M/s Basil Mendes Memorial Educational and Charitable Trust , Mangalore V. Income Tax Officer Ward-1(1)Exemptions, Mangalore

MA 58/BANG/2019

• Counselvise Citation: [2019] 115 COUNSELVISE.COM (IT) 5446 (ITAT-BANGALORE)
• Duration Of Justice: 6 month(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 27-09-2019
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: C
• Assessment Year: 2011-2012
• Appeal Filed On: 27-03-2019
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: R PREMI
• Assessee Lawyers: PRATIKSHA M PAI
• Keywords: Charitable institution; Maximum Marginal Rate
• Section: 254(2)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH : BANGALORE BEFORE SHRI ARUN KUMAR GARODIA, ACCOUNTANT MEMBER AND SHRI PAVAN KUMAR GADALE, JUDICIAL MEMBER M.P. NO. 58/BANG/2019 (IN ITA NO. 2887 /BANG/201 7 ) ASSESSMENT YEAR : 20 11 - 12 M/S. BASIL MENDES MEMORIAL EDUCATIONAL AND CHARITABLE TRUST, 2-11-821/2 &, ASHLENE, OPP. CIRCUIT HOUSE, KADRI HILLS, MANGALORE 575 004. PAN: AABTB4742K VS. THE INCOME TAX OFFICER, WARD 1 (1) (EXEMPTIONS), MANGALORE. APPELLANT RESPONDENT ASSESSEE BY : SMT. PRATIKSHA M PAI, CA REVENUE BY : SMT. R. PREMI, JCIT (DR) DATE OF HEARING : 13 .0 9 .2019 DATE OF PRONOUNCEMENT : 27. 0 9 .2019 O R D E R PER SHRI A.K. GARODIA, ACCOUNTANT MEMBER THIS M.P. IS FILED BY THE ASSESSEE IN WHICH IT IS CONTENDED THAT THERE ARE CERTAIN APPARENT MISTAKES IN THE IMPUGNED TRIBUNAL ORDER WHICH SHOULD BE RECTIFIED U/S. 254(2) OF THE IT ACT. 2. IN PARA NO. 2 OF THE M.P. FILED BY THE ASSESSEE, THIS IS THE CLAIM OF THE ASSESSEE THAT AS PER PARA NO. 8 OF THE IMPUGNED TRIBUNAL ORDER, IT IS HELD BY THE TRIBUNAL THAT WHEN THE TRIBUNAL READS BOTH CLAUSES OF THE TRUST DEED SIMULTANEOUSLY, IT COMES OUT THAT DURING THE LIFE TIME OF TRUST, THE INCOME / FUNDS CANNOT BE UTILIZED BY THE TRUSTEES BUT IF AT ANY POINT OF TIME, THE TRUSTEES DECIDES TO DISSOLVE THE TRUST, THE FUNDS AND PROPERTIES OF THE TRUST CAN BE DISTRIBUTED TO ANY PERSON AS THE TRUSTEES MAY DECIDE AND THEREFORE, IT CANNOT BE SAID THAT THE TRUST FUND CANNOT BE USED BY THE TRUSTEES AT ALL. IN COURSE OF HEARING, IT WAS SUBMITTED BY LD. AR OF ASSESSEE THAT THE RELEVANT CLAUSE OF TRUST DEED HAD BEEN MISREAD / NOT COMPLETELY READ, AS IS THERE IN THE TRUST DEED, DUE TO WHICH THE WHOLE MEANING OF THE CLAUSE HAS ALTERED, WHILE INTERPRETING THE SAME. IT WAS POINTED OUT BY HER THAT IN PARA NO. 12, PAGE NO. 46 OF THE PAPER BOOK, THE TRIBUNAL HAS M.P. NO. 58/BANG/2019 (IN ITA NO. 2887/BANG/2017) PAGE 2 OF 3 NOT NOTED ABOUT THESE WORDS AND APPROVED BY THE OBJECTS OF THE TRUST. SHE SUBMITTED THAT THIS PORTION OF THE CLAUSE WAS MISSED OUT WHILE PASSING THE ORDER BY THE TRIBUNAL AND THEREFORE, IT IS AN APPARENT MISTAKE IN THE TRIBUNAL ORDER. SHE FURTHER SUBMITTED THAT THE TRIBUNAL HAS ALSO REFERRED TO CLAUSE NO. 3(H) IN WHICH IT IS STATED THAT THE FUNDS AND INCOME OF THE TRUST SHALL BE SOLELY UTILIZED FOR THE ACHIEVEMENT OF ITS OBJECTS AND NO PORTION OF IT SHALL BE UTILIZED FOR PAYMENT TO THE TRUSTEE / MEMBER BY WAY OF PROFITS, INTEREST, DIVIDEND, SALARY ETC. SHE SUBMITTED THAT FROM THIS CLAUSE, THIS IS VERY CLEAR THAT THE TRUST FUNDS CANNOT BE USED FOR THE BENEFIT OF THE TRUSTEES / MEMBER. AS AGAINST THIS, THE LD. DR OF REVENUE SUBMITTED THAT THERE IS NO APPARENT MISTAKE IN THE IMPUGNED TRIBUNAL ORDER. 3. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. FIRST OF ALL, WE REPRODUCE PARA NO. 8 OF THE IMPUGNED TRIBUNAL ORDER BECAUSE THIS IS THE ALLEGATION THAT THERE IS MISTAKE IN THIS PARA OF THE TRIBUNAL ORDER. THIS PARA READS AS UNDER. 