RADISSON INDIA CHARITABLE FOUNDATION,GURGAON V. ITO EXEMPTION WARD, FARIDABAD

ITA 3976/DEL/2024

AI Insights

Radisson India Charitable Foundation filed appeals against the orders of the CIT Exemptions, Chandigarh, which rejected their applications for registration under Section 12AB and Section 80G of the Income Tax Act, 1961. The primary issues were whether the trust's activities, which included providing education and healthcare to the families of deceased employees, constituted public charitable activities, and whether the absence of a dissolution clause in the trust deed was a valid ground for rejection. The Tribunal referenced the Supreme Court's decision in Ahmedabad Rana Caste Association vs. CIT, which clarified that benefiting a section of the public qualifies as a charitable purpose. The Tribunal also noted that the trust deed's lack of a dissolution clause should not preclude registration, especially in light of amendments to Section 115TD of the Act.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 474851 (ITAT-DELHI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-01-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: F
• Assessment Year: 2022-2023
• Other Referred Cases: Ahmedabad Rana Caste Association Vs. CIT, Gujrat, Hiralal Bhagwati Vs. CIT
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAJESH KUMAR
• Assessee Lawyers: R.K. KAPOOR; PRINCE
• Keywords: Set aside; Gift; Charitable institution
• Section: 22; 12A; 80G

Judgement Text

" 1 ITA Nos. 3976 and 3978/Del/2024 Radisson India Charitable Foundation IN THE INCOME TAX APPELLATE TRIBUNAL DELHI (DELHI BENCH ‘F’ NEW DELHI) BEFORE SHRI M. BALAGANESH, ACCOUNTANT MEMBER AND SH. YOGESH KUMAR U.S., JUDICIAL MEMBER ITA No. 3976/Del/2024 (A.Y. 2022-23) Radisson India Charitable Foundation First Floor, Block A Chimes, Plot No. 61, Sector 44, Gurgaon, Haryana PAN: AAETR3910L Vs. ITO Exemption Ward, Faridabad, Haryana Appellant Respondent ITA No. 3978/Del/2024 (A.Y. 2022-23) Radisson India Charitable Foundation First Floor, Block A Chimes, Plot No. 61, Sector 44, Gurgaon, Haryana PAN: AAETR3910L Vs. Assessing Officer Exemption Ward, Faridabad, Haryana Appellant Respondent Assessee by Shri R. K. Kapoor, CA& Sh. Prince Chugh, CA Revenue by Sh. Rajesh Kumar, CIT DR Date of Hearing 02/01/2025 Date of Pronouncement 22/01/2025 ORDER PER YOGESH KUMAR, U.S. JM: Both the above captioned Appeals are filed by the Assessee against the order of CIT Exemptions, Chandigarh dated 02/07/2024 for the Assessment Year 2022-23. 2 ITA Nos. 3976 and 3978/Del/2024 Radisson India Charitable Foundation 2. The Grounds of Appeal are as under: - “1. That the order of rejection/cancellation passed u/s 12AB of the Income Tax Act, 1961 (\"the Act\") by Ld. CIT Exemptions Chandigarh (\"Ld. CIT Exemptions\") is bad in law and prayed to be reversed, by directing CIT Exemptions to grant registration u/s 12AB of the Act. 2. That the Ld. CIT Exemptions has grossly erred in law and on the facts and circumstances of the appellant's case in rejecting the registration sought u/s 12A(1)(ac)(iii) of the Income Tax Act, which is illegal, erroneous and bad in law. 3. That the Ld. CIT Exemption has grossly erred in law in denying the registration without appreciating that the objects of the trust are charitable u/s 2(15) of the Income Tax Act, 1961. 4. That the Ld. CIT Exemption erred in law in holding that trust has no \"dissolution clause\" in trust deed although trustees had powers to dissolve the trust in the trust deed which meets such requirement. 5. That the Ld. CIT Exemption failed to appreciate that charity (i.e. Medical Relief and Education) to the families and children of ex-employees also amounts to charity to public. 6. That the appellant craves leave to add, amend, alter, change vary or substitute any of the aforesaid grounds or raise an additional ground if it becomes necessary to do so in the interest of justice. 7. That each ground of appeal is independent and without prejudice to other grounds of appeal raised herein.” 3. Brief facts of the case are that, the Appellant filed an application in Form No. 10AB on 29/09/2022 seeking registration under Sub Clause (iii) of Clause (ac) of Sub Section (1) of Section 12A of the Income Tax 3 ITA Nos. 3976 and 3978/Del/2024 Radisson India Charitable Foundation Act, 1961 (‘Act’ for short), which has been rejected vide order dated 29/03/2023. Aggrieved by the said order dated 29/03/2023, the Assessee preferred an Appeal before the Tribunal in ITA No.344 and 345/CHD/2023 and the Chandigarh Bench of the Tribunal vide order dated 27/02/2024, remanded the matter to the file of the CIT(E) to decide the application afresh by providing adequate opportunity to the Appellant. After the remand order by the Tribunal, once again Ld. CIT(E) rejected the application for registration u/s 12AB of the Act vide order dated 02/07/2024, consequently, also rejected the grant of approval u/s 80G of the Act vide order dated 02/07/2014. Aggrieved by the orders of the Ld. CIT(E) dated 02/07/2024, the Assessee preferred the captioned Appeals on the Grounds mentioned above. 