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TMI Blog2004 (2) TMI 302X X X X Extracts X X X X X X X X Extracts X X X X ..... section 12A(a) of the Income-tax Act, 1961 in the prescribed form, i.e., Form No. 10A, on 14th May, 1999. The Income-tax Officer (Judl.), for CIT, Udaipur, pointed out to the assessee that as per trust deed, all the trustees are closely related and belong to one family and as per clause 'C', in the event of a vacancy in the Board of Trustees, the remaining trustees are to co-opt another person from the very family of the outgoing trustee. The trust, therefore, appears more in the nature of a family affair/settlement than a public charitable trust. The assessee replied vide letter No. 1158, dated 10-11-1999 in the following manner:- "With reference to your honour's above cited letter, we beg to state as under: Your honour has drawn our attention towards Board of Trustees where trustees are closely related and belonging to one family and further mentioned above clause C of the Board of Trustees for whatever reasons, the remaining trustees shall co-opt another major male or female person out of the family members of that person to fill up the vacancy. In this connection, we have to state that for constituting public trust one of the conditions is that the beneficiary ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ilized for the charitable purpose. Accordingly, it was submitted that the ld. CIT was not justified in declining registration to the trust. Reliance was also placed on the following case laws: (i) Malli Ram Charitable Trust v. CIT [2003] 260 ITR (AT) 118 (Asr.); and (ii) Fifth Generation Education Society v. CIT [1990] 185 ITR 634 (All). 5. In his rival submissions, the ld. D.R. strongly supported the order of the CIT, Udaipur. 6. We have heard the ld. representatives of both the parties at length and also gone through the order of the ld. Commissioner along with the material available on record. On perusing the copy of the trust deed dated 10-6-1998 (available on record), it would be clear that the objects of the trust are as under: "4. Aims and objects: The objects for which the Trust has been created and established are education, relief to the poor, medical relief and advancement of any other charitable objects of general public utility or construction of Dharamshala, rain-basera, temple and school etc. Not involving the carrying on of any activity for profit and for such purposes:- 1. To establish, maintain and/or grant aid in cash and/or in kind to hospitals, sani ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ns and poors. 11. To help the Indian Military personals and their families who from time to time make and/or made sacrifices, become disabled and lay their lives for the nation. 12. To aid and promote the family planning movement and other national causes as enumerated in the current twenty point programme, for the upliftment of the downtrodden and poors. 13. To do any other act for the advancement of general public utility (not involving the carrying on of any activity for profit) without distinction of any caste, colour or creed." 7. In the present case, it is not in dispute that application for registration has been made in the prescribed form, i.e., Form No. 10A. It is also not the case of the department that the property held by the trust and income therefrom had not been utilized for the purposes of charity/public utility. The only reason for not granting registration was that there is a clause in the trust deed that "in the event of a vacancy arising in the Board of Trustees for whatever reasons, the remaining trustees shall co-opt another major male or female person out of the family members of that person to fill up the vacancy". Only on that basis, the Id. Commissi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntant and setting forth such particulars as may be prescribed." For the instant case, it is also relevant to point out the rule 17A of the Income-tax Rules, 1962, which provides as under:- "17A. An application under clause (a) of section 12A for registration of a charitable or religious trust or institution shall be made in duplicate in Form No. 10A and shall be accompanied by the following documents, namely:- (a) where the trust is created, or the institution is established, under an instrument, the instrument in original, together with one copy thereof, and where the trust is created, or the institution is established, otherwise than under an instrument, the document evidencing the creation of the trust or the establishment for example the institution, together with one copy thereof: Provided that if the instrument or document in original cannot conveniently be produced, it shall be open to the Chief Commissioner or Commissioner to accept a certified copy in lieu of the original. (b) where the trust or institution has been in existence during any year or years, prior to the financial year in which the application for registration is made, two copies of the accounts of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y member of the trustee can be co-opted from the very family of the outgoing trustee. While taking such a view, we are fortified by the judgment of Hon'ble Allahabad High Court in the case of Fifth Generation Education Society, wherein it has been held that the CIT was required to see as to whether the objects of the trust were charitable or not. He was further required to see as to whether the application was made in accordance with the requirements of section 12A of the Income-tax Act, 1961 read with rule 17 of the Income-tax Rules, 1962. Furthermore, it has been held in the said case that the CIT was not required to examine the application of income. 9. In view of the above discussion, we are of the view that the ld. CIT was not justified in refusing registration to the assessee merely on the basis that in case of a vacancy in the Board of Trustees, the remaining trustees are to co-opt another person from the very family of the outgoing trustee and as such the trust appears more in the nature of a family affair/settlement than a charitable trust. We accordingly reverse his order and direct him to grant registration under section 12A of the Income-tax Act, 1961. 10. In the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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