Income Tax Appellate Tribunal - Chennai
Sivasakthi Charities, Salem vs Assessee on 21 November, 2007
IN THE INCOME TAX APPELLATE TRIBUNAL
CHENNAI BENCH 'C' : CHENNAI
[BEFORE SHRI HARI OM MARATHA, JUDICIAL MEMBER
AND SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER]
I.T.A.No.1584/Mds/2009
Assessment year : NA
Sivasakthi Charities vs The ITO
Mahalakshmi Apartments Ward I(1)
'B' Block, 3rd Floor Salem
No.28/14 Sivasamy Street
Salem 636 001
(Appellant) (Respondent)
Appellant by : Shri S. Sridhar
Respondent by : Shri Tapas Kumar Dutta
ORDER
PER HARI OM MARATHA, JUDICIAL MEMBER:
This appeal of the assessee-trust is directed against the order of the ld. CIT, Salem, passed u/s 12AA of the Income-tax Act, 1961 (hereinafter referred to as 'the Act' for short).
2. Briefly stated, the facts of the case are that an application in Form 10A was filed by the assessee-trust for its registration u/s 12AA of the Act on 12.3.2009. The trust came into existence by a deed dated 21.11.2007 which was supplemented by another deed dated 6.6.2008. At the time of consideration of application for registration it :- 2 -: ITA 1584/09 was noticed by the ld. CIT that the trust deed did not conform to the conditions laid down in the Indian Trust Act. On a notice given in this respect, the trust amended its deed by incorporating the requisite clauses and filed the supplementary deed on 22.7.2009. While considering the grant of requisite registration, the ld. CIT wanted to examine the following aspects:
(i) Notes on activities undertaken by the Trust so far with satisfactory documentary evidence in support of the expenses debited in the Income & Expenditure Account for the period from the date of inception till date.
(ii) Details of donations received (Foreign as well as Domestic) alongwith PAN and assessment particulars of donors donating ` 5,000/- and above.
(iii) Receipts and Payments Account, Income & Expenditure Account and Balance Sheet as at 31.3.2008 and 31.3.2009.
(iv) Details of assessment particulars of the trustees as well as break-up details of trustees' contributions together with sources thereof.
3. When nobody appeared to answer the above queries, notices were sent repeatedly and finally on 14.8.2009, Shri V.S. Venkat Pati, CA, appeared and the case was discussed with him. It was noticed by the ld. CIT from para 8 at page 9 of the trust deed that the delegation of all or any of the powers, authorities and directions vested in the trustees generally, has been incorporated, which he found to be :- 3 -: ITA 1584/09 vague and against the spirit of execution of such public charitable trust deed. It was also noted that clause (p) of the trust deed speaks about addition/deletion or amendment of any of the powers of the trustees which he found to be not permissible. Likewise, clause(q) permitted the addition of any other object(s) provided wholly educational and charitable in nature. From this clause, the ld. CIT inferred that this provision may be used to the very purpose of formation of such charitable trust. The objects of the trust mentioned in the deed were, however, found to be charitable in nature. But the powers given in the manner stated above, to amend the trust deed arbitrarily at the whims and fancies of the trustees according to the ld. CIT, would render the object clauses simply vague and is not permission in view of the decision of the Hon'ble Jurisdictional High Court rendered in the case of CIT vs P. Bhandari, 147 ITR 500. With these observations, which remained unreplied, the ld. CIT refused to grant registration sought for by the assessee-trust. Now the assessee-trust is aggrieved and has raised following grounds in its appeal:
"1. The order of The Commissioner of Income Tax, Salem dated 28.8.2009 in C.No.9755(146)/SLM/2008-09 in refusing registration in terms of Section 12 AA of Income Tax Act, 1961 is contrary to law, facts, and in the circumstances of the case.:- 4 -: ITA 1584/09
2. The CIT erred in rejecting the application filed for registration u/s 12 AA of the Act without assigning proper reasons and justification.
3. The CIT failed to appreciate that the objects of the Trust were charitable within the scope of Section 2(15) of the Act and having not disputed the nature of such objects, the rejection of the prayer for registration u/s 12AA of the Act was wrong, incorrect, unjustified, erroneous and not sustainable both on facts and in law.
4. The CIT failed to appreciate that the objects enumerated in the Deed of Trust were not vague and in this regard the decision relied upon in the impugned order by him was not applicable to the facts of the case, cited out of context.
5. The CIT failed to appreciate that the findings on the powers of the Trustees were outside the scope of proceedings before him inasmuch as having not objected to the nature of the objects for which the registration sought for, rejecting the said prayer was wrong, incorrect, unjustified, erroneous and not sustainable both on facts and in law.
6. The CIT failed to appreciate that the findings recorded in this regard in para 4.1 of the impugned order were wrong, incorrect, unjustified, erroneous and not sustainable both on facts and in law.
7. The CIT failed to appreciate that the findings recorded in this regard in paras 4.5 and 4.6 of the impugned order were wrong, incorrect, unjustified, erroneous and not sustainable both on facts and in law.
8. The CIT failed to appreciate that the order rejecting the prayer for registration u/s 12AA of the Act was passed out of time, invalid, passed without jurisdiction and not sustainable both on facts and in law.:- 5 -: ITA 1584/09
9. The CIT failed to appreciate that there was no proper opportunity given before passing the impugned order and any order passed in violation of the principles of natural justice is nullity in law.
10. The CIT failed to appreciate that the decisions cited in the impugned order were not applicable to the facts of the case and relied upon erroneously and out of context. "
4. We have considered the rival submissions and have carefully perused the material available on record. The assessee-trust has taken a ground that opportunity of hearing was not properly given to it to explain the objections noticed by the ld. CIT in his order. We also find that initially when the case of the trust remained unrepresented on three occasions, the ld. CIT gave hearing to the CA, who appeared on fourth occasion and the case is stated to have been discussed with him. But as per the specific ground taken by the assessee-trust in this regard i.e Ground No.9, we deem it fit to send the issue of registration to the file of the ld. CIT so that the details called for by him can be properly examined and the grievance of the assessee-trust can be redressed. Accordingly, we send this issue to the file of the ld. CIT and direct him to decide the application for registration u/s 12AA of the Act after giving opportunity of hearing to the assessee. We, therefore, set aside the order of the ld. CIT and allow the appeal of the assessee-trust for statistical purposes only.
:- 6 -: ITA 1584/09
5. In the result, the appeal filed by the assessee-trust is allowed for statistical purposes.
The order pronounced in the open court on 4.2.2011 Sd/- Sd/-
(B. RAMAKOTAIAH) ( HARI OM MARATHA )
ACCOUNTANT MEMBER JUDICIAL MEMBER
Dated: 4.2. 2011
RD
Copy to:
1. Appellant
2. Respondent
3. CIT(A)
4. CIT
5. DR