Income Tax Appellate Tribunal - Mumbai
Tara Educational And Charitable Trust , ... vs Assessee on 18 July, 2014
आयकर अपील य अ धकरण "E" यायपीठ मब
ंु ई म।
IN THE INCOME TAX APPELLATE TRIBUNAL "E" BENCH, MUMBAI
BEFORE S/SHRI H.L. KARWA, HON'BLE PRESIDENT AND P.M. JAGTAP, AM
ी एच.एल. कावा, अ य एवं ी पी.एम. जगताप, लेखा सद य के सम ।
आयकर अपील सं./I.T.A. No.1247 /Mum/2013
( नधारण वष / Assessment Year : 2012-2013
Tara Educational and बनाम/ Director of Income Tax
Charitable Trust, Vs. (Exemptions),
B-9, Mayoor College Lane, Piramal Chambers,
MTNL Marg, Mumbai - 400 028.
Dadar (W),
Mumbai - 400 028.
थायी ले खा सं . /PAN : AABTT5973G
(अपीलाथ /Appellant) .. ( यथ / Respondent)
Appellant by Ms. Reshmarani J. Nathani
Respondent by : Shri Rajesh Ranjan Prasad
ु वाई क तार ख / Date of Hearing
सन : 14-07-2014
घोषणा क तार ख /Date of Pronouncement :
[
आदे श / O R D E R
PER P.M. JAGTAP, A.M. :
पी.एम. जगताप, लेखा सद य This appeal filed by the assessee is directed against the order of ld. Director of Income Tax (Exemptions), Mumbai dated 27-12-2012 passed u/s 12AA of the Income Tax Act, 1961 whereby he rejected the application filed by the assessee for registration u/s 12A of the Act.
2. The assessee in the present case is a Public Charitable Trust which has been duly constituted under the Deed of Trust dtd. 15-05-2008 and registered with the Charity Commissioner Mumbai on 8-10-2008 u/s 18 of the Bombay Public Trusts Act, 1950. It filed an application with the Director of Income Tax (Exemptions) for registration u/s 12A of the Act in the 2 ITA 1247/M/13 prescribed Form No. 10A on 27-06-2012. From the perusal of the Trust Deed of the assessee, it was noticed by the DIT (exemptions) that the same did not contain "dissolution clause" to the effect that Trust is irrevocable and that if for some reason its objects cannot be carried out, then as per the provisions of the Bombay Public Trusts Act, 1950, its net assets will be given to another Trust having similar objects and under no circumstances, these will be distributed among the Trustees. When this aspect was confronted by the DIT (Exemptions) to the assessee, the later offered its explanation vide letter dated 27-12-2012 submitting therein that it is registered u/s 18 of the Bombay Public Trusts Act, 1950 under which dissolution clause is not required to be mentioned in the trust Deed. It was also submitted that the assessee Trust is formed for charitable purpose and on dissolution of the Trust, the net assets could not come back to the Trust.
3. The ld. DIT (Exemptions) did not find merit in the explanation of the assessee and rejected its application for registration u/s 12A of the Act for the following reasons given in para 4 of his impugned order:-
"I have considered the submissions of the applicant but the same are not acceptable. Section 18 of the Bombay Public Trusts Act, 1950 only prescribes the manner of making an application for registration and the particulars to be furnished in such application. It is nowhere mentioned in Section 18 that dissolution clause is not required in a Trust Deed creating a public trust. In order to determine whether a particular trust is a public trust within the meaning of Section 2(13) of the Bombay Public Trusts Act, 1950 we have to see whether the beneficial interest is vested in an uncertain and fluctuating body of Individuals and whether the trust is of a permanent character[ Wazir Shah v. San! Shah AIR 1961 J&K 42]. To sum up, the applicant has not given any valid reason for not incorporating the dissolution clause in its Trust Deed. As per the Bombay Public Trusts Act, 1950 and the settled position of law, a trust is a perpetual trust. The essence of a trust for public charitable or religious purpose lies in its characteristic of permanency. In case the objects! activities of the trust cannot be carried out and it has to be dissolved, its corpus and properties etc. remaining on the date of dissolution have to be transferred to another trust having similar objects with the sanction of the Charity Commissioner as per the procedure laid down under the Bombay Public Trusts Act, 1950. No such clause is found to be there in the 3 ITA 1247/M/13 Trust Deed and, therefore, the applicant cannot be said to have been constituted as a valid public charitable trust. Accordingly, the application for registration u/s. I 2A made by the applicant trust is rejected.
