Super Gas Foundation, Hyderabad V. DIT(Exemptions), Hyderabad

ITA 906/HYD/2012

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 66286 (ITAT-HYDERABAD)
• Duration Of Justice: 3 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-09-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: misc
• Appeal Filed On: 04-06-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: V SRINIVAS
• Assessee Lawyers: K SAI PRASAD
• Keywords: Charitable institution; Wholly owned subsidiary
• Section: 12AA

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH A', HYDERABAD BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SHRI SAKTIJIT DEY, JUDICIAL MEMBER I.T.A. NO. 906/HYD/2012 ASSESSMENT YEAR - NA M/S. SUPER GAS FOUNDATION HYDERABAD PAN: AAKTS7581C V S. THE DIRECTOR OF INCOME - TAX (EXEMPTIONS), HYDERABAD APPELLANT RESPONDENT APPELLANT BY: SRI K. SAI PRASAD RESPONDENT BY: SRI V. SRINIVAS DATE OF HEARING: 27 .0 9 .2012 DATE OF PRONOUNCEMENT: 27 .0 9 .2012 O R D E R PER CHANDRA POOJARI, AM: THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST TH E ORDER OF THE DIRECTOR OF INCOME-TAX (EXEMPTIONS) [DIT(E)], HYDER ABAD DATED 29.3.2012. 2. THE GRIEVANCE OF THE ASSESSEE IS IN THIS APPEAL IS THAT THE DIT(E) IS NOT JUSTIFIED IN NOT GRANTING REGISTRATION U/S. 12AA OF THE INCOME-TAX ACT, 1961 ON THE REASON THAT THE TRUST CAN BE REVOK ED BY THE AUTHOR ANYTIME DURING ITS EXISTENCE BY STATING 'ITS CONTIN UITY IS SUBJECT TO THE WILL OF THE SAID INDIAN COMPANY, THE AUTHOR OF THE TRUST, WHICH IN TURN, IS CONTROLLED BY THE SAID DUTCH MULTINATIONAL'. 3. BRIEF FACTS OF THE ISSUE ARE THAT THE ASSESSEE TRUS T FILED AN APPLICATION IN FORM NO. 10A ON 9.9.2011, SEEKING RE GISTRATION U/S. 12AA OF THE INCOME-TAX ACT, 1961. IN VIEW OF SUCH A PPLICATION, A QUESTIONNAIRE WAS ISSUED BY THE DIT(E) TO THE ASSES SEE TRUST, VIDE LETTER DATED 18.11.2011, TO FURNISH DETAILED INFORMATION O N SPECIFIC POINTS AND TO PRODUCE BOOKS OF ACCOUNT FOR VERIFICATION ON 26. 12.2011. IN RESPONSE, SRI A. BINDU MADHAV, TRUSTEE, APPEARED BE FORE THE DIT(E) AND FILED REPLY TO THE QUESTIONNAIRE AND OTHER INFO RMATION. THE DIT(E) I.T.A. NO. 906/HYD/2012 M/S. SUPER GAS FOUNDATION ===================== 2 OBSERVED FROM THE TRUST DEED WHICH WAS EXECUTED ON 24.06.2011 THAT M/S SHV ENERGY INDIA PRIVATE LIMITED IS THE AUTHOR/ FOUNDER OF THE ASSESSEE TRUST. FROM THE INFORMATION FURNISHED BY THE ABOVE TRUSTEE, THE DIT(E) NOTICED THAT THE SAID COMPANY IS A 100% SUBSIDIARY OF M/S SHV (STEENKOLEN HANDELS-VEREENIGING), WHICH IS A DU TCH MULTI- NATIONAL, CARRYING ON BUSINESS IN DIFFERENT COUNTRI ES. FROM THE TRUST DEED, IT IS FURTHER NOTICED THAT THE AUTHOR OF THE TRUST HAS POWER TO APPOINT TRUSTEE(S), AS PER CLAUSE 6 AND CLAUSE 7(VI ) OF THE SAID TRUST DEED. HE FURTHER NOTED THAT, THE TRUST IS NOT IRRE VOCABLE. UNDER CLAUSE 10 OF THE SAID TRUST DEED, IT IS MENTIONED AS UNDER : 'THE TRUST DEED IS REVOCABLE BY THE AUTHOR ANY TIME DURING ITS EXISTENCE. HOWEVER, SUBSEQUENT TO SUCH REVOCATION THE CORPUS FUNDS GRANTED UNDER THIS DEED , SUCH OTHER ASSETS/PROPERTIES PURCHASED, ACQUIRED BY THE TRUST IN ITS NAME SHALL NOT BE TRANSFERRED IN THE N AME OF AUTHOR, BUT SHALL BE TRANSFERRED AS PER THE AUTHOR' S WISHES AND DESIRES TO ANOTHER TRUST OR SOCIETY REGI STERED UNDER THE INCOME TAX ACT, 1961 WITH SIMILAR AIMS AN D OBJECTIVES. IT IS CLARIFIED THAT, FOR THE PURPOSE O F THIS TRUST DEED, THE TERM 'AUTHOR' SHALL INCLUDE ANY RES ULTANT ENTITY UPON MERGER OR AMALGAMATION OF THE AUTHOR WI TH ANY OTHER ENTITY AND IN CASE OF WINDING UP, THE PAR ENT ENTITY THAT HELD CONTROLLING STAKE IN THE AUTHOR, B EFORE THE WINDING-UP ORDER IS PASSED.' 