Income Tax Appellate Tribunal - Delhi
Lala Chet Ram Memorial Trust, Faridabad vs Assessee
IN THE INCOME TAX APPELLATE TRIBUNAL
(DELHI BENCH 'I' NEW DELHI)
BEFORE SHRI U.B.S. BEDI, JUDICIAL MEMBER
AND
SHRI B.K. HALDAR, ACCOUNTANT MEMBER
I.T.A. No.3404 & 3405/Del/2010
Lala Chet Ram Memorial CIT,
Trust, House No.1265, New CGO Bldg.,
Sector-19, Faridabad. V. NH-IV, Faridabad.
(Appellant) (Respondent)
PAN /GIR/No.AAATL
/GIR/No.AAATL-
AAATL-6808-
6808-M
Appellant by : Shri G.D. Mittal, Advocate.
Respondent by : Shri Rohit Garg, Sr. DR.
ORDER
PER B.K. HALDAR, AM:
These are two appeals filed by the assessee against the respective orders of the ld CIT, Faridabad refusing registration u/s 12AA(1)(b)(ii) of the Act and refusing approval u/s 80G (5) of the Act respectively. For the sake of convenience, both these appeals are being disposed off by this common order.
I.T.A. No. 3404/Del/2010:
2. In this appeal the assessee has taken following grounds of appeals:-
2 ITA No3404 & 3405/Del/10
1. That the Ld CIT erred in passing u/s 12AA(1)(b)(ii) of the Income Tax Act, 1961 without affording reasonable opportunity of being heard in spite of specific request made to the CIT.
2. That the CIT in facts and law erred in refusing registration u/s 12AA(1)(b)(ii) of the Income Tax Act, 1961.
3. That the appellant crave to lease, add, alter, amend or substitute any ground of appeal either before or at the time of hearing of appeal.
3. At the time of hearing the ld AR for the assessee has withdrawn ground No.1 of grounds of appeal. Thus, this ground is rejected as withdrawn. The assessee, therefore, is contesting refusal of registration u/s 12AA(1)(b)(ii) of the Act by the Ld CIT on merit.
4. The assessee filed an application u/s 12A(a) of the Act on 29.11.2009. In the said application in Form No.10A, it was stated that the date of creation of the trust was 6.11.2008. The Ld. CIT made certain enquiries and thereafter giving opportunity to the assessee refused the registration on following grounds:-
1) Clause 6(a) of the Trust Deed which stipulates imparting of training for any entrance/competitive tests, all India or State Services Examinations or for admission to professional or other educational institutes would not fall within the meaning of the word "Education" as explained by the Hon'ble Supreme Court in the case of Sole Trustee, Loka Shikshaana Trust v. CIT reported in 101 ITR 234 (SC). Thus, this object would not fall within the meaning of "charitable purpose" as defined in section 2(15) of the Act.
3 ITA No3404 & 3405/Del/10
2) Clause 6(b) of the Trust Deed stipulates supplying of medical equipments, medicines, surgical equipments etc. This object is like that of the object of any commercial business concern. Carrying on such activity would not fall within the meaning of "medical relief" as mentioned in section 2(15) of the Act.
3) Clause 6(d) of the Trust Deed stipulates many aims under the head "other objects of general public utility". However, as per section 2(15) of the Act, there can be only one such object. Multiplicity of object is not permitted. The activity permitted as per clause 6(d)(iii) clearly authorizes business activity which is repugnant to proviso to section 2(15) of the Act.
4) Clause 8(10) of the Trust Deed authorizes investment of trust funds in any securities authorizes by the Indian and Trusts Act, 1882. The said Act governs only private Trust. As a public charitable trust, the assessee is not entitled to invest trust funds in such securities. Aggrieved, the assessee has filed appeal before the Tribunal.