Aggrieved by the order of the ld. DIT (Exemptions), the assessee has preferred this appeal before the Tribunal.
4. We have heard the arguments of both the sides and also perused the relevant material available on record. It is observed that the application filed by the assessee u/s 12A of the Act has been rejected by the ld. DIT (Exemptions) mainly on the ground that the relevant Trust Deed does not contain the so-called "dissolution clause". As per the provisions of section 11 & 12 of the Act, income derived from property held for charitable or religious purposes and income of Trusts or Institutions from contributions are exempt from tax provided such Trusts or Institutions are registered u/s 12A of the Act. The procedure for registration u/s 12A is prescribed in section 12AA of the Act which provides that the Commissioner, on the receipt of an application for registration of a Trust or Institution made u/s 12A, shall call for such information from the Trust/Institution as he thinks necessary in order to satisfy himself about the genuineness of activities of the Trust/Institution and may also make such inquiries as deemed necessary on this behalf. It further provides that after satisfying himself about the objects of the Trust/Institution and the genuineness of its activities, the Commissioner shall pass an order in writing registering the Trust/Institution u/s 12A and if he is not so satisfied, he shall pass an order in writing refusing to register the Trust/Institution. The scope of enquiry contemplated u/s 12AA of the Act thus is limited to the extent of Commissioner getting himself satisfied about object of the Trust and the genuineness of its activities so as to grant or refuse the registration u/s 12A of the Act. A perusal of the impugned order of the ld. DIT (Exemptions), however, shows that he has not recorded any adverse comment or dis-satisfaction about the object of the
4 ITA 1247/M/13 Trust or genuineness of the Trust activities. He has refused to grant the registration u/s 12A of the Act on the ground that its Trust Deed does not contain "dissolution clause". In our opinion, the ld. DIT (Exemptions) thus has clearly gone beyond the scope of enquiry contemplated u/s 12A of the Act and has refused to grant the registration u/s 12A of the Act to the assessee Trust on a totally irrelevant ground without pointing out as to how he was not satisfied either about the object of the Trust or the genuineness of its activities. We therefore set aside the impugned order of the ld. DIT (Exemptions) and direct that the registration u/s 12A of the Act as applied by the assessee Trust be granted.
5. In the result, appeal of the assessee is allowed.
Order pronounced in the open court on 18th July, 2014.
आदे श क घोषणा खल
ु े यायालय म दनांकः 18-7-2014 को क गई ।
Sd/- sd/-
(H.L. KARWA) (P.M. JAGTAP)
अ य /PRESIDENT लेखा सद य ACCOUNTANT MEMBER
मुंबई Mumbai; दनांक Dated
[
व. न.स./ RK , Sr. PS
5 ITA 1247/M/13
आदे श क त ल प अ े षत/Copy of the Order forwarded to :
1. अपीलाथ / The Appellant
2. यथ / The Respondent.
3. आयकर आयु त(अपील) / The DIT(E)--, Mumbai
4. आयकर आयु त / DDIT (E)-1(2), Mumbai
5. वभागीय त न ध, आयकर अपील य अ धकरण, मुंबई / DR, ITAT, Mumbai E Bench
6. गाड फाईल / Guard file.
ु ार/ BY ORDER,
आदे शानस
स या पत त //True Copy//
उप/सहायक पंजीकार (Dy./Asstt. Registrar)
आयकर अपील य अ धकरण, मुंबई / ITAT, Mumbai