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Your appellant submits that the above findings are contrary to the facts & legal position and hence learned DIT(E) has erred in law and in facts in taking recourse to these findings for the purpose of withdrawing registration u/s 12AA(3) of the Act.

6. The learned DIT(E) failed to appreciate that there were legally enforceable rights created by the transfer of undertaking to Ananya, the same was at Arm's length and there was constructive receipt from Ananya and the same was donated constructively to IFIG another charitable trust with the similar object of the appellant trust and hence it could not be said that there was siphoning off of funds.

"A question has been raised regarding the availability of exemption in the hands of charitable trusts of amounts paid as donation to other charitable trusts.

The issue has been considered by the Board and it has been decided that as the law stands at present, the payment of a sum by one charitable trust to another for utilization by the donee trust towards its charitable objects is proper application of income for charitable purpose in the hands of the donee trust; and the donor trust will not lose exemption under section 11 of the Income-tax Act, 1961, merely because the donee trust did not spend the donation during the year of receipt itself.

5.3 With respect to point no.(vi), it is stated that the above point is even reinforced whereby it is clear that the assessee has obtained loans at an interest from various organizations and has given the same to other organizations at a higher rate of interest for these trusts to carry out relief of poor women. In this regard, it can be clearly stated that the assessee was in fact engaged only in the activity of general public utility as it was not directly doing relief of poor women etc. 5.4 With respect to point no,(vii), the argument of the assessee is not correct. As slated above, the activity of siphoning off of funds of Rs.45 crorcs cannot be stated to be genuine activity or activity as per the objects of the trust. No charitable trust would permit siphoning off of money from its own corpus and accumulated funds and even current income. While a charitable trust would permit donation out of current income to other trusts carrying on similar activity, but in this case the entire money which is supposed to have been given to a group charitable trust has been misused. As per object No.3(g) of IFIG, it can buy share capital of any company etc. This is expressly prohibited by section 11(5) of the Income-tax Act which means right from the beginning the trust had different motive of making the arrangement under discussion. The IFIG trust and Ananya's date of creation shows that motive was to make this arrangement. The said group charitable trust was refused registration u/s 12AA(l) by the Commissioner of Income-tax at Faridabad and hence the said donation cannot be stated to be for the objects of the assessee trust. Further, even this amount did not remain with this said charitable group trust but the trust invested in the group finance company the entire amount and purchases its shares. No charitable trust under any Indian laws is allowed to purchases shares of a group finance company instead of doing charitable activity. It is not understood as to which objects of the trust would be fulfilled when the other group charitable trust has bought shares of a group finance company.

5.7 With--respect-to argument of the assessee in point no. (x) and xi) of para 4.1, it is clear that the assessee himself has admitted that it had transferred the "micro finance business." of the assessee to another trust namely IFIG which was stated to be charitable trust but whose registration has been refused by the Income-tax department in view of the its objects. In any case, the so-called charitable trust IFIG has admittedly purchased the shares of a group finance company "Ananya" which is again, by no stretch of imagination stated to be charitable activity or tar the purpose of charitable activity whatsoever. The argument of the assessee that Ananvia's majority shares are with IFIG is not relevant. The Company Ananya is not a property held under trust of the assessee trust. This is most important issue. The assessee trust has lost assets to Auanya, IPIG is a trust where deed consists of clauses whereby it can buy shares of companies and so It can do speculation and hence it cannot qualify for charitable trust. IFIG is created in this entire scheme to siphon off money.