Income Tax Appellate Tribunal - Chennai
Enfants Du Tamilnadu - India ... vs Assessee on 27 July, 2010
IN THE INCOME TAX APPELLATE TRIBUNAL
BENCH 'B', CHENNAI
Before Shri U.B.S. Bedi, J.M. & Shri Abraham P. George, A.M.
I.TA. Nos.1643 and 1644/Mds/2010
ENFANTS DU TAMILNADU - INDIA Vs The Income Tax Officer,
(edtn - India), 10, Vaigai Street, . Ward - II (4), Madurai.
Meenakshi Nagar, Opp. Fathima
College, Madurai 625 018.
[PAN: AAATE3606J]
(Appellant) (Respondent)
Assessee by : Shri G. Baskar
Revenue by : Shri P.B. Sekaran
O R DE R
PER U.B.S. Bedi, J.M.
These two appeals of the assessee are directed against separate orders of the ld. CIT I, Madurai passed on the application for approval under section 80G of the Income Tax Act and application for registration filed under section 12AA of the Income Tax Act both dated 27.07.2010.
2. These appeals were heard together, therefore being disposed of by this single order for the sake of convenience.
3. Since aggrieved orders relate to application for registration under section 12AA, which has been followed in the application for approval on the request under section 80G(5)(i) and (iv), therefore order under section 12AA shall be discussed.
4. The assessee trust has filed an application for grant of registration under section 12AA on 29.01.2010. As per copy of the Trust deed appended to the application in Form No. 10A, this trust has been created on 12.08.2008 and accordingly, the application for registration has been filed in time and a 2 ITA Nos Nos. 1643 & 1644/Mds/10 1644/Mds/10 notice of hearing was issued on 05.07.2010 posting the case for hearing on 20.07.2010, which was attended by the ld. Counsel for the assessee, who was heard.
5. The ld. CIT discussed the case of the assessee in para 2 and 3 and concluded to reject the application as per para 3.1, 4 and 5 of his order as under:
"2. Although as per the Trust deed, the objects are apparently charitable in nature, the very constitution of the Trust itself is invalid. Reports from the lower authorities were received and perused. The CIT before granting or refusing registration to a Trust should examine whether (i) a genuine trust exists, and (ii) the objects of the trust are charitable in nature and the activities are being carried out strictly in accordance with the object clause.
3. The applicant Trust was created by two persons namely i) Mr. Drahe Patrick Raoul, ii) Mr. Ruediodore Rahoult and iii) Ms. Amram Martine Sarah of France, who were declared as the Founders of the applicant Trust. It is observed from the copies of accounts filed for the financial year ending 31.03.2009 that the applicant Trust has spent most of its receipts towards administrative expenses. It has not filed any bills/vouchers for such expenses claimed to have been spent. It is also seen that a sum of `.39,810/- was claimed to have been spent for food expenses. But the applicant Trust did not explain to whom it was spent and no corresponding bills/vouchers were produced for verification. Therefore, the genuineness of the charitable activities, if any, could not be verified.
3.1 It is also observed that one of the trustees Ms. P.E. Yahini is employed as a teacher in a government aided school at Karuguvalayapatti, Melur, Madurai District. The so-called Trust is being run in the residence of the said trustee only. A government employee cannot become a trustee under the relevant service conduct rules. Therefore, the very constitution of the Trust is irregular. On such facts, the existence and the activities of the applicant Trust are not genuine. Therefore, the applicant Trust did not fulfill the conditions for grant of registration u/s. 12AA of the Act.
4. Since the two parameters i.e. genuineness of the Trust and its charitable activities being carried out in terms of the Trust deed have not been established with documentary evidence before the undersigned in spite of the opportunities allowed, the benefit of registration cannot be allowed to the Trust in terms of the provisions of Section 12AA (1)(b)(ii) of the Income Tax Act, 1961.
