MAHARAWAL KHEWAJI TRUST,FARIDKOT V. DCIT, C-1 (E), CHANDIGARH

ITA 569/CHANDI/2019

AI Insights

The case involves Maharawal Khewaji Trust, which appealed against the order of the CIT(A), National Faceless Appeal Centre, Delhi, concerning the assessment year 2015-16. The Trust contested the treatment of its income and the denial of its status as a charitable entity under section 12A of the Income Tax Act, 1961. The Trust had previously been involved in legal proceedings to secure its registration as a charitable trust, which were ultimately unsuccessful. The High Court of Punjab and Haryana and the Supreme Court had both found the Trust to be illegally formed and thus not entitled to the benefits accorded to charitable trusts. The Tribunal's decision was based on these judicial findings, leading to the dismissal of the Trust's appeal.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 714496 (ITAT-CHANDIGARH)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-08-2025
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Assessment Year: 2015-2016
• Other Referred Cases: CWP 9483/1996
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: KUSUM BA NSAL
• Keywords: TDS; Source of fund; Charitable institution
• Section: 12A

Judgement Text

"आयकर अपीलȣय अͬधकरण, चÖडीगढ़ Ûयायपीठ, चÖडीगढ़ IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCH, ‘B’, CHANDIGARH BEFORE SHRI RAJPAL YADAV, VICE PRESIDENT & SHRI KRINWANT SAHAY, ACCOUNTANT MEMBER आयकर अपील सं./ ITA No. 569/CHD/2019 Ǔनधा[रण वष[ / Assessment Year : 2015-16 Maharawal Khewaji Trust C/o J K Gupta, ] Advocate, 4702, Hospital Bazar, Bathinda. बनाम Vs. DCIT, Circle 1 (Exemption), Chandigarh. èथायी लेखा सं./PAN NO: AAATM2875R अपीलाथȸ/Appellant Ĥ×यथȸ/Respondent ( Virtual Hearing ) Ǔनधा[ǐरती कȧ ओर से/Assessee by : None राजèव कȧ ओर से/ Revenue by : Smt Kusum Bansal, CIT DR सुनवाई कȧ तारȣख/Date of Hearing : 14.05.2025 उदघोषणा कȧ तारȣख/Date of Pronouncement : 06.08.2025 आदेश/Order Per Krinwant Sahay, AM: Appeal in this case has been filed by the assessee against the order dated 15.02.2019 of Ld. CIT(A), National Faceless Appeal Centre (NFAC), Delhi. 2. Grounds of Appeal are as under:- 1. That on the facts and circumstances of the case and in law, the learned CIT(A) should have waited for Printed from counselvise.com 569-Chd-2019 Maharawal Khewaji Trust, Faridkot. 2 the result of the decision of the Hon'ble Punjab and Haryana High Court on the issue of registration of the Trust u/s 12A of the Income tax Act, 1961 to avoid multiple proceedings. 2. That the learned CIT(A) should have passed the detailed order as his order is appealable. So, it is liable to be quashed. 3. That the learned AO should have taken the income as per the Income and Expenditure A/c and not head wise. So, the assessment is liable to be quashed. 4. That the learned CIT(A) should have set off the loss in charitable hospital with other income of the current assessment year under appeal u/s 70/71 of the Income tax Act, 1961 as the assessee trust has not been treated as charitable trust but AOP for all the sources of income. The same was allowed for the assessment year 2001-02 in appeal vide order dated 13.01.2005 by CIT(A), Bathinda. 5. That on the facts and circumstances of the case and in law, the learned CIT(A) should not have treated the agricultural income for rate purposes being a case of charitable society. 6. That on the facts and circumstances of the case and in law, the learned CIT(A) erred in not allowing the payment of Income tax/TDS against the assessed income as expenditure being a case of charitable society. It is only application of income. Printed from counselvise.com 569-Chd-2019 Maharawal Khewaji Trust, Faridkot. 3 7. That any other relief may kindly be granted to the assessee to whom it is found entitled at the time of hearing of appeal. 