Income Tax Appellate Tribunal - Hyderabad
Super Gas Foundation,, Nalgonda vs Assessee on 26 November, 2013
IN THE INCOME TAX APPELLATE TRIBUNAL
HYDERABAD BENCHES "B" : HYDERABAD
BEFORE SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER
AND
SHRI SAKTIJIT DEY, JUDICIAL MEMBER
ITA.No.1116/Hyd/2013
Super Gas Foundation vs. Director of Income Tax
Hyderabad (Exemptions), Hyderabad.
PANAAKTS7581C
(Appellant) (Respondent)
For appellant : Shri Y.R. Rao
For respondent : Shri D.Sudhakar Rao
Date of Hearing : 26.11.2013
Date of pronouncement : 17.01.2014
ORDER
PER SAKTIJIT DEY, J.M.
This appeal of the assessee is directed against the order dated 31.05.2013 passed by the DIT(E), Hyderabad refusing to grant registration under section 12AA of the Act.
2. Briefly the facts are that the assessee stated to be a charitable trust was formed on 24.06.2011 by M/s. SHV Energy India Pvt. Ltd. as its author with the object of granting educational aid, community support programmes and support to poor. The author of the trust is 100% subsidiary of a multinational company from Netherlands viz., M/s. SHV Calor Asia B.V. The assessee applied for registration under section 12AA of the Act before the DIT(E) on 09.09.2011. The DIT(E) taking umbrage to the fact that clause 10 of the trust deed makes the trust revocable as its continuity is subject to the will of its author, which in turn, is controlled by the Dutch multinational company, held that it cannot be treated as a 2 ITA.No.1116/Hyd/2013 Super Gas Foundation, Hyderabad wholly public charitable trust. Hence, he refused to grant registration under section 12AA of the Act.
3. Being aggrieved of denial of registration under section 12AA, the assessee preferred an appeal before the ITAT. The ITAT vide order dated 27.09.2012 in ITA.No.906/Hyd/2012 again remitted the matter back to the DIT(E) with the following direction :
"7. We have heard both the parties and peursed the material on record. In this case an absolute power has been given to the author/founder to revoke the Trust Deed according to his wishes. In our opinion, it will affect the very existence of the trust itself. As such we are not inclined to uphold the arguments of the assessee's counsel. However, as conceded by the AR on making appropriate amendment to the Trust Deed to the satisfaction of the DIT(E), the registration will be granted. Accordingly, the entire issue is remitted back to the file of the DIT(E) for fresh consideration."
4. Pursuant to the aforesaid direction of the ITAT, the DIT(E) took-up the proceeding again by issuing notice dated 22.05.2013 to the appellant to produce the original trust deed and amended/supplementary trust deed, if any, made subsequently. In response to the aforesaid notice, the appellant submitted a letter dated 31.05.2013 enclosing a draft amended trust deed signed by its AR. In the said letter the assessee requested the DIT(E) to go through the draft trust deed and accord his approval if it is to his satisfaction. It was 3 ITA.No.1116/Hyd/2013 Super Gas Foundation, Hyderabad further contended by the appellant that the settler may be permitted to amend the trust deed without the intervention of the Civil Court in view of the ruling of the ITAT, Chennai Bench. The DIT(E), however, passed the impugned order again refusing to grant registration under section 12AA of the Act observing as under :
"5. I have duly considered the submissions of the learned A.R. made today and perused the said draft trust deed. The said draft document with heading "Amended And Restated Trust Deed"
with the first sentence mentioned as "This Amended and Restated Trust Deed made on this the ___ day of February, 2013 at Hyderabad", which is not signed by any trustee, is a vague document and in my view, no cognizance can be taken thereof at this stage during the present proceedings."
5.1. As per the observations made by the Hon'ble ITAT in para 7 of their order reproduced above, the assessee trust was required to make necessary amendment to their trust deed for the purpose of registration to their trust. In fact, as per such commitment given by the assessee trust before the Hon'ble ITAT, it was required to make necessary amendment deed/supplementary deed as per law, soon after the said order of Hon'ble ITAT. As may noticed, after the matter was set aside by the Hon'ble ITAT, the assessee trust has not taken any step for the purchase of amendment to 4 ITA.No.1116/Hyd/2013 Super Gas Foundation, Hyderabad their trust deed in the light of such observation made by the Hon'ble ITAT. It has not initiated any step for that purpose. Since the assessee trust has not made any amendment deed so far i.e., till date i.e., till a period of 6 months from the end of the month in which the said order of the Hon'ble ITAT was received in this office, it cannot be allowed registration u/s.12AA of the Act. Hence, registration sought u/s.12AA of the Act is refused to the above trust."
