2016 (9) TMI 457 - HC - Income Tax

Correction in mistakes in Trust Deed - preparation of fresh deed - Held that - When provisions had been made to enable the trustees with the previous concurrence and approval in writing of the employer to alter, vary or amend any of the Trusts or provisions of this Deed and the Rules, petitioner can as well make such amendments and thereafter, the same can be produced before the Commissioner of Income Tax for approval. In fact, such a method has not been adopted by the petitioner as evident from the records. Petitioner had only sent Ext.P4 which does not contain the required amendments as specified under the Trust Deed. Therefore, it is necessary that the petitioner will have to submit an amendment made in accordance with the provisions and seek approval of the Commissioner of Income Tax. However, it is clarified that a fresh deed is not required in the matter as contemplated in Ext.P5. Accordingly, this writ petition is disposed of as under (i) Petitioner is free to alter or correct the mistakes that had crept in the Trust Deed and thereafter comply with the procedure prescribed in Clause 5 as stated above. (ii) If such an application is filed, it shall be open for the Commissioner of Income Tax to take appropriate decision in the matter in accordance with law.

Summary

Issues:
Challenge to Ext.P5 issued by Principal Commissioner of Income Tax regarding Trust Deed correction.

Analysis:
The petitioner sought to challenge Ext.P5 issued by the Principal Commissioner of Income Tax, directing the petitioner to correct mistakes in the Trust Deed by preparing a fresh Deed. The petitioner argued that the Trust Deed itself contained provisions in Clause 5 allowing for amendments without the necessity of preparing a fresh deed. The petitioner was concerned that submitting a fresh deed might affect the benefits accruing from the original application submitted earlier. The court considered the arguments presented by both parties.

The Standing Counsel for the respondents stated that the original deed had defects, and the errors could only be rectified by amending the original deed. Ext.P5 was issued to correct the mistake by preparing a fresh deed, as the original deed was deemed invalid. The Standing Counsel emphasized that any benefits would only accrue from the amended date, not the original submission date.

The court analyzed the Trust Deed's Clause 5, which empowered the trustees to alter, vary, or amend any provisions of the deed with the employer's approval. The court noted that there was no necessity to prepare a fresh deed as indicated in Ext.P5. The petitioner was advised to amend the Trust Deed in accordance with the provisions of Clause 5 and seek approval from the Commissioner of Income Tax. The court highlighted that the petitioner had not followed the correct procedure for amending the Trust Deed, as evidenced by the incomplete amendments in Ext.P4. The court clarified that a fresh deed was not required, and the petitioner was directed to submit the necessary amendments for approval.

In the final disposition, the court allowed the petitioner to correct the mistakes in the Trust Deed as per Clause 5 and instructed the petitioner to follow the prescribed procedure for seeking approval from the Commissioner of Income Tax. The Commissioner was granted the authority to make a decision based on the amended application in accordance with the law.