Income Tax Appellate Tribunal - Hyderabad
Super Gas Foundation,, Hyderabad vs Assessee on 27 September, 2012
IN THE INCOME TAX APPELLATE TRIBUNAL
HYDERABAD BENCH 'A', HYDERABAD
BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER and
SHRI SAKTIJIT DEY, JUDICIAL MEMBER
I.T.A. No. 906/Hyd/2012
Assessment year - NA
M/s. Super Gas Foundation vs. The Director of Income-tax
Hyderabad (Exemptions),
PAN: AAKTS7581C Hyderabad
Appellant Respondent
Appellant by: Sri K. Sai Prasad
Respondent by: Sri V. Srinivas
Date of hearing: 27.09.2012
Date of pronouncement: 27.09.2012
ORDER
PER CHANDRA POOJARI, AM:
This appeal by the assessee is directed against the order of the Director of Income-tax (Exemptions) [DIT(E)], Hyderabad dated 29.3.2012.
2. The grievance of the assessee is in this appeal is that the DIT(E) is not justified in not granting registration u/s. 12AA of the Income-tax Act, 1961 on the reason that the trust can be revoked by the author anytime during its existence by stating "its continuity is subject to the will of the said Indian Company, the Author of the Trust, which in turn, is controlled by the said Dutch Multinational".
3. Brief facts of the issue are that the assessee trust filed an application in Form No. 10A on 9.9.2011, seeking registration u/s. 12AA of the Income-tax Act, 1961. In view of such application, a questionnaire was issued by the DIT(E) to the assessee trust, vide letter dated 18.11.2011, to furnish detailed information on specific points and to produce books of account for verification on 26.12.2011. In response, Sri A. Bindu Madhav, Trustee, appeared before the DIT(E) and filed reply to the questionnaire and other information. The DIT(E) 2 I.T.A. No. 906/Hyd/2012 M/s. Super Gas Foundation ===================== observed from the trust deed which was executed on 24.06.2011 that M/s SHV Energy India Private Limited is the author/founder of the assessee trust. From the information furnished by the above trustee, the DIT(E) noticed that the said company is a 100% subsidiary of M/s SHV (Steenkolen Handels-Vereeniging), which is a Dutch Multi- national, carrying on business in different countries. From the trust deed, it is further noticed that the author of the trust has power to appoint trustee(s), as per clause 6 and clause 7(vi) of the said trust deed. He further noted that, the trust is not irrevocable. Under clause 10 of the said trust deed, it is mentioned as under:
"The trust deed is revocable by the Author any time during its existence. However, subsequent to such revocation the Corpus Funds granted under this Deed, such other assets/properties purchased, acquired by the Trust in its name shall not be transferred in the name of Author, but shall be transferred as per the Author's wishes and desires to another trust or society registered under the Income Tax Act, 1961 with similar aims and objectives. It is clarified that, for the purpose of this Trust Deed, the term "Author" shall include any resultant entity upon merger or amalgamation of the Author with any other entity and in case of winding up, the parent entity that held controlling stake in the Author, before the winding-up order is passed."
4. From such stipulation in the trust deed, it clearly shows that the above trust is not irrevocable. Its continuity is subject to the will of the said Indian Company, the Author of the trust, which in turn, is controlled by the said Dutch Multinational. From such provision, it clearly shows that the above trust can be extinguished at the instance and will of the said Dutch multinational at any time. Under these circumstances, the DIT(E) was of the view that the above trust cannot be treated as a wholly public charitable trust. The DIT(E) was of the opinion that the assessee trust has not carried out any charitable activity and accordingly, he refused the registration u/s. 12AA of the Act. Against this the assessee is in appeal before us.
5. Before us the learned AR submitted that because the power has been given to the author/founder to revoke the Trust Deed at any time 3 I.T.A. No. 906/Hyd/2012 M/s. Super Gas Foundation ===================== during the existence of the trust, it does not disentitle the assessee registration u/s. 12AA of the Act, because on revocation of the Trust Deed, all corpus fund granted under this Trust Deed, such other assets/ properties acquired by the trust in its name shall be transferred as per the author/founder's wishes and desires to another trust or society registered under the Income-tax Act, 1961 with similar aims and objects. Being so, the objects of the trust are not against the provisions of section 2(15) of the Act. For this purpose he relied on the order of the Tribunal in the case of Saviour Charitable Trust v. CIT (7 Taxmann.com 34) (Delhi). He also relied on 23 SOT 42.
6. On the other hand, the learned DR strongly opposed the arguments of the AR and relied on the order of the DIT(E).
7. We have heard both the parties and perused the material on record. In this case an absolute power has been given to the author/ founder to revoke the Trust Deed according to his wishes. In our opinion, it will affect the very existence of the trust itself. As such we are not inclined to uphold the arguments of the assessee's counsel. However, as conceded by the AR on making appropriate amendment to the Trust Deed to the satisfaction of the DIT(E), the registration will be granted. Accordingly, the entire issue is remitted back to the file of the DIT(E) for fresh consideration.
8. In the result, appeal of the assessee is allowed for statistical purposes.
Order pronounced in the open court on 27th September, 2012.
Sd/- Sd/-
(SAKTIJIT DEY) (CHANDRA POOJARI)
JUDICIAL MEMBER ACCOUNTANT MEMBER
Hyderabad, dated 27th September, 2012
tprao
4 I.T.A. No. 906/Hyd/2012
M/s. Super Gas Foundation
=====================
Copy forwarded to:
1. M/s. Super Gas Foundation, c/o. M/s. Ch. Parthasarathy & Co., 1-1-298/2/B/3, 1st Floor, Sowbhagya Avenue, St. No. 1, Ashoknagar, Hyderabad-500 020.
2. The Director of Income-tax (Exemptions), Hyderabad.
3. The ADIT(E), Hyderabad.
4. The DR - A Bench, ITAT, Hyderabad