Gujarat High Court
Director Of Income Tax (Exemption) vs Chargam Dasha Poward ... on 18 February, 2014
Bench: Akil Kureshi, Sonia Gokani
O/TAXAP/1147/2013 ORDER
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
TAX APPEAL No. 1147 of 2013
With
TAX APPEAL No. 1148 of 2013
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DIRECTOR OF INCOME TAX (EXEMPTION)....Appellant(s)
Versus
CHARGAM DASHA POWARD MAHAMANDAL....Opponent(s)
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Appearance:
Mr MR BHATT Sr Advocate with Mrs MAUNA M BHATT, ADVOCATE for the Appellant
Mr BHARGAV KARIA for M/s BHARGAV KARIA & ASSO, ADVOCATE for the Opponent
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CORAM: HONOURABLE Mr. JUSTICE AKIL KURESHI
and
HONOURABLE Ms. JUSTICE SONIA GOKANI
18th February 2014
ORAL ORDER (PER : HONOURABLE Ms. JUSTICE SONIA GOKANI)
These Tax Appeals arise out of common judgment and order of the Income Tax Appellate Tribunal, Ahmedabad {"Tribunal" for short} dated 8th May 2013, raising following substantial questions for our consideration : {A} "Whether the Appellate Tribunal has substantially erred in setting aside the order of DIT (E) holding that dissolution clause is not necessary in the deed of charitable trust ?"
{B} "Whether in view of the fact that the assessee is a public charitable trust, should the deed not have a clause that upon dissolution no asset will go to any trustee, Page 1 of 4 O/TAXAP/1147/2013 ORDER donor, settler, etc ?"
We have heard learned counsel Shri Manish R. Bhatt for the Revenue and Mr. Bhargav Karia for the respondentassessee.
The assessee preferred an appeal before the Tribunal against the order of the Director of Income Tax [Exemptions], Ahmedabad dated 19th December 2012 where the registration under Sections 12AA and 80G(5) of the Incometax Act, 1961 {"Act" for short} was refused to the respondent. Such refusal was on the ground that the trust deed did not contain a clause for dissolution and the same since being perpetual, registration under Section 12AA by the authority on 10th December 2012 and consequently the one under Section 80G(5) of the Act on 19th December 2012 was refused. It was contended before the Tribunal that the assessee had moved an amendment to the trust deed and the same was pending before the Charity Commissioner providing specifically that the Trust shall be irrevocable and in the most unlikely situation, if the trust practically stops functioning, it can only be merged/amalgamated with other one or more public charitable trusts/bodies.
The Tribunal, considering the provisions so also the facts before it, directed the Director of Income Tax [Exemptions] to grant exemption under Sections 12AA and 80G (5) of the Act to the assessee by holding that the issue of refusal of registration, in absence of dissolution of the Trust Deed is covered by Page 2 of 4 O/TAXAP/1147/2013 ORDER the decision in case of Shri Sai Samarpan Trust Co. vs. CIT, reported in [2009] 27 SOT 423 (Delhi). The Tribunal on the ground that the assessee since had already applied to the Charity Commissioner for amendment in the trust deed requesting for insertion of the dissolution clause, reversed the order and permitted registration. It also found that there was no contrary material to indicate that the aims and objects of the Trust were not charitable in nature.
It has been pointed out to us that at the time of constitution of the trust, such clause was already forming part of the trustdeed. Since this clause being the central issue, the same reads thus 25 Dissolution/ CDPMM Trust created herein shall be Merger of irrevocable. In the most unlikely situation, if CDPMM CDPMM practically stops functioning, and if there are sufficient and good reasons and grounds for dissolution/ceasing the existence of CDPMM, it can only be merged/ amalgamated with other one ore public charitable trusts or bodies having similar objects through appropriate legal process, subject however to the approval by the Office of the Public Charity Commissioner and/or other statutory permissions as may be required in terms of prevalent laws.
For any such purpose dissolution/merger of CDPMM with other public charitable trusts or bodies, MC and/or members may bring proposals for consideration and decision in Annual General Meeting [AGM] or Extra ordinary General Body Meeting [AGM] or Specially Requisitioned General Body Meeting [SGM] as per the provisions of General Body meeting Page 3 of 4 O/TAXAP/1147/2013 ORDER Learned counsel Shri Karia pointed out that it was a sheer inadvertence on the part of the assessee not to have produced the last page of the trust deed before the concerned authority, which has led to such confusion of the facts. After having applied before the Charity Commissioner, this mistake had come to the notice and therefore when the Trust Deed itself has provided for and made sufficient provision for dissolution, the entire factual context will change. Having noted the dissolution clause in the trust deed, we are of the opinion that predominantly the objection raised by the Revenue was the absence of such dissolution clause and in wake of presence of the same, the grant of registration by the Tribunal is not being interfered with.
The very basis of challenge when does not survive, the Tribunal's final decision requires to be upheld. However, in light of the discussion above, the questions raised before us, need not be answered and the same shall be answered in appropriate proceedings in future. Resultantly, the present Tax Appeal is dismissed.
{Akil Kureshi, J.} {Ms. Sonia Gokani, J.} Prakash* Page 4 of 4