8. THIS IS THE SECOND ARGUMENT OF LD. AR OF ASSESSEE THAT SECTION 167B IS NOT APPLICABLE IN RESPECT OF CHARITABLE TRUST/INSTITUTIONS. BUT WE FIND NO MERIT IN THIS CONTENTION OF ASSESSEE BECAUSE WE DO NOT FIND ANY MENTION IN THE PROVISIONS OF SECTION 167B AS PER WHICH CHARITABLE TRUST, INSTITUTIONS ARE EXCLUDED FROM ITS APPLICABILITY. AS PER THE EXPLANATION TO SECTION 167B, IT IS PROVIDED THAT FOR THE PURPOSE OF THIS SECTION, IF THE INDIVIDUAL SHARES OF THE MEMBERS OF AN ASSOCIATION OF PERSONS OR BODY OF INDIVIDUALS IN THE WHOLE OR ANY PART OF THE INCOME OF SUCH ASSOCIATION OR BODY SHALL BE DEEMED TO BE INDETERMINATE OR UNKNOWN AND IF SUCH SHARES (IN RELATION TO THE WHOLE OR ANY PART OF SUCH INCOME) ARE INDETERMINATE OR UNKNOWN ON THE DATE OF FORMATION OF SUCH ASSOCIATION OR BOI OR AT ANY TIME THEREAFTER, MMR IS APPLICABLE IN THE PRESENT CASE, IT IS STATED BEFORE US THAT AS PER CLAUSE 3(H) OF THE TRUST DEED, THE FUNDS AND INCOME OF THE TRUST SHALL BE SOLELY UTILIZED FOR THE ACHIEVEMENT OF THE OBJECTS OF THE TRUST BUT WE FIND THAT AS PER PARA NO. 12 OF THE SAME TRUST DEED, THE TRUST SHALL BE IRREVOCABLE BUT THE TRUSTEES AT ANY TIME IN THEIR DISCRETION AND FOR THE BETTER FULFILLMENT OF THE OBJECTS OF THE TRUST MAY DISSOLVE THE TRUST AND DISTRIBUTE THE FUNDS AND PROPERTIES OF THE TRUST TO SUCH INSTITUTION OR PERSONS, AS THEY MAY DECIDE AND APPROVED BY THE OBJECTS OF THE TRUST. WHEN WE READ BOTH THESE CLAUSES SIMULTANEOUSLY, IT COMES OUT THAT DURING THE LIFE TIME OF TRUST, THE INCOME / FUNDS OF THE TRUST CANNOT BE UTILIZED BY THE TRUSTEES BUT IF AT ANY POINT OF TIME, THE TRUSTEES DECIDES TO DISSOLVE THE TRUST, THE FUNDS AND PROPERTIES OF THE TRUST CAN BE DISTRIBUTED TO ANY PERSON AS THE TRUSTEES MAY DECIDE AND THEREFORE, IT CANNOT BE SAID THAT THE TRUST FUND CANNOT BE USED BY THE TRUSTEES AT ALL. UNDER THESE FACTS, IN OUR CONSIDERED OPINION, THE SHARE OF THE TRUSTEES IN THE TRUST FUND IS NOT KNOWN AND IT IS INDETERMINATE AND THEREFORE, THERE IS NO INFIRMITY IN THE M.P. NO. 58/BANG/2019 (IN ITA NO. 2887/BANG/2017) PAGE 3 OF 3 ORDERS OF THE LOWER AUTHORITIES AS PER WHICH, THEY APPLIED PROVISIONS OF SECTION 164(1) OF IT ACT. HENCE WE DECLINE TO INTERFERE IN THE ORDER OF CIT (A) ON THIS ISSUE. 4. BEFORE US, THIS WAS THE ARGUMENT THAT SOME PORTION OF CLAUSE 12 OF THE TRUST DEED HAS BEEN MISSED OUT BY THE TRIBUNAL BUT WE FIND THAT THIS IS NOT CORRECT. THE TRIBUNAL HAS VERY MUCH NOTED THIS PORTION OF THIS CLAUSE ALSO THAT ON DISSOLUTION OF THE TRUST, FUNDS AND PROPERTIES OF THE TRUST CAN BE DISTRIBUTED TO SUCH INSTITUTION OR PERSONS, AS THEY MAY DECIDE AND APPROVED BY THE OBJECTS OF THE TRUST. HENCE, IT CANNOT BE SAID THAT THIS PORTION OF CLAUSE (12) OF THE TRUST DEED HAS BEEN MISSED OUT BY THE TRIBUNAL. THERE MAY BE A CASE THAT THE INTERPRETATION AND DECISION OF THE TRIBUNAL ON THIS ASPECT MAY BE INCORRECT BUT IT CANNOT BE SAID THAT THERE IS ANY APPARENT MISTAKE IN THE TRIBUNAL ORDER WHICH CAN BE RECTIFIED U/S. 254(2) OF THE IT ACT. HENCE, WE FIND THAT THERE IS NO MERIT IN THE M.P. FILED BY THE ASSESSEE. 5. IN THE RESULT, THE M.P. FILED BY THE ASSESSEE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THE DATE MENTIONED ON THE CAPTION PAGE. SD/- SD/- (PAVAN KUMAR GADALE) (ARUN KUMAR GARODIA) JUDICIAL MEMBER ACCOUNTANT MEMBER BANGALORE, DATED, THE 27 TH SEPTEMBER, 2019. /MS/ COPY TO: 1. APPELLANT 4. CIT(A) 2. RESPONDENT 5. DR, ITAT, BANGALORE 3. CIT 6. GUARD FILE BY ORDER ASSISTANT REGISTRAR, INCOME TAX APPELLATE TRIBUNAL, BANGALORE.