4. FROM SUCH STIPULATION IN THE TRUST DEED, IT CLEARLY SHOWS THAT THE ABOVE TRUST IS NOT IRREVOCABLE. ITS CONTINUITY IS SUBJECT TO THE WILL OF THE SAID INDIAN COMPANY, THE AUTHOR OF THE TRUST, WHICH IN TURN, IS CONTROLLED BY THE SAID DUTCH MULTINATIONAL. FROM S UCH PROVISION, IT CLEARLY SHOWS THAT THE ABOVE TRUST CAN BE EXTINGUIS HED AT THE INSTANCE AND WILL OF THE SAID DUTCH MULTINATIONAL AT ANY TIM E. UNDER THESE CIRCUMSTANCES, THE DIT(E) WAS OF THE VIEW THAT THE ABOVE TRUST CANNOT BE TREATED AS A WHOLLY PUBLIC CHARITABLE TRUST. THE DIT(E) WAS OF THE OPINION THAT THE ASSESSEE TRUST HAS NOT CARRIED OUT ANY CHARITABLE ACTIVITY AND ACCORDINGLY, HE REFUSED THE REGISTRATI ON U/S. 12AA OF THE ACT. AGAINST THIS THE ASSESSEE IS IN APPEAL BEFOR E US. 5. BEFORE US THE LEARNED AR SUBMITTED THAT BECAUSE THE POWER HAS BEEN GIVEN TO THE AUTHOR/FOUNDER TO REVOKE THE TRUS T DEED AT ANY TIME I.T.A. NO. 906/HYD/2012 M/S. SUPER GAS FOUNDATION ===================== 3 DURING THE EXISTENCE OF THE TRUST, IT DOES NOT DISE NTITLE THE ASSESSEE REGISTRATION U/S. 12AA OF THE ACT, BECAUSE ON REVOC ATION OF THE TRUST DEED, ALL CORPUS FUND GRANTED UNDER THIS TRUST DEED , SUCH OTHER ASSETS/ PROPERTIES ACQUIRED BY THE TRUST IN ITS NAME SHALL BE TRANSFERRED AS PER THE AUTHOR/FOUNDER'S WISHES AND DESIRES TO ANOTHER TRUST OR SOCIETY REGISTERED UNDER THE INCOME-TAX ACT, 1961 WITH SIMI LAR AIMS AND OBJECTS. BEING SO, THE OBJECTS OF THE TRUST ARE NO T AGAINST THE PROVISIONS OF SECTION 2(15) OF THE ACT. FOR THIS PURPOSE HE R ELIED ON THE ORDER OF THE TRIBUNAL IN THE CASE OF SAVIOUR CHARITABLE TRUS T V. CIT (7 TAXMANN.COM 34) (DELHI). HE ALSO RELIED ON 23 SOT 42. 6. ON THE OTHER HAND, THE LEARNED DR STRONGLY OPPOSED THE ARGUMENTS OF THE AR AND RELIED ON THE ORDER OF THE DIT(E). 7. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATE RIAL ON RECORD. IN THIS CASE AN ABSOLUTE POWER HAS BEEN GI VEN TO THE AUTHOR/ FOUNDER TO REVOKE THE TRUST DEED ACCORDING TO HIS W ISHES. IN OUR OPINION, IT WILL AFFECT THE VERY EXISTENCE OF THE T RUST ITSELF. AS SUCH WE ARE NOT INCLINED TO UPHOLD THE ARGUMENTS OF THE ASS ESSEE'S COUNSEL. HOWEVER, AS CONCEDED BY THE AR ON MAKING APPROPRIAT E AMENDMENT TO THE TRUST DEED TO THE SATISFACTION OF THE DIT(E), T HE REGISTRATION WILL BE GRANTED. ACCORDINGLY, THE ENTIRE ISSUE IS REMITTED BACK TO THE FILE OF THE DIT(E) FOR FRESH CONSIDERATION. 8. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED FO R STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 27 TH SEPTEMBER, 2012. SD/ - (SAKTIJIT DEY) JUDICIAL MEMBER SD/ - (CHANDRA POOJARI) ACCOUNTANT MEMBER HYDERABAD, DATED 27 TH SEPTEMBER, 2012 TPRAO I.T.A. NO. 906/HYD/2012 M/S. SUPER GAS FOUNDATION ===================== 4 COPY FORWARDED TO: 1. M/S. SUPER GAS FOUNDATION, C/O. M/S. CH. PARTHASARA THY & CO., 1-1-298/2/B/3, 1 ST FLOOR, SOWBHAGYA AVENUE, ST. NO. 1, ASHOKNAGAR, HYDERABAD-500 020. 2. THE DIRECTOR OF INCOME - TAX (EXEMPTIONS), HYDERABAD. 3 . THE ADIT(E), HYDERABAD. 4 . THE DR A BENCH, ITAT, HYDERABAD