3. Brief facts of the case as per the order of the Ld. CIT(A) are as under: “The appellant is a Testamentary Trust which came into existence through \"Will\" executed by Raja Harinder Singh Brar Bans Bahadur, the erstwhile ruler of Faridkot State. The dominant purpose of the said Trust was to look after the buildings and movable properties of the deceased Raja Harinder Singh Brar. The Trust filed an application before the Commissioner of Income Tax, Jalandhar under the provisions of section 12A of the Act on 22.12.1990 but on examining the activities, objects and Constitution of the Trust, the Commissioner, Jalandhar refused to register the Trust as a Charitable Trust. Similar application was made by the Trust before the Commissioner, Amritsar, which application was also rejected. Against such rejections, the appellant Trust approached the Hon'ble Punjab and Haryana High Court by way of writ petition in the year 1996 bearing no. CWP 9483/1996. This writ was dismissed vide order dated 4.11.2013 for want of persuasion but again revived and thus pending, which is still pending and has not yet seen any finality. The appellant claims Printed from counselvise.com 569-Chd-2019 Maharawal Khewaji Trust, Faridkot. 4 itself to be a Trust and a Charitable Trust, though the Department, in the absence of registration to the said Trust, treats it as private Trust and assesses its income accordingly, leading to dispute”. 4. The Assessee has taken 27 adjournments in this case on all previous occasions. The Assessee has been taking such adjournments on the ground that a Writ Petition is lying in the Hon'ble High Court regarding the status of the Trust. Now the Hon'ble High Court of Punjab & Haryana has passed order in CWP 9483-1996 dated April 01,2024 which is as under: - “CWP-9483-1996 Date of Decision: April 01, 2024 M/s Maharawal Khewaji Trust Petitioner(s) Vs. Commissioner of Income Tax Jalandhar and another Respondent(s) CORAM: HON'BLE MR. JUSTICE SANJEEV PRAKASH SHARMA HON'BLE MRS. JUSTICE SUDEEPTI SHARMA Present: Mr. Shantanu Bansal, Advocate for the petitioner- assessee. Printed from counselvise.com 569-Chd-2019 Maharawal Khewaji Trust, Faridkot. 5 Mr. Amanpreet (A.P.) Singh, St. Standing Counsel for the respondent. SANJEEV PRAKASH SHARMA.J. (ORAL) Learned counsel for the petitioner states that the Trust has been found as illegally formed Trust and the same has been declared null and void by this Court. SLPs preferred by the Trustee have been rejected by Hon'ble the Supreme Court vide Special Leave Petition (Civil) Nos.9151-9153 of 2020; 10211- 10213 of 2020 and 11206-11208 of 2020, decided on 07.09.2022. 2 In view of the above, learned counsel for the petitioner does not wish to press the present writ petition for want of instructions. 3. Accordingly, the instant writ petition is dismissed as not being pressed. 4 All pending applications, if any, stand disposed of.” 5. On the last hearing, it was made clear that the date of final hearing would be 14th May 2025 and it was made clear to the Assessee that no adjournment should be sought. However, on 14.5.2025, none appeared on behalf of the Assessee, therefore, the matter was taken up for hearing on the basis of material available on record. 6. The ld. DR brought it on record a copy of the order passed by the Hon'ble Jurisdictional High Court in which it has been clearly stated that the Ld. counsel for the Printed from counselvise.com 569-Chd-2019 Maharawal Khewaji Trust, Faridkot. 6 petitioner stated that the Trust has been found as illegally formed Trust and the same has been declared null and void by the Hon'ble High Court. Special Leave Petion preferred by the Trust have been rejected by the Hon'ble Supreme Court by Special Leave Petition (Civil) Nos.9151- 9153 of 2020: 10211-10213 of 2020 and 11206-11208 of 2020 dated 7.9.2022. 7. Since the trust itself is formed illegally, therefore, the findings given by the Assessing Officer and its confirmation by the Ld. CIT(A) that all the income is to be taxed treating the Assessee as ‘AOP’ is valid. Accordingly, Assessee’s appeal on different grounds filed herewith is dismissed. 8. In the result, Assessee’s appeal is dismissed. Sd/- Sd/- ( RAJPAL YADAV ) ( KRINWANT SAHAY) Vice President Accountant Member 06/08/2025 “आर.क े.” Printed from counselvise.com 569-Chd-2019 Maharawal Khewaji Trust, Faridkot. 7 आदेश कȧ ĤǓतͧलͪप अĒेͪषत / Copy of the order forwarded to : 1. अपीलाथȸ/ The Appellant 2. Ĥ×यथȸ/ The Respondent 3. आयकर आयुÈत/ CIT 4. ͪवभागीय ĤǓतǓनͬध, आयकर अपीलȣय आͬधकरण, चÖडीगढ़/ DR, ITAT, CHANDIGARH 5. गाड[ फाईल/ Guard File आदेशानुसार/ By order, सहायक पंजीकार/ Assistant Registrar Printed from counselvise.com "