Indian Kanoon - Search engine for Indian Law

17. This issue also cropped up before ITAT Delhi in the case of NLB Charitable Trust Vs CIT, Meerut (ITA No. 1707/D/2009) wherein it has been held that "12. These clauses describe only reimbursements of out-of-pocket expenses incurred by the trustees in the course of discharging the objects of the trust and for payment of honorarium for the work a particular trustee do for carrying out the activities of the trust and honorarium will have to have the approval of Board of Trustees and other clause deals with indemnification and reimbursement for the lawful acts in the discharge of objects of the trust. The trustees are prohibited from deriving any direct or indirect pecuniary advantage out of trust properties, income or application thereof for themselves and their relatives and associates. The spending of trust properties on any object which is not enumerated in the objects of trust was also prohibited and the trustees' act against the interest of trust is also prohibited. Thus, according to the prohibition clause trustees cannot derive any direct or indirect pecuniary advantage either out of property of the trust or from income or application thereof not only for themselves, but for their relatives and associates. In any case, if later on it is found by the department that trustees or their relatives or their associates are deriving any direct or indirect pecuniary advantage out of trust property or its income and if any such property or income is applied for that purpose, then it will be contravention of the trust deed. Therefore, in our opinion, the simple fact that there is perpetual succession in the appointment of trustee, cannot disentitle the assessee institution from getting registration. Moreover, the trust deed has to be read as a whole according to well established law. It has been stated in clause 2(0) that if any of the first trustees resigned during his/her lifetime, the vacant seat will be filled by the Board of first trustees with 3/4th majority and, thus, nominated will also be called first trustee. Clause 2(iii) provides that the number of trustees could be increased by moving an amendment of the trust and getting approval of 3/4th number of first trustees, however, the total number of trustees cannot exceed 10. In view of this clause also it cannot be said that there is perpetual succession of the post of the trustee."