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TMI Blog2004 (9) TMI 371X X X X Extracts X X X X X X X X Extracts X X X X ..... dar, one of the trustees, who had gone to Delhi on or about 7th Oct., 1992 with a view to establish a public charitable trust in the name of his mother Smt. Vimalabai (Jiji) Jatar and in the form of residuary bequest. The said probate was obtained on 25th April, 1996. It was only thereafter that the process for registration of the trust under the Bombay Public Trust Act started. The trust was registered under R. No. E/2395/Pune dt. 12th Feb., 1997. Thereafter, on 25th Nov., 1997 the document for registration under s. 12A and for certificate under s. 80G was submitted to the CIT, Pune. Thus there was no delay in submission of the document for registration under s. 12A of the Act. 3. The CIT noted that the main object of the trust as per cl. (4) of the trust deed is as under: "(4): The primary object of this trust is education. It shall include offering all or any kind of educational assistance to needy-deserving students from India for prosecuting their primary, secondary and higher studies including professional courses in India and abroad. It also includes expenditure of lodging, boarding, books, apparatus that may be necessary to effectively prosecute their studies. The trustee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e created or established or expressed for the benefit of any particular religious community or caste. This would mean that the trust has to be created or established or expressed only and exclusively for any particular religious community or caste, and in that case alone it will not be registered under s. 12A and it will also not get certificate under s. 80G(5). The learned counsel referred to the object of the trust as reproduced by the CIT in para 1 of his order and submitted that the primary or the predominant object of the trust is education, i.e., offering all or any kind of educational assistance to needy deserving students from India. Therefore, any needy deserving student from India can be the beneficiary. That is the predominant object, according to the learned counsel. The learned counsel further submitted that as a proviso, it is stated in the object clause that "other things being equal", the trustees shall give preference to students belonging to Karhada Brahmin Community from Maharashtra or to Aiyyangar Brahmin Community from Tamil Nadu. According to the learned counsel, it shall not matter even if the students belonging to the above communities or their parents have ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ,00,000 Deshashta Brahmin 5. P.B. Tatkar 9,700 Karhada Brahmin 6. Swapnil Jakhade 1,600 Non-brahmin 7. Nikita Deshpande 1,095 Deshatha Brahmin Total 2,62,845 53% of Karhada Brahmins & nil for Aiyyangars The learned counsel further submitted that for the purpose of grant of registration under s. 12A, it is not necessary to consider ss. 11, 12 and 13 and in support of this proposition, he placed reliance on the decision of Gujarat High Court in Shantagauri Ramaniklal Trust vs. CIT (1999) 153 CTR (Guj) 145 : (1999) 239 ITR 528 (Guj) at 531 and of the Madras High Court in New Life in Christ Evangelistic Association (NLC) vs. CIT (2001) 165 CTR (Mad) 446 : (2000) 246 ITR 532 (Mad). 5. Shri Shishir Agarwal, the learned Departmental Representative strongly supported the order of the learned CIT. He also read the main object clause reproduced by the CIT in his order and submitted that the trust was created for the benefit of a particular community, i.e., Karhada Brahmin community from Maharashtra and Aiyyanagar Brahmin community from Tamil Nadu and as such, the trust is hit by the provisions contained in s. 13(1) and 80G(5)(iii) of the Act and accordingly, the CIT was per ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y or caste, i.e., Karhada Brahmin or Aiyyanagar Brahmin, A harmonious reading of cl. 4 of the trust deed reproduced supra, reveals that the trust has not been created or established or expressed only and exclusively for Karhada Brahmin or Aiyyangar Brahmin because it is clearly stated in the object clause that "other things being equal", the trustees shall give preference to students belonging to Karhada Brahmin community from Maharashtra or to Aiyyangar Brahmin community from Tamil Nadu. Thus, it is clear that "other things being equal", Karhada Brahmin or Aiyyanagar Brahmin were to be given preferences. There is no exclusive reservation for the Karhada Brahmins or Aiyyanagar Brahmins; but only the trustees have been given option to give preference to Karhada Brahmins of Aiyyangar Brahmins "other things being equal". Thus, it is only a case of preference and the students could be preferred only to the extent "other things being equal". The eminent Judge Chagla C.J. in Trustees of Govardhandas Govindram Family Trust vs. CIT (1952) 21 ITR 231 (Bom) at p. 236 has explained the meaning of the expression "preference" in the following words : "As I understood "preference", it means tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dgment of the Hon'ble Supreme Court in the case of Trustees of Charity Fund held as under: "If the dominant object of the trust is to grant relief to indigent persons by making payments or contributions towards their support and aid, the circumstance that discretion has been given in the trust deed to the trustees, to prefer the poor relatives of the settlor will not affect the validity of the trust nor in any manner be derogatory from the trust being one for purpose of a charitable nature. An overall picture ought to be taken and if the predominant object of the Wakf was to benefit the poor or other members of the public, the fact that provision was made for the support or payment or marriage expenses of poor relatives as one of the objects did not cut down the primary object to such an extent that intention itself is lost." We have also perused the list of students/institutions who were awarded scholarships placed in the paper book and the list for the year 1998-99 reproduced supra and we find that the awardees include students of all communities, religion and Karhada Brahmins or Aiyyangar Brahmins are not the exclusive awardees. The awardees even include non-Hindus. In fact, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... conditions regarding the castes of the beneficiaries. Further, these donations are of an ongoing nature for the next five to six years." 13. From the above, it is clear that the assessee has categorically submitted that the CIT was expecting to satisfy himself about the genuineness of the activities of the trust. He neither made any enquiries nor called for any details and as per para 2.1, assessee submitted a list of students/institutions along with amounts shown against each who were awarded the scholarship so far (by enclosing their detailed list) for the period starting from 1998-99 to 2000-2001. Since the impugned order in this case is passed on 31st July, 1998, so obviously this list could not be there before the learned CIT, being not in existence at that time. This being new evidence, for which neither any application is there nor an opportunity to the learned CIT was there with regard to these documents. Otherwise, these documents have not been verified and correctness of the same has not been proved before reliance could be placed by the Tribunal. Apart from this, necessary enquiry as contemplated in the relevant provision appears to have not been conducted prior to pass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the case, the CIT-II, Pune, is justified in refusing to recognise the assessee-trust as charitable under ss. 12A and 80G of the Act, vide his order under s. 12AA of the IT Act, 1961?" U.B.S. Bedi, j.m.: March, 2002 As there is a difference of opinion between the Members on the Bench, following point of difference is being referred to Hon'ble President for hearing on such point or for nominating the Third Member or to pass such orders as the Hon'ble President may deem fit and proper: "Whether, on facts and circumstances of the case, direction issued to CIT to recognise the assessee-trust under s. 12A and 80G of IT Act by AM is justified or setting aside the issue to be decided afresh by holding enquiry and considering the fresh material filed before Tribunal as held by JM is justified". M.K. Chaturvedi, vice president (as Third member): 1st September, 2004 This appeal came before me as a Third Member, to express my opinion on the following question: "Whether, on the facts and in the circumstances of the case, the directions to recognise the trust under s. 12A and grant of certificate under s. 80G(5) as proposed by the learned AM are right or the learned JM is correct in sett ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... left out the former from its sweep. Thus, any charitable or religious trust or institution created or established on or after 1st April, 1962, could not enjoy the benefit of the exemption under s. 11 if it was meant for the benefit of any particular religious community or caste. It was submitted that the precedents relied upon by Dr. Pathak were rendered in the context of 1922 Act, as such these are not relevant. He supported the order of learned JM. 6. It is true that s. 13(1)(b) of the Act denied benefit to charitable trusts created for the benefit of particular religious community or caste. But the facts of the present case are different. This was not created for the benefit of a particular religious community or caste. It only speaks about preference to students belonging to a particular community if other things are being equal. If other things are not equal, the benefit will not go to the members of the particular community. As such, it is important to see that how the preference was exercised. 7. The appeal was preferred before the Tribunal against the order passed under s. 12AA of the Act by the CIT, refusing to recognise the assessee-trust as charitable under s. 12A and ..... X X X X Extracts X X X X X X X X Extracts X X X X
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