Shree Hari Gokulesh Gau Seva Charitable Trust, JAMNAGAR V. The Commr. of Income Tax, JAMNAGAR

ITA 672/RJT/2014

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 2394 (ITAT-RAJKOT)
• Duration Of Justice: 1 year(s) 1 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-01-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 08-10-2015
• Assessment Year: misc
• Appeal Filed On: 26-11-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: AJIT KUMAR SINHA RESPON
• Keywords: Charitable institution
• Section: 12A; 12AA

Judgement Text

I.T.A. NO. 672/RJT/2014 : : PAGE 1 OF 3 IN THE INCOME TAX APPELLATE TRIBUNAL RAJKOT BENCH, RAJKOT . [CORAM: PRAMOD KUMAR , AM AND RAJPAL YADAV, JM ] I.T.A. NO. 672 /RJT/ 2014 SHREE HARI G OKULESH GAU SEVA CHARITABLE TRUST, C/O CHETAN AGARWAL & CO., CHARTERED ACCOUNTANTS, 601/602, SWAGAT COMPLEX , P.N. MARG, JAMNAGAR . ......... ...... .... APPELLANT VS. COMMISSIONER OF INCOME - TAX, JAMNAGAR . . RESPONDENT APPEARANCES BY: CHETAN AGARWAL ........... FOR THE APPELLANT AJIT KUMAR SINHA .......... F OR THE RESPONDENT D ATE OF CONCLUDING THE HEARING : 8 TH OCTOBER, 2015 DATE OF PRONOUNCING THE ORDER : 4 TH JANUARY, 2016 O R D E R PER PRAMOD KUMAR , AM : BY WAY OF THIS APPEAL, THE ASSESSEE APPELLANT HAS CHALLENGED CORRECTNESS OF THE ORDER DATED 11 T H NOVEMBER, 2014 PASSED BY THE LEARNED COMMISSIONER, REJECTING REGISTRATION U/S 12AA OF THE INCOME - TAX ACT, 1961, ON THE FOLLOWING GROUNDS : - 1. HON. CIT ERRED IN LAW AS WELL ON FACT OBSERVED THAT TRUST DEED DOES NOT CONTAIN PROVISION IN THE EVENT OF ITS DI SSOLUTION TO THE EFFECT THAT UPON DISSOLUTION, IF ANY PROPERTY REMAINS AFTER SATISFACTION OF DEBT AND LIABILITIES, THE SAME SHALL BE TRANSFERRED TO THE TRUST HAVING SIMILAR OBJECT. HOWEVER, HON. CIT HAS NOT CONSIDERED PARA NO.25 OF MODIFIED TRUST DEED DU LY APPROVED BY CHARITY COMMISSIONER CONTAINS THE PROVISION OF DISSOLUTION OF TRUST I.E. IF CIRCUMSTANCES REQUIRE DISSOLUTION OF TRUST THEN AS PER PROVISIONS I.T.A. NO. 672/RJT/2014 : : PAGE 2 OF 3 OF THE SOCIETY REGULATION ACT 1860 IT WILL BE DISSOLVED . HOWEVER, DUE TO NON RECEIPT OF ORIGINAL MODIFIED REPORT FROM THE CHARITY COMMISSIONER HON. CIT HAS NOT GRANTED REGISTRATION U/S 12A OF INCOME - TAX ACT, 1961 AND REJECT OUR APPLICATION FOR THE SAME. 2. LD. COMMISSIONER OF INCOME - TAX HAS ERRED IN REJECTING APPLICATION FOR GRANT OF APPROVAL OF REGISTR ATION U/S 12AA OF THE ACT ON THE GROUND THAT DISSOLUTION CLAUSE IS NOT PROPERLY MENTIONED IN TRUST DEED OF THE APPELLANT TRUST. HE OUGHT TO HAVE GRANTED REGISTRATION U/S 12A CONSIDERING PROVISIONS OF SECTION WHICH ONLY REQUIRES TO INVESTIGATE ABOUT THE GEN UINENESS OF THE ACTIVITIES AND THE OBJECTS OF THE TRUST AND THERE IS NO REQUIREMENT TO APPREHEND DISSOLUTION CLAUSE WHICH IS BEYOND THE CLAUSES AND SCOPE OF THIS SECTION. 