5. Before us, Ld AR for the assessee has reiterated the submissions made before the Ld CIT. Referring to various articles and clauses of the trust deed, it was contended by him that the trust was not formed for profit and all the objects of the trusts are charitable in nature. Reliance was placed on the following case laws:
1. City Montenssari School (Regd.) v. Union of India 315 ITR 48 (Alld.).
2. Aditnar Educational Institution etc. v. Addl. CIT 224 ITR 310 (SC).
4 ITA No3404 & 3405/Del/10
6. The Ld DR, on the other hand, relied on the order of ld CIT. It was submitted by him that the objects of the trust were not charitable in nature. It was further submitted by him that the case laws relied on by the Ld AR for the assessee were not applicable on the facts of the case as in those cases the assessees were already running some educational institution whereas the assessee has not even taken any step to set up any institution. It was, therefore, contended by him that the order of ld CIT be confirmed..
7. We have heard the parties and perused the record. We have also gone through the case laws relied on by both the parties. We find that there is no specific Act applicable to the State of Haryana with respect to public charitable trust. The Indian Trust Act, 1882 is the law relating to private trust and trustees only. However, the public charitable trusts are formed under general law with guidance drawn from the Indian Trust Act 1882. . In the present case, the trust deed has been drawn up on 6.11.2008. Thus, the application for registration in Form No.10A should have been made u/s 12A(aa) of the Act. However, we find that such application was made by the assessee u/s 12A(a) which section ceased to operate w.e.f. 1.6.2007. The assessee has also shown that it had spent an aggregate amount of `.33,000/- till 31.3.2009 on donation given to the following parties:-
1. Shri Shyam Ji Trader. `.11,000/-
2. Studio 90. `.11,000/-
3. Shri Kunj Behari Ashram. `.11,000/-
8. As per the evidence on record, none of the above parties have registration u/s 12AA of the Act. The assessee has also shown expenses for the financial year 2009-2010 towards donation as under:-
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1. Rotary Club of Faridabad Mid-Town. `.11,000/-
2. Shirdi Sai Baba Temple Society `.11,000/-
3. Shri Gopal Gaushala Regd. `.15,000/-
9. There is no evidence on record to show that the above concerns were registered u/s 12AA of the Act. Other than the above activities, the assessee did not undertake any charitable activity. It has also not shown that it was likely to take steps to start some charitable activities.
10. The objects of the trust are reflected in article 6 of the trust deed. There is an omnibus clause with reference to the objects of the trust which reads as under:-
"So, however, the objects set out above will be subject to the following restrictions.
(i) There will be no profit motive, whatsoever and all its activities would be prompted solely by service motive. For public and charitable purposes.
(ii) The benefit is intended for the public at large without any discrimination of any caste, creed, color, place or religion.
(iii) The trust will not embark on any business nor activity unrelated to its objects.
(iv) If any of the objects above is found to be inconsistent with the object of public charitable institutions exempt formerly u/s 6 ITA No3404 & 3405/Del/10 10(22), (22A) and now u/s 10(23C) or 11 or the Income Tax Act, 1961, or any other law applicable to public trust as now enacted or as may be amended from time to time, or any new enactment relating to public trusts, they will be treated as modified to accord with such law, so that any concessions, privileges, conditions or regulations available to and applicable to such public charitable institutions will be available or applicable to this Trust as well so that this trust will continue to retain its character as a public charitable institution without profit motive with public character within the meaning of all such laws."
11. It is the contention of the assessee that in view of the above, the objects of the trust should be considered as charitable.
12. The case laws which have been specifically relied on by the assessee are City Montessari School and Aditnar Educational Institution (supra). Both these cases relate to exemption u/s 10(22)/10(23C) of the Act. The assessment year involved in the City Montessari Sschool's case was assessment year 1999-00 to 2001-02. In the case of Aditnar Educational Institution the assessment years involved were 1963-64 to 1967-68, 1971-72 to 1974-75 and 197-78 to 1980-81. The main criteria on which exemption under the said section depended was as to whether the educational institution existed solely for educational purposes and not for the purpose of profit. The conditions which were required to be satisfied for the purpose of exemption u/s 10(22) of the Act are not the same as the conditions which are required to be fulfilled by a Public Charitable Trust for getting registration u/s 12AA of the Act.