4. The Ld. Counsel for the Assessee submitted that the Ld. CIT(E) has grossly erred in rejecting registration sought by the Assessee u/s 12A(1)(ac) (iii) of the Act, wherein the Ld. CIT(E) not appreciated the object of the trust which are charitable in nature as per Section 2(15) of the Act. Further submitted that, the Ld. CIT(E)without going through the trust deed, recorded erroneous finding that, the trust deed has no ‘dissolution’ clause though the trust deed meets such requirement. The Ld. Assessee's Representative also submitted that the Ld. CIT(E) failed to 4 ITA Nos. 3976 and 3978/Del/2024 Radisson India Charitable Foundation appreciate that the families and children of ex-employeesare also ‘Public’ which has been grossly undermined by the Ld. CIT(E) in rejecting the application, thus, the Ld. Assessee's Representative sought for allowing the Appeal. 5. Per contra, the Ld. Departmental Representative submitted that the trust deed of the Assessee does not contain ‘dissolution’ clause and there is no clarity as to what could happen to the funds/assets in case of dissolution of trust, further the activities of the trust are only centralized to employees and their family members and not extended to general public, therefore submitted that the trust of the Assessee is not ‘public charitable trust’, therefore, the Ld. CIT(E) has rightly rejected the applications. By relying impugned orders, the Ld. Departmental Representative sought for dismissal of the Appeals filed by the Assessee. 6 We have heard both the parties and perused the material available on record. The Ld. CIT(E) rejected the application for registration filed by the Assessee on two Grounds (1) The activities carried out by the trust are restricted to its own employees, ex-employees and their family members, which shows that it is not a public charitable trust. (2)There is no dissolution clause in the trust deed, the net asset of the trust in case of dissolution can be transferred to any other entity. 5 ITA Nos. 3976 and 3978/Del/2024 Radisson India Charitable Foundation 7. For the purpose of adjudicating above controversy, the objects of the trust deed are to be verified. The Clause 4 of the trust deed deals with the object of the trust which reads as under: “4. The principal objective of Radisson India Charitable Foundation a. The Principal objective of Radisson India Charitable Foundation shall be Follows: b. promoting education directly or indirectly, including special education and employment enhancing vocation skills, promoting education directly or indirectly, including special education and employment enhancing vocation skills especially among children, women, elderly and the differently abled; C promoting livelihood enhancement projects, d. eradicating hunger, poverty, and malnutrition including by providing financial assistance by way of school fee, scholarships to needy children and providing financial help in obtaining healthcare facilities and medical facilities; e. promoting health care including preventive health care and sanitation; f. promoting availability of safe drinking water: g. training to promote rural sports, nationally recognized sports, Paralympics sports and Olympic sports; h. o do all other acts and things as are conducive or helpful in the advancement and fulfilment of the principal and other objects above mentioned; i. to issue appeals and applications for money and funds in furtherance of the said objects and to accept gifts/grants/funds/subscription of cash and securities/immovable and moveable property, 6 ITA Nos. 3976 and 3978/Del/2024 Radisson India Charitable Foundation j. for such other charitable purposes or purpose of public utility as the Trustees may think fit; k. All the activities of the Trust shall be as far as possible, carried out on NO PROFIT, NO LOSS basis and earning of any income or surplus is not the objective of the Trust. Any surplus arising from any activity shall be utilized only for charitable purpose as enshrined in these objectives.” 8. It is the case of the Assessee that the objects of the trust to provide education and medical facilities for public at large and the Assessee has provided details of expenses incurred for providing medical facilities for last three years and all the expenses have been incurred for supporting the family members of the employees of Radisson Group who tragically passed away during Covid-19 Pandemic. The main objection of the Department is that, the activities carried out by the trust are restricted to its own employees, ex-employees and their family members, thus the Assessee trust is not a public charitable trust. 9. The Hon'ble Supreme Court in the case of Ahmedabad Rana Caste Association Vs. CIT, Gujrat reported in (1971) 82 ITR 704 (S.C) held as under:- “It is well settled by now and the High Court also has rightly taken that view that an object beneficial to a section of the public is an object of general public utility. To serve a charitable purpose it is not necessary that the object should be to benefit the whole of mankind or all persons in a particular country or State. It is sufficient if the intention to benefit a section of the public as distinguished from a specified individual is present. This Court in Commissioner of 7 ITA Nos. 3976 and 3978/Del/2024 Radisson India Charitable Foundation Income tax, Madras v. Andhra Chamber of Commerce(1) overruled the view of Beaumont C.J. in Commissioner of Income tax v. Grain Merchants' Association of Bombay(2) on the point. It was, however, observed