Income Tax Appellate Tribunal - Delhi
Acharya Sewa Niyas Uttaranchal vs Cit on 2 November, 2006
ORDER
R.V. Easwar, Vice President
1. This is an appeal by the assessee which is a public charitable trust and it is directed against the order passed by the CIT under Section 12AA(l)(b)(ii) of the Income Tax Act refusing to grant registration to the assessee. The assessee is a trust. One Anil Kumar Verma of Haridwar made a declaration to form a trust on 30-11-2000 and dedicated a sum of Rs. 500 to commence the trust. A formal deed was executed. The name of the trust was Acharya Seva Niyas Uttaranchal. The working area of the trust was to be the State of Uttaranchal. According to the trust deed, the following were the objects of the trust:
(1) To work for the welfare of the Aacharyas engaged in the area of expansion of education based on Indian life values. (2) To help economically to the individuals dedicated in the field of education considering their ability, capacity and duration of service provided. (3) To select such Aacharyas in whsose schools education based on India life values is provided and Indian Sanskars are given. To list such schools and affiliate them. (4) To do other works in the interest of nation and society.
(5) To make regulations to fulfil the above objectives."
A board of trustees was constituted under the trust deed which consisted of ten persons. The maximum number of trustees was to be fifteen. Detailed provisions were made in the trust deed regarding the functions of the board of trustees.
2. The assessee-trust applied for registration before the CIT on 5-8-2002 along with the copy of the trust deed, copy of balance sheet as on 15-5-2002 and a list of the trustees. The CIT took the view that the trust money of Rs. 500 was "too petty an amount out of the income of the trust which cannot fulfil any of the declared objectives". According to him, the trust property was not real and was virtually non-existent and "hence the objects of the trust are not genuine". It was the view of the CIT that since the amount of Rs. 500 which was the initial contribution of the founder of the trust was too small and illusory, the necessary ingredient of the trust property was missing and the objects of the trust cannot be achieved with this paltry amount. He, therefore, refused registration to the trust.
3. The assessce is in appeal to the Tribunal contending that the reasons given by the CIT to refuse registration are not relevant under Section 12AA of the Act. It is contended that the jurisdiction of the CIT, while examining an application for registration of the trust, is confined to the question whether the activities of the trust are genuine and whether the objects of the trust are charitable. It is submitted that the question of sufficiency or otherwise of the initial contribution made by the founder to the trust fund is not a relevant consideration for the purpose of granting registration under Section 12AA. Our attention is drawn to p. 7 of the paper book which is a copy of the written submissions filed before the CIT. In para 5 thereof, the assessee has taken that it being a public trust has received contributions from the public and the balance in the bank as on date (21-9-2004) was Rs. 5,71,927. In support of the submission, the copy of the bank statement was also attached. It was contended on this basis that even the objection of the CIT that with the paltry amount of Rs. 500, the charitable activities cannot be carried out is not justified on merits since the assessee has collected substantial contributions from the public from which the activities can be carried out. It is, therefore, pleaded that registration be granted to the trust.
4. The learned senior departmental Representative strongly supported the order of the CIT.
5. On a careful consideration of the matter, we are of the view that the CIT was not justified in refusing to grant registration to the trust. As rightly pointed out on behalf of the assessee, under Section 12AA the jurisdiction of the CIT is confined to satisfying himself about the objects of the trust and the genuineness of the activities and for this purpose, he is authorized to make such enquiries as he may deem fit. The CIT has not taken any objection to the charitable nature of the trust. In fact, the objects of the trust as declared in the trust deed, which we have extracted earlier, are all charitable objects and there is no finding recorded by the CIT to the contrary. He has nearly made a sweeping observation in the second page of the order that "moreover, there are no charitable activities at all", This we find to be a wholly untenable and general statement and he has not demonstrated as to how he considers any or all the objects of the trust to be non-charitable. Be that as it may, the real objection of the CIT seems to be that the initial contribution of Rs. 500 made by the founder of the trust and dedicated to the objects of the trust is hardly sufficient to carry out the charitable activities of the trust. The sufficiency or otherwise, as rightly pointed out on behalf of the assessee, is not d relevant factor while dealing with an application for registration under Section 12AA. The section in terms does not make it a consideration for the grant of registration. Further, there is a board of trustees constituted by the trust deed and the board has been authorized to collect contributions from schools and society to meet the objects of the trust and has been directed to deposit the contributions into the corpus fund. The corpus fund is to be invested in the prescribed modes and Clause 6.7 of the trust deed authorizes the trustees to utilize the earnings from the corpus fund towards meeting the objects of the trust. In special cases, the trustees have been authorized to utilize the corpus fund also for such purposes. The trustees have collected a sum of Rs. 5,71,927 towards contribution to the trust which has been deposited with the Punjab National Bank. The statement of account issued by the bank and which was placed before the CIT shows this figure as on 17-9-2004. Therefore, there are sufficient funds available with the trust from which the charitable activities can be carried out. In our opinion, the CIT was not justified in refusing to grant registration to the assessee trust. The reasons given by him for such refusal are extraneous to Section 12AA. We may add that the CIT has not doubted the genuineness of the activities of the trust.
6. In his order, the CIT has referred to a judgment of the Madras High Court in Nachimuthu Indus Uial Association v. CIT . In this case, it was found that the property itself did not exist on the date of the resolution passed for giving a donation by the trust to the polytechnic. It was, therefore, held that there was no question of any trust coming into existence and the resolution was a mere expression of a pious opinion. The present case is different. Here, there was in fact a dedication of Rs. 500 to the trust which was the initial contribution and it is not the case of the CIT that this contribution was not in fact made or did not exist when the trust was established. The CIT, in our opinion, was not justified in relying on this decision for refusing registration to the trust.
7. For the above reasons, We allow registration of the assessee trust, set aside the order passed by the CIT under Section 12AA and allow the appeal. No costs.