2. TO ADJUDICATE ON THIS APPEAL, ONLY A VERY FEW MATERIAL FACTS ARE REQUIRED TO BE T AKEN NOTE OF. THE ASSESSEE APPELLANT IS A TRUST AND IT HAD APPLIED FOR R EGISTRATION , U/S 12A(A) OF THE INCOME - TAX ACT, 1961, ON 3 RD JUNE, 2014. THIS APPLICATION WAS, HOWEVER, REJECTED ON THE FOLLOWING TECHNICAL GROUNDS: - 2 . ON VERIFICATION OF THE TRUST DEED, IT IS OBSERVED THAT THE TRUST DEED CONTAINS THE PROVISION OF DISSOLUTION WHICH READS AS IN CASE OF EXTRAORDINARY CIRCUMSTANCES OF DISSOLUTION AFTER MEETING ALL THE LIABILITIES OF THE TRUST REMAINING PROPERTIES OF THE TRUST MAY BE DISTRIBUTED AS PER THE LAW OF THAT PERIOD AND THE MANAGING TRUSTEE MAY PERFORM ALL THE RESPONSIBILITIES AS CARE TAKER OF THE TRUST. THUS, THE PROVISION IS NOT AS PER LAW. BUT IT SHOULD BE AS AT THE TIME OF DISSOLUTION OF THE TRUST, THE PROPERTIES OF THE TRUST IF ANY, AFTER MEETING THE LIABILITIES OF THE TRUST WOULD BE TRANSFERRED ONLY TO THOSE ANOTHER TRUST HAVING SIMILAR OBJECTS. 3. THEREFORE, NOTICE WAS ISSUED ON 5.11.2014 TO THE APPLICANT TRUST, WHEREBY IT WAS REQUESTED TO EXPLAIN THE DISCREPANCIES MENTIONED ABOVE. THE APPLICANT TRUST HAS VIDE SUBMISSION DATED 10.11.2014 STATED THAT THEY HAVE APPLIED FOR CHANGE IN THE DISSOLUTION CLAUSE OF THE TRUST DEED WITH THE CHARITY COMMISSION FOR AMENDMENT IN THE DISSOLUTION CLAUSE AS PER LAW. 4. HOWEVER, ABOVE EXPLANATION CANNOT BE ACCEPTED AS THE DISSOLUTION CLAUSE IN THE TRUST DEED AT PRESENT IS NOT AS PER LAW. HENCE, THE TRUST IS NOT FOUND TO BE FULFILLING THE CONDITIONS LAID DOWN UNDER THE ACT. 5. IN VIEW OF THE ABOVE FACTS, SINCE THE TRUST HAS FAILED TO PROVE ITS ELIGIBILIT Y FOR REGISTRATION U/S 12A(A) OF THE ACT, REGISTRATION SOUGHT U/S 12AA OF THE ACT CANNOT BE GRANTED. 3. THE ASSESSEE IS AGGRIEVED AND IS IN APPEAL BEFORE US. I.T.A. NO. 672/RJT/2014 : : PAGE 3 OF 3 4. WE FIND THAT THE ASSESSEE TRUST HAD SUITABLY AMENDED THE TRUST DEED AND EVEN THE OBJECTION R AISED BY THE CIT THUS CEASES TO HOLD GOOD IN LAW. LD. CIT HAS ADOPTED A HYPER TECHNICAL APPROACH WHICH EVEN ON MERITS, CANNOT MEET ANY JUDICIAL APPROVAL. ADMITTEDLY, THE TRUST DEED STANDS SUITABLY AMENDED. IN ANY CASE, AS HELD BY A CO - ORDINATE BENCH IN THE CASE OF TARA EDUCATIONAL & CHARITABLE TRUST VS. DIT (EXEMPTIONS) [ITA NO.1247/MUM/2013; ORDER DATED 18 TH JULY, 2014], THE ISSUES REGARDING DISSOLUTION CLAUSE OF A TRUST ARE BEYOND THE SCOPE OF ENQUIRY CONTEMPLATED UNDER SECTION 12A OF THE ACT . IN VIEW O F THESE DISCUSSIONS, AND THE ONLY OBJECTION TO THE REGISTRATION BEING LEGALLY SUSTAINABLE AS DISCUSSED ABOVE, WE UPHOLD THE GRIEVANCE OF THE ASSESSEE. LD. COMMISSIONER IS DIRECTED TO GRANT THE REGISTRATION, AS PRAYED FOR. 5. IN THE RESULT, THE APPEAL IS ALLOWED IN THE TERMS INDICATED ABOVE. PRONOUNCED TODAY ON 4 TH DAY OF JANUARY, 2016 SD/ - SD/ - ( RAJPAL YADAV ) ( PRAMOD KUMAR ) (JUDICIAL MEMBER) (ACCOUNTANT MEMBER) DATED: 4 TH DAY OF JANUARY, 2016 COPIES TO: (1) THE APPELLANT (2) THE RESPONDENT ( 3) COMMISSIONER (4) CIT(A) (5) DEP ARTMENTAL REPRESENTATIVE (6) GUARD FILE BY ORDER ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL RAJKOT