that the section of the community sought to be benefitted must be sufficiently defined and identifiable by some common quality of a public or impersonal nature. Where there was no common quality uniting the potential beneficiaries into a class the trust might not be regarded as valid. In the various orders the clause relating to the beneficiaries has not been clearly and accurately set out. In the petition of appeal dated October 7, 1968 the provisions of the constitution of the assessee are set out and with reference to The community it is stated, \"Rana community means natives of Ahmedabad only and the other community brothers accepted by the community as per old rules of the community staying in Ahmedabad\". It is common ground that the word \" old rules\" do not represent the correct translation of the original word in Gujarati which is Riwaj meaning custom. The learned judges of the High Court also, who are conversant with that language, have proceeded on the basis that the correct rendering of the aforesaid word is custom or usage. That is why according to the High Court the definition comprises two classes of members of Rana caste residing in Ahmedabad, one class consisting of those who are natives of Ahmedabad while the other class consists of such persons who are admitted by the Rana caste according to the old custom or usage of the community. The reason which prevailed with the High Court for treating the second class as not being united with the first class by a common characteristic or attribute was that its members have to be accepted by the community according to the old custom or usage and that the entry of the members of this class into the Rana caste residing in Ahmedabad was dependent on the decision of the caste to (1) 55 I.T.R. 722. (2) 6 I.T.R. 427. Admit them. We are altogether unable to concur in the approach or the conclusion of the High Court on the above point. We may usefully refer to the judgment of Lord Greene M.R. in re Compton, Powell v. Compton & Others(1). The Master of Rolls declared that no definition of what was meant by \"a section of the public\" had, so far as he was aware, been laid down. But he indicated that the trust of a public character is one in which the beneficiaries do not enjoy the benefit when they receive it by virtue of their character as individuals but by virtue of their membership of a specified class the common quality, uniting potential beneficiaries into the class being essentially an impersonal one. This common quality he said was \"definable by reference to what each has in 8 ITA Nos. 3976 and 3978/Del/2024 Radisson India Charitable Foundation common with the others and that is something into which their status as individuals does not enter\". Andrew, L.C.J. accepted this statement of law without hesitation in Trustees of the Londonderry Presbyterian Church House v. Commissioners of Inland Revenue(2). What has to be seen in the present case is whether the members of the Rana caste who are not natives of Ahmedabad but who come to reside there and are accepted as members of that caste according to its usage and customs can be said to have a relationship which is an impersonal one dependent on their condition as members of the Rana community. We are unable to comprehend how such members of the Rana caste can be regarded as having been introduced into that caste by consideration of their personal status as individuals. As a matter of fact the predominant content and requirement of the clause defining \"beneficiaries\" in the constitution of the assessee is the factum of their belonging to the Rana community of Ahmedabad. The common quality, therefore, uniting the potential beneficiaries into the class consists of being members of the Rana caste or community of Ahmedabad whether as natives or as being admitted to that caste or community under custom or usage. The mere fact that a person of the Rana community who is not an original native of Ahmedabad has to prove his credentials according to the custom and usage of that community to get admitted into that community cannot introduce a personal element. In Oppenheim v. Tobacco Securities Trust Co. Ltd. & Others(1) the trustees were directed to apply certain income in providing for the education of children of employees or \"former employees\" of a British limited company or any of its subsidiary or allied companies. It was held by the House of Lords by a majority that though the group of persons indicated was numerous, the nexus between them was employment by particular employers and accordingly the trust did not satisfy the test of public (1) [1945] Ch. 123. (3) [1951] A.C. 297. (2) 27 T.C. 431. 75O benefit requisite to establish it as charitable. This is what Lord Simonds observed – \"A group of persons relationship which takes a group nexus between them is their personal relationship to a single propositus or to several propositi, they are neither the community nor a section of the community for charitable purposes\". 9 ITA Nos. 3976 and 3978/Del/2024 Radisson India Charitable Foundation The personal element of personal relationship which takes a group out of section of the community for charitable purposes is of the nature which is to be found in cases of the aforesaid type. We cannot possibly discover a similar element of personal nature in the members of the Rana community who settle in Ahmedabad and have been accepted by the Rana community of that place as members of that community. As regards the acceptance of such persons as members of the community or caste, according to custom and usage, it is well known that whenever a question arises whether a person belongs to a particular community or caste the custom or usage prevailing in that community must play a decisive and vital part. That cannot be regarded as an element which would detract from the impersonal nature of the common quality. For the reasons given above the appeals are allowed and the answer returned by the High Court is discharged. The matters are remitted to the High Court for returning the answer to the question referred after determining the,- other points which were left undecided. The parties shall bear their own costs in these appeals. Appeals by certificate (i.e. C.As. 2146-2148 of 1968) are dismissed, the certificate being defective for want of reasons. In the case of Hiralal Bhagwati (supra), the trust was created for the benefit of employees of the 16 institutions with the object of providing aid in case of sickness and disablement. The Hon'ble High Court following the decision of Hon'ble Supreme Court in the case of Ahmedabad Rana Caste Association (supra) held that an object beneficial to a section of the public is an object of general public utility.” 10. In the present case, admittedly the trust deed of the Assessee contains the object of carrying out charitable activities to general public. The Assessee has also incurred expenses for providing the education and health care facilities to the children and the family members of Radisson Group Employees who expired due to Covid-19 pandemic. In our opinion, the family members of the deceased employees are part of ‘public’ and there is no relationship of employee and employer between 10 ITA Nos. 3976 and 3978/Del/2024 Radisson India Charitable Foundation the Appellant and the family members of deceased employees. Even otherwise, the ratio laid down by the Hon'ble Supreme Court in the case of Ahmedabad Rana Caste Association (supra) and Harilal Bhagwati Vs. CIT(2000) 246 ITR 188 are applicable to the case in hand. Thus, in our opinion, the Ld. CIT(E) committed error in holding that ‘the activities of the appellant are restricted only to family members of the ex- employees, thus, the Assessee is not a ‘public charitable Trust’. 11. Another reason for rejecting the registration is that there is no dissolution clause in the trust deed of the Assessee. We have gone through the trust deed, wherein in the Clause of ‘power of trustees’, it is mentioned as under: - “1. The Trustees shall have the following powers: (a) To start, abolish, discontinue, and restart any charity/charitable organization or institution for the benefit of the general public and impose conditions to its subscription or donations made therein. (h) To transfer and hand over the Trust to any other trust/society/association/institution on such terms and conditions as the Trustees shall in their absolute discretion think fit and proper.” 12. From the plain reading of the above Clauses, though the trustees have power to transfer and hand over the trust to any other trust/society/Association/Institution, is no mentioning regarding the 11 ITA Nos. 3976 and 3978/Del/2024 Radisson India Charitable Foundation dissolution of the trust and the fate of net asset of the trust in case of dissolution. It is true that the net asset of the trust can be transferred to any entity since, as per the above Clause in the trust deed, the trustees have absolute right to transfer and hand over the Trust to any other trust/society/association/institution on such terms and conditions as the Trustees shall in their absolute discretion think fit and proper. However, after the amendment to provision of Section 115TD of the Act, which has been inserted by Finance Act, 2016 w.e.f. 01/06/2016, the relevance of having dissolution clause and the apprehension on the transfer of net asset to any other entity has been taken care by the said provisions of Section 115TD of the Act. Thus, in our considered opinion, the absence of dissolution clause and non- mentioning of fate of net asset in the trust deed cannot be a ground to deny the registration u/s 12AB of the Act. Thus, the Ld. CIT(E) committed error in rejecting the registration u/s 12A and 80G of the Act. 13. In view of the above discussion, we find merit in the Grounds of appeal of the Assessee, accordingly, we allow the Grounds of appeal of the Assessee and set aside the impugned orders of the Ld. CIT(E) dated 12 ITA Nos. 3976 and 3978/Del/2024 Radisson India Charitable Foundation 02/07/2024 and direct the Ld. CIT(E) grant registration u/s 12AB of the Act, consequently, also grant Registration u/s 80G of the Act. 14. In the result, Appeals of the Assessee in ITA No. 3976/Del/2024 and 3978/Del/2024 are allowed. Order pronounced in the open court on 22nd January, 2025 Sd/- Sd/- (M. BALAGANESH) (YOGESH KUMAR U.S.) ACCOUNTANT MEMBER JUDICIAL MEMBER Date:- 22 .01.2025 R.N, Sr.P.S* Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(Appeals) 5. DR: ITAT ASSISTANT REGISTRAR ITAT, NEW DELHI 13 ITA Nos. 3976 and 3978/Del/2024 Radisson India Charitable Foundation "