3 ITA Nos Nos. 1643 & 1644/Mds/10 1644/Mds/10
5. Accordingly, the application of registration u/s. 12AA of the Act stands rejected."
6. Aggrieved by such order of the ld. CIT, the assessee has come up in appeal and it was stated that at one place, the ld. CIT has categorically held that the objects of the trust are apparently charitable in nature, at the other place he opined that the very constitution of the trust itself is invalid. The ld. Counsel for the assessee further submitted that the registration of the applicant has been rejected without any reasonable basis as he went wrong in rejecting the application so his order is liable to be quashed. Further, the ld. CIT is wrong in his interpretation of the provisions of section 2(15) of the Income Tax Act and he erred in proceeding to dispose of the application with pre-conceived notions. He is also wrong in its observation that the genuineness of the charitable activity could not be verified when the trust itself is situated in the Income Tax Colony. He has also ignored the documentary evidence produced at the time of hearing about activities of the trust. So relying upon the decision of Hon'ble Supreme Court in the case of R & B Falcon (A) Pvt. Ltd. v. CIT 301 ITR 309 and Circular No. 11 of 2008 dated 19.12.2008, when both the objects and activities were clearly consistent with the explanation of law in the Board Circular, which was binding on him, so rejecting of application is neither legal nor justified. He has just referred to the service conduct rule of one of the trustee, who is a Government employee, which does not permit her to become trustees, which, even assuming to be correct, cannot defeat the trust itself. So, the 4 ITA Nos Nos. 1643 & 1644/Mds/10 1644/Mds/10 conclusion of the ld. CIT is hyper technical and superfluous and application of the assessee could not be rejected. It was, thus pleaded for quashment of the order of the ld. CIT and granting registration under section 12AA of the Act as applied by the assessee.
7. The ld. DR has been heard, who relied upon the order of the ld. CIT.
8. We have heard both the sides, considered the material on record and find that the assessee trust has given following activities:
Enfants du Tamil Nadu - India is a Registered voluntary charitable trust under Trust Act. The trust is formed in August, 2008 consisting of three governing body members. The main objective of the turst is to give proper education, clothing, food and shelter to the orphan children mainly the victims of natural calamities. The orphanage of EDTN is located in Income Tax Colony II Street, Madurai bearing 31 children. The registered office is at Plot No.10, Vaigai Street, Meenakshi Nagar, Madurai - 18. The children are sheltered with good food and good education. We rented a big building for this purpose. The children are put in different schools nearby. We give proper care to maintain discipline with one Warden and One Assistant Warden. The small children are taken care to drop in and pick them from schools by the Assistant Warden. There is a tuition teacher to make them do their home assignment and help them in their studies. We have an English Teacher to teach spoken English during week end. There are two cooks to maintain kitchen. The children are healthy and neat. If they are fallen sick immediate medical care is given with the doctors staying around. The trust is doing its service at the fullest for which it is formed.
8.1 The ld. CIT himself admitted in his order that as per trust deed, the objects are apparently charitable in nature and all necessary documents have been filed before him to establish that it is a charitable trust which 5 ITA Nos Nos. 1643 & 1644/Mds/10 1644/Mds/10 entitled the assessee to obtain registration, against which the ld. CIT could not give plausible or convincing reason to reject the application. Considering the entirety of facts and circumstances, material on record, we are of the view that the ld. CIT has just rejected the application of the assessee without giving cogent reasons and in our view apparently the assessee fulfills all conditions, which makes it entitled for registration under section 12AA of the Act. As such, while accepting the appeal of the assessee, we direct the ld.
CIT to grant registration to the assessee as applied for.
9. Since approval under section 80G(5)(i) has been refused on the basis of order rejecting application for registration under section 12AA, which has been granted by us in earlier part of the order, therefore, we direct the ld. CIT to grant approval under section 80G(5) to the assessee as applied for.
10. In the result, both the appeals of the assessee are allowed.
Order pronounced soon after the conclusion of hearing on 08.12.2010.
Sd/- Sd/- (ABRAHAM P. GEORGE) (U.B.S. BEDI) ACCOUNTANT MEMBER JUDICIAL MEMBER Chennai, Dated, the 08.12.2010. Vm/- Copy to : Appellant/Respondent/CIT(A)- /CIT, /DR