7 ITA No3404 & 3405/Del/10
13. The definition of charitable purpose as per section 2(15) of the Act as applicable during the relevant previous year is reproduced hereunder:-
Section 2(15) "Charitable purpose includes relief of the poor, education, medical relief, preservation of environment (including water sheds, forests and wildlife) and preservation of monuments or places or objects or artistic or historic interest, and the advancement of any other object of general public utility.
Provided: That the advancement of any other object of general public utility shall not be a charitable purposes, if it involves the carrying on of any activity in the nature of trade, commerce or business or any activity of rendering any service in relation to any trade, commerce or business, for a cess or fee or any other consideration, irrespective of the nature of use or application, or retention of the income from such activity.
Provided further: that the first proviso shall not apply if the aggregate value of the receipts from the activities referred to therein is ten lakh rupees or less in the previous year."
14. The Ld CIT has relied on the decision of Hon'ble Apex Court in the case of Sole Trustee, Loka sikhsana Trust (supra) for the meaning of the expression 'education' used in section 2(15) of the Act. On this basis, it was opined by him that imparting training to persons for appearing in competitive examinations cannot be said to be imparting education. Thus, it was held by him that provision of such object in the 8 ITA No3404 & 3405/Del/10 trust deed would make the trust ineligible for registration u/s 12AA of the Act. The above charge of the Ld CIT has not been dislodged by the assessee. The case laws relied upon by the Ld AR for the assessee has not modified the meaning of the word 'education' used in clause (15) of the section 2 of the Act as explained by the Hon'ble Apex Court in the case of Sole Trustee, Loka sikhsana Trust (supra). This object is also not subservient to the object of imparting normal education. The assessee has also not modified the trust deed as per the objection raised by the Ld CIT. We, therefore, hold that the Ld CIT was justified in holding that the said object of the trust was not charitable as per the provisions of the Act.
15. As regards the object of the clause 6 (b) of the trust deed, we find that the objects mentioned therein are not inter dependent. If the objects mentioned therein were subservient to the main object of providing medical relief to the public at large, it could be said that the object of the trust was charitable in nature. However, as it is not so, we are of the considered opinion that the objection raised by the Ld CIT is quite justified.
16. As regards the other two objections raised by the Ld CIT, we find that clause 8(10) is only with reference to power of Board of Trustees. The same does not relate to the objects of the trust and therefore would not be relevant for grating registration u/s 12AAA of the Act. We also do not find any merit in the objection raised by the Ld CIT with reference to other objects of general public utility.
17. Looking at the factual position, narrated by us in the earlier part of this order and our finding with reference to the first two objections 9 ITA No3404 & 3405/Del/10 raised by the Ld CIT, we are of the considered opinion that registration u/s 12AA of the Act was rightly rejected by the Ld CIT.
18. In the result, the appeal of the assessee is dismissed.
I.T.A. No.3405/Del/2010:
19. The assessee has taken the following grounds of appeals:-
1. That the Ld CIT erred in law and facts of the case in refusing exemption u/s 80G(5) of the Income Tax Act, 1961 to the assessee trust.
2. That the assessee crave to leave, alter, amend or substitute of any ground of appeal either before or at the time of hearing."
20. As we have already upheld the rejection of registration u/s 12A(a) of the Act by Ld CIT, we dismiss this appeal filed by the assessee.
21. In the result, the appeals filed by the assessee are dismissed.
22. Order pronounced in the open court on the 23rd day of September 21, 2011 Sd/- Sd/-
(U.B.S. BEDI) (B.K. HALDAR)
JUDICIAL MEMBER ACCOUNTANT MEMBER
Dt. 23.9.2011.
HMS
Copy forwarded to:-
1. The appellant
10 ITA No3404 & 3405/Del/10
2. The respondent
3. The CIT
4. The CIT (A)-, New Delhi.
5. The DR, ITAT, Loknayak Bhawan, Khan Market, New Delhi. True copy.
By Order (ITAT, New Delhi).
Date of hearing Date of Dictation Date of order signed by the Hon'ble" Member. Date of order Sent to the concerned Bench 11 ITA No3404 & 3405/Del/10