5. The learned AR strongly assailing the order of the DIT(E) submitted that on the earlier occasion when the appellant had challenged the refusal of registration by the DIT(E), the Tribunal in clear terms had directed that if appropriate amendment to the trust deed is made to the satisfaction of the DIT(E), registration will be granted. Keeping in view the direction of the Tribunal, the appellant, therefore, submitted the draft amended trust deed before the DIT(E) to know if it is to his satisfaction. It was submitted that once the DIT(E) would have approved the draft trust deed, the appellant would have made a final deed incorporating the amendment and produced the original amended deed with signatures of all concerned before the DIT(E). In this context, the learned A.R. drew our attention to the letter dated 31.05.2013 addressed to the DIT(E) and the draft trust deed at pages 20 and 22 of the paper book. It was therefore, submitted that the DIT(E) was totally wrong in commenting that the draft trust deed is a vague document and since no amendment has been carried out by the assessee in terms of the direction of the Tribunal, registration cannot be granted to the assessee.
5 ITA.No.1116/Hyd/2013Super Gas Foundation, Hyderabad
6. The learned D.R. on the other hand, submitted that matter may be remitted back to the DIT(E) for fresh consideration.
7. We have heard the parties and perused the order of the DIT(E) and other materials on record. As would be evident from the order dated 29.03.2012 of the DIT(E), the registration was refused to the appellant, and rightly so, because clause 10 of the trust deed allowed the author to take decision with regard to its continuity which made the trust revocable. However, the ITAT vide order dated 27.09.2012 (supra), as would be clear from the extracted portion hereinbefore, had remitted the matter back to the DIT(E) to grant registration if the assessee carries out amendment to the trust deed to the satisfaction of the DIT(E). A perusal of the draft trust deed does reveal that there is amendment to the trust deed. It is the contention of the learned A.R. that the unsigned draft trust deed was submitted before the DIT(E) only for the purpose of knowing whether the amendment carried out was to his satisfaction or not. This fact is also clear from the letter dated 31.05.2013 before the DIT(E). We also accept such contention of the assessee. In our view the approach of the assessee in submitting the draft trust deed before the DIT(E) for his approval in the given circumstances was correct, since there is certainly a genuine apprehension in the mind of the assessee as to whether the amendment carried out would be to the satisfaction of the DIT(E). Had the assessee submitted the amended trust deed and the DIT(E) would have again disapproved it or pointed out some more deficiency it would again have created a difficult situation for the assessee. In these circumstances, it would have been proper on the part of the DIT(E) to go through the draft trust deed and point out 6 ITA.No.1116/Hyd/2013 Super Gas Foundation, Hyderabad to the assessee whether the amendment made was to his satisfaction or not. Without doing so it was inappropriate on the part of the DIT(E) to have refused to grant registration alleging non-furnishing of amended trust deed.
8. After considering the totality of facts and circumstances of the case, we are of the view that the impugned order passed by the DIT(E) is required to be set aside. We, accordingly, do so. We direct the DIT(E) to go through the draft trust deed and inform the assessee as to whether the proposed amendment carried out by the assessee with regard to irrevocability of the trust is to his satisfaction or not. Once the DIT(E) accords his approval, the assessee shall prepare a trust deed incorporating the amended clause being signed by all concerned and complete in all respects and submit it before the DIT(E). Upon submission of such amended trust deed the DIT(E) shall grant registration to the assessee under section 12AA of the Act. With the aforesaid directions, we remit the matter back to the file of the DIT(E). Accordingly, this appeal of the assessee is allowed for statistical purposes.
8. In the result, appeal of the assessee is allowed for statistical purposes.
Order pronounced in the open Court on 17.01.2014.
Sd/- Sd/- (B. RAMAKOTAIAH) (SAKTIJIT DEY) ACCOUNTANT MEMBER JUDICIAL MEMBER Hyderabad, Date 17th January, 2014 VBP/- 7 ITA.No.1116/Hyd/2013 Super Gas Foundation, Hyderabad Copy to
1. Super Gas Foundation, Super Gas House, IV Floor, SDE Serene Chambers, 8-2-334, Road No.7, Banjara Hills, Hyderabad - 500 034.
2. DIT(E), Hyderabad.
3. ADIT(E)-II, Hyderabad.
4. D.R. 'B' Bench, ITAT, Hyderabad.