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Showing contexts for: charitable trust objects in Broadway Chritable Trust, Nadia vs Assessee on 29 April, 2016Matching Fragments
5. We have heard the rival submissions and perused the materials available on record. We find that the Learned AR had pointed out that the trust is running an educational institution in the name of Broadway Accent Junior High School, duly recognized and approved by Govt. of West Bengal Secondary Education Board, vide their reference no. S/RCC09/2011/83. The running of school in the name of the assessee trust is not disputed by the revenue. We find that the Learned CIT had not disputed the objects of the trust as charitable in nature. We find that he had only pointed out certain defects in the trust deed which are curable in nature and which would not disturb the root of the existence of the trust per se. We find that the assessee had replied before the Learned CIT that a sum of Rs. 4,33,000/- were seized and possessed with the settlors being the initial corpus fund of the trust and had undertook to invest the balance promised amount of Rs. 4,67,000/- in future to the trust. We find that the Learned CIT had called for a report from the Learned AO to satisfy himself as to the genuineness of the activities of the Trust as well as its objects in terms of section 12AA(1)(a) of the Act. It was argued that admittedly no adverse remarks were sent by the Learned AO in this regard. However, the Learned CIT had proceeded initially to reject the application on the ground that the same was not made within one year from the date of creation of the trust and there is no power to condone the delay provided in the statute. In this regard, we find that in case the applicant had preferred an application on or after 1.6.2007, the Learned CIT, if satisfied with the charitable objects of the trust and genuineness of the activities of the trust, is duty bound to grant registration from the date of application of the trust. He cannot simply reject the M/s. Broadway Charitable Trust.
"Under section 12AA the jurisdiction of the Commissioner 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 Commissioner, in the instant case, had not taken any objection to the charitable nature of the trust. In fact, the objects of the trust as declared in the trust deed, were all charitable objects and there was no finding recorded by the Commissioner to the contrary. The real objection of the Commissioner appeared to be that the initial contribution of Rs. 500 made by the founder of the trust and dedicated to the objects of the trust was hardly sufficient to carry out the charitable activities of the trust. The sufficiency or otherwise of the initial contribution made by the founder to the trust fund is not a relevant factor while dealing with an application for registration under section 12AA. The section in terms did not make it a consideration for the grant of registration. Further, there was a board of trustees constituted by the trust deed and the board had been authorized to collect contributions from schools and society to meet the objects of the trust and had been directed to deposit the contributions into the corpus fund. The corpus fund was to be invested in the prescribed modes and the trust deed authorised the trustees to utilize the earnings from the corpus fund towards meeting the objects of the trust. In special cases, the trustees had been authorized 10 utilize the corpus fund also for such purposes. The trustees had collected a sum of Rs. 5,71,927 towards contribution to the trust which had been deposited with the bank. The statement of account issued by the bank, which was placed before the Commissioner showed this M/s. Broadway Charitable Trust.
objects. Moreover, there is no allegation that the monies so brought in have been diverted to the personal benefit of the settlors. The monies so brought in remained in the coffers of the trust to be deployed for the charitable objects of the trust.
5.3. It is true that Rule 17A provides that assessee has to furnish the previous years accounts when application in Form 10A is filed. In our opinion, this requirement in Rule 17A asking for previous year accounts was relevant when the legislature had provided for condonation of delay in filing the application in Form 10A and granting registration with retrospective effect. Now the requirement of accounts had practically become redundant as the registration is granted only with effect from the date on which application is made after 1.6.2007. Hence viewing from this perspective, the assessee trust not bringing in the part of the promised initial corpus fund would not vitiate the status of the trust coming into existence much less seeking registration under the Income Tax Act. We hold that what is relevant at the time of granting registration u/s 12AA of the Act is that the Learned CIT should examine whether the objects of the trust as enumerated in the trust deed are charitable in nature and activities of the trust are genuine. It is well settled that the assessee trust cannot be forced to have carried out the objects as per the trust deed before seeking registration u/s 12AA of the Act. While this is so, both the receipts of the trust as well as the application of the funds of the trust would become irrelevant for examination at the time of granting registration. However, the same would be very much relevant at the time of assessment proceedings wherein the eligibility of claim of exemption u/s 11 of the Act could be examined in detail. We find that the Hon'ble Kerala High Court in its recent decision had an occasion to consider the powers of the Learned CIT vis a vis the behaviour of the trustees at the stage of granting registration u/s 12AA of the Act, in the case of Sree Anjaneya Medical Trust vs CIT reported in (2016) 382 ITR 399 (Ker) dated 11.2.2016, wherein it was held that :
5.6. In view of the aforesaid findings and judicial precedents relied upon hereinabove, to sum up, we hold that :-
(a) Sufficiency or some irregularities in bringing the initial corpus fund would not automatically make the trust as not to have come into existence ;
(b) The charitable objects of the trust are not disputed by the Learned CIT ;
(c) What is to be seen at the time of granting registration by the Learned CIT is only whether the objects of the trust are charitable and activities carried out are genuine in nature , which conditions have been duly satisfied by the assessee in the instant case ;