Income Tax Appellate Tribunal - Delhi
Mohinder Gupta Charitable Trust, New ... vs Assessee
IN THE INCOME TAX APPELLATE TRIBUNAL
[ DELHI BENCH "E" DELHI ]
BEFORE SHRI I. P. BANSAL, JM & SHRI K. D. RANJAN, AM
I. T. Appeal No. 4306 (Del) of 2011.
Assessment year : ----.
Mohinder Gupta Charitable Trust, Dy. Director of Income-tax,
D-324, Anand Vihar, Vs. [ Exemption ];
D E L H I - 110 092. D E L H I.
PAN / GIR No. AAC TM 7759 E.
( Appellant ) ( Respondent )
Assessee by : Shri Ashwani Kumar, F. C. A.;
Department by : Shri R. S. Negi, Sr. D. R.;
O R D E R.
PER K. D. RANJAN, AM :
This appeal by the assessee is directed against refusal of registration under section 12-A of the Income Tax Act, 1961 [hereinafter referred to as the Act].
2. The grounds of appeal raised by the assessee are reproduced as under :-
" 1. That order passed under section 12-AA(1)(b) r.w.s. 12-A of the Income Tax Act, 1961 by the ld. Director of Income Tax (Exemption), Delhi is against law and facts on the file in as much he was not justified in holding that the Trust was not eligible for registration under section 12-A of the Income Tax Act, 1961;
2. That the ld. Director of Income Tax (Exemption) failed to appreciate that for granting registration, satisfaction of the objects and its genuineness should be the criteria and not that the Trust should start the activity for applying for registration."
3. The only issue for consideration relates to rejection of assessee's application for grant of registration under section 12-A of the Act. The facts of the case stated in brief are that the 2 I. T. Appeal No. 4306 (Del) of 2011.
assessee filed application on 25th March, 2011 in form No. 10 for seeking registration under section 12-A. The ld. Director of Income Tax [Exemption] required the assessee to furnish certain information with reference to grant of registration. The ld. DIT (Exemption) on examination of details found that the assessee had neither received any donation nor incurred any expenditure on charitable activities except giving donations. On the basis of this fact the ld. DIT (Exemption) came to the conclusion that the assessee had not carried out any charitable activity except giving donations. Mere giving donations in itself is not a charitable activity. The ld. DIT (Exemption) also noted that the assessee had not submitted any concrete evidence by way of which it could be proved that the actual charitable activities had been carried out. The assessee also failed to file income and expenditure account in support of the activities. The DIT (Exemption) has also noted that as per Rule 17-A of the Income Tax Rules, 1962 the assessee is required to produce the original MOA and registration certificate. In view of the above facts the ld. DIT (Exemption) rejected the application for registration under section 12-A of the Act.
4. Before us the ld. AR of the assessee produced the original copy of Trust Deed dated 15th November, 2010. It was submitted that the settler of the trust, Shri M. P. Gupta has settled a sum of Rs.15 lakhs and interest therefrom is to be utilized for the charitable objects of the assessee. The ld. DIT (Exemption) has rejected the application for registration u/s 12A mainly on two grounds that the original trust deed was not filed and no charitable activities were carried out. The ld. AR of the assessee had drawn our attention towards his letter dated 16/05/2011 giving the details of donations to four charitable entities. All the entities were registered with the Income/tax authorities as genuine charitable organizations. He also submitted that the charitable objects of the trust have not been doubted by the ld. DIT (Exemption). The ld. AR of the assessee also filed copy of bank account with Punjab National Bank wherein Rs.15 lakhs were transferred by the settler to the account of the assessee trust and fixed deposits were made out of the funds so deposited. Out of interest income, which is credited in the bank account, the assessee had paid donations of Rs.5,100/- each to four charitable institutions. He, therefore, submitted that the assessee is eligible for registration under section 12-A of the Act as the objects of the trust are charitable in nature and the assessee had carried out the charitable activities by 3 I. T. Appeal No. 4306 (Del) of 2011.
giving donations to other trusts / institutions having charitable objects. On the other hand, the ld. Sr. DR supported the order of the ld. DIT (Exemption).
5. We have heard both the parties and gone through the order dated 6/09/2011 rejecting the registration under section 12-A of the Act. The ld. DIT (Exemption) has denied the exemption only on two grounds that the original trust deed was not filed and charitable activities were not carried out. We have gone through the bank statement in the name of the assessee trust with State Bank of India, bearing No. 3980000100122444 - 0100122444, D-Block, DDA Market, Anand Vihar, Delhi - 92. From the perusal of the bank statement we find that the assessee has received interest upto 28th March, 2011 at Rs.27,972/- out of which the assessee had made payments towards donations of Rs.5,1000/- each to four institutions, namely, (i) Handicapped Children Rehabilitation Association, Greater Kailash; (ii) Vivekanand Manav Sewa Society, Kalka; (iii) Lok Kalyan Samiti; and (iv) Rama Krishna Math, Baranagar, Kolkatta. It is settled law that income a charitable institution can be applied by way of donations. Therefore, it is incorrect on the part of the ld. DIT (Exemption) that no charitable activities had been carried out by the assessee trust. We, therefore, do not find any substance in this contention of the ld. DIT (Exemption). As regards the original trust deed, the ld. AR of the assessee has filed the original copy of the trust deed before us. We have verified the contents of the same with the photo copy of the trust deed filed before the ld. DIT (Exemption). We find that the trust was created on 25th November, 2010 by Shri M. P. Gupta, son of Late Shri Madan Gopal. At the time of registration, what is to be seen is that the objects of the trust, as per the trust deed, as to whether they are charitable in character. From the objects clause, we find that the trust had been created for the charitable purposes within the meaning of section 2(15) of the Act. Therefore, in our considered opinion, the ld. DIT (Exemption) is not correct in denying the registration under section 12-A.
6. However, on perusal of the trust deed, we find that in the trust deed the settler had not included a clause debarring the settler or trustee and their relatives for use of the trust property and income for their personal benefit. We also find that there is no clause in the trust deed as to what will happen to the assets of the trust on determination of trust or dissolution of the trust. In 4 I. T. Appeal No. 4306 (Del) of 2011.
case of charitable institution, it is necessary that the trust deed should have a provision that on dissolution of the trust, the assets and liabilities will be transferred to another trust or society having similar objects. We, therefore, direct the assessee to get the trust deed amended by including a clause debarring the trustees, the settler and their relatives from use of trust property for their personal benefits. Another clause should be inserted in the trust deed by way of amendment stating that on dissolution of the trust, the assets and liabilities of the trust shall be transferred to another trust or society having charitable objects. The assessee is, therefore, directed that after amendment of the trust deed, as suggested above, the assessee trust will file amended copy of the trust deed before the ld. DIT (Exemption) who will consider to grant registration to the assessee trust with effect from the year in which the application for registration under section 12-A of the Act was filed before him. We order accordingly.
7. In the result, the appeal filed by the assessee is allowed for statistical purposes.
The order pronounced in the open court on : 08th December, 2011.
Sd/- Sd/-
[ I. P. BANSAL ] [ K. D. RANJAN ]
JUDICIAL MEMBER ACCOUNTANT MEMBER
Dated : 08th December, 2011.
*MEHTA*
" Copy of the order forwarded to : -
1. Appellant.
2. Respondent.
3. CIT,
4. CIT (Appeals),
5. Sr. DR, ITAT, New Delhi.
True Copy. By Order.
Assistant Registrar, ITAT. "