXAMINED THE OBJECTS AND THE GENUINENESS OF THE ACTIVITIES OF THE ASSESSEE TRUST WHICH IS REQUIRED TO BE EXAMINED WHILE CONSIDERING THE REGISTRATION U/S 12A A, AND THEREFORE, IN ALL FITNESS OF MATER, WE DEEM IT PROP ER THAT THIS MATTER OF REGISTRATION SHOULD BE RESTORED BACK TO T HE FILE OF THE LD. CIT(E) WHO SHALL EXAMINE THE OBJECTS OF THE T RUST AS WELL AS GENUINENESS OF ITS ACTIVITIES; AND IF THE ASSESS EE TRUSTS OBJECTS ARE CHARITABLE AND IS ACTUALLY CARRYING O UT CHARITABLE ACTIVITIES FOR THE BENEFIT OF PUBLIC AT LARGE, THEN REGISTRATION U/S.12AA SHOULD BE GRANTED. CONSEQUENTLY, THE APPLI CATION FOR EXEMPTION U/S.80G SHOULD ALSO BE EXAMINED IN TH AT LIGHT. WITH THIS DIRECTION, APPEAL OF THE ASSESSEE IS TREA TED AS ALLOWED FOR STATISTICAL PURPOSE. 11. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWE D FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 14 TH SEPTEMBER, 2018. SD/- SD/- [G.D. AGRAWAL] [AMIT SHUKLA] PRESIDENT JUDICIAL MEMBER DATED: 14 TH SEPTEMBER, 2018 PKK: