Income Tax Appellate Tribunal - Chennai
Vijaya Vidhyashramam, Chennai vs Assessee on 5 March, 2013
IN THE INCOME TAX APPELLATE TRIBUNAL
'B' BENCH, CHENNAI
BEFORE Dr. O.K. NARAYANAN, VICE-PRESIDENT
AND SHRI S.S.GODARA, JUDICIAL MEMBER
I.T.A.No. 2306/Mds/2012
M/s. Vijaya Vidhyashramam,
No.8-B, Ramamoorthy St., Vs. The Director of Income-tax
Kurinji Nagar Extension, (Exemptions),
Jameen Royapettah, Chennai.
Chrompet,Chennai -600044
PAN - AABTV5470C
(Appellant) (Respondent)
Appellant by : Shri K. Meenakshisundaram
Respondent by : Dr. S. Moharana, IRS, CIT
Date of Hearing : 5th March, 2013
Date of Pronouncement : 5th March, 2013
O R D E R
PER Dr. O.K. NARAYANAN, VICE-PRESIDENT This appeal is filed by the assessee. It is filed against the order of the Director of Income-tax(Exemptions) at Chennai, rejecting the application put in by the assessee for obtaining registration under sec.12AA and also rejecting the prayer for approval under sec.80G of the Income-tax Act, 1961.
:- 2 -: ITA 2306/122. It is very useful to extract the full text of the order of the Director of Income-tax(Exemptions) to understand the full picture of the background of the assessee :
"ORDER UNDER SECTION 12AA OF THE INCOME TAX ACT, 1961.
The applicant trust, constituted by a trust deed on 19.05.2012 has filed an application in Form 10A on 28.05.2012 for registration u/s 12AA of the Income Tax Act.
2. While processing the application it was noticed that certain clarifications were required to be furnished. Vide this office letter dated 17.08.2012, the applicant Trust was requested to offer its explanation. It was also requested to furnish additional information called for in the letter. The case was posted for hearing on 05.09.2012.
3. In response to the same, the Managing Trustee of the applicant trust Shri A. Manoharan, has submitted a letter dated 04.09.2012, giving certain details about the proposed activities of the applicant trust. With regard to 'immediate plan of action', it has been mentioned that the trust proposed to set up a Yoga centre and to offer :- 3 -: ITA 2306/12 courses and training in Yoga and meditation to young and old.
4. He has also enclosed a few photographs showing its Managing Trustee in certain yogic postures. One of the photographs also shown him as taking Yoga lessons from another Yoga teacher. A copy of this photograph in which the Managing Trustee is taking lessons from a Yoga teacher is made part of this order.
5. Subsequently, on 26.11.2012, the Managing Trustee has appeared along with his Authorised Representative Shri A. Areef. On this day, he has submitted a Certificate issued by Patanjali Yoga Trust World, certifying that the Managing Trustee of the applicant trust has participated in a Yoga camp and has completed an advanced course on 06.08.2010. Two more photographs, showing participation by the Managing Trustee in some Yoga programmes, were furnished. However, no proof of any activity being undertaken by the Managing Trustee in furtherance of the objects of the trust, has been provided. Mere participation of the Managing Trustee in Yoga camps and his obtaining a certificate of an advanced course in Yoga, does not prove that he himself is engaged in any charitable activity as proposed in the Trust Deed.
:- 4 -: ITA 2306/126. In the absence of any such proof, there is no way the undersigned could have satisfied himself about the genuineness of the activities of the applicant trust, without which the trust does not become eligible for registration. In this regard, relevant provision of Section 12AA is reproduced hereunder : -
"Procedure for registration :
Section 12AA: (1) The Commissioner, on receipt of an application for registration of a trust or institution made under clause (a) [or clause (aa) of sub-section (1)] of section 12A, shall -
(a) Call for such documents or information from the trust or institution as he thinks necessary in order to satisfy himself about the genuineness of activities of the trust or institution and may also make such inquiries as he may deem necessary in this behalf"
7. The other deficiency noted in the Trust Deed is that the Founder has not accounted any other trustee except himself as Managing Trustee. But at Para 5.3 & 5.4 of the Trust Deed, there is a mention of Second declarant and Third declarant. The relevant provisions read as under:-
:- 5 -: ITA 2306/125.3: The Second declarant shall be the secretary who is also empowered to carry on the day to day administrative activities of the trust. 5.4: The Third declarant shall be the Treasurer who shall be entitled to carry out the day to day financial and accounts transaction and shall be responsible for the maintenance of the accounts on behalf of the trust.
8. However, on a reading of the other provisions of the Trust Deed, it is found that nowhere there is a mention of any other person as Second declarant or Third declarant. When this deficiency in the Trust Deed was pointed out, on 26.11.2012, the Managing Trustee has submitted an "Unilateral Declaration of the Founder", wherein he has appointed both his sons as 'Trustees' along with himself to administer the trust. In his unilateral declaration, the Founder has also mentioned that the word "Declarants" appearing in the Trust Deed should refer to the two trustees now appointed.
However, this unilateral declaration is not registered. Hence, it has no existence in the eye of law. Moreover, such unilateral declaration is only an afterthought to overcome the deficiencies in the Trust Deed.
9. For all the reasons mentioned herein above and keeping in view of the fact that no activity in furtherance of the objects of the trust has been started so far and :- 6 -: ITA 2306/12 there are serious deficiencies in the way the Trust Deed has been drafted, registration u/s.12AA cannot be granted to the applicant trust. Hence, the application filed by the Trust for registration u/s 12AA is hereby rejected and the registration u/s 12AA is denied."
3. The order is self speaking one. The assessee has not started any activity or contemplate to start any activity in the immediate future so that the Director of Income-tax(Exemptions) may assess the bona fides of the intentions declared in the trust.
Moreover, the assessee has unilaterally adopted his two sons as trustees and the amended deed has not been registered. At the same time, in the registered trust deed, the asseessee is mentioning about the second declarant or third declarant. Even at the first instance, the assessee was the sole trustee.
4. We agree with the finding of the Director of Income-
tax(Exemptions) and this is not a fit case for granting registration under sec.12AA of the Act, as well as approval under sec.80G.
Let the assessee rectify all the omissions and commissions pointed out by the Director of Income-tax(Exemptions) and also start some activity to prove the genuineness and thereafter, if he desires, he will file a fresh application before the competent :- 7 -: ITA 2306/12 authority for availing registration. Anyhow, that is only a future event.
5. For the present, we confirm the order of the Director of Income-tax(Exemptions) and dismiss the appeal filed by the assessee.
Order pronounced in the open court at the time of hearing on Tuesday, the 5th of March, 2013 at Chennai.
Sd/- Sd/-
(S.S.GODARA) (Dr.O.K.NARAYANAN)
Judicial Member Vice-President
Chennai,
Dated the 5th March, 2013
mpo*
Copy to: 1. Appellant
2. Respondent
3. CIT
4. CIT(A)
5. DR
6. GF.