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TMI Blog2015 (11) TMI 115X X X X Extracts X X X X X X X X Extracts X X X X ..... tutory provisions in any Act to debar the family members of the author of the trust to be the trustees of a charitable trust. As long as the objects of the Trust are charitable and for the benefit of the general public at large the charitable nature of the trust cannot be denied. Therefore, we hereby direct the Ld. Assessing Officer to treat the trust as a charitable trust recognized U/s.12AA of the Act since the registration granted by the Ld.DITE is not withdrawn and assess the income of the Trust, if any, in accordance with the provisions of the Act and on merits. - Decided in favour of assessee. - ITA No. 331/Mds/2015 - - - Dated:- 29-9-2015 - A. Mohan Alankamony, AM And V. Durga Rao, JM For the Petitioner : Mr G Baskar, Adv For the Respondent : Mr A B Koli, JCIT, DR ORDER Per A Mohan Alankamony, Accountant Member This appeal is filed by the assessee, aggrieved by the order of the Learned Commissioner of Income Tax(A)-VII, Chennai dated 11.11.2014 in ITA No.127/14-15 passed under Sec.143(3) read with section Sec. 250 of the Act. 2. The Assessee has raised seven elaborate grounds in its appeal; however the cruxes of the issues are that:- 1. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... must be a valid charitable purpose according to law. Capacity to create Trust: The founder or settlor should be capable of creating a trust and dedicating his property to that trust. Certainty of object and dedication thereto : The settlor should indicate precisely the object of the trust and the property in respect of which it is made. The property should be dedicated to the trust and the owner must divest himself of the ownership of that property. Concurrence with the law: The trust or its objects must not be opposed to the provisions of any law for the time being in force. It is submitted that all these requisites have been complied with at the time of formation of the trust and the trust was set up by means of a registered trust deed which is also enclosed for your kind reference. It is also submitted that the trust deed was vetted and approved by the Income tax Department and registration u/s. I2AA of the IT Act, as a valid charitable trust has been provided to the trust vide letter dated 02-12-1992, copy of which is enclosed. It is also submitted that the trust has been carrying out charitable activities pertaining to education pursuant to the objects con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nditional clause makes the trust as a private property of individuals as rightly pointed out by the assessing officer. When the trust becomes a private trust, Indian Trust Act and Indian Contract Act automatically come into play. In that situation, person competent to contract alone can be a trustee and Miss There Bhaskaran being a minor at the time of constitution of the trust is not capable of holding the post of trustee. This renders the trust deed void ab initio. A trust which is void ab initio cannot be held a valid one legally. After Thara Bhaskaran becoming major, the trust should have made a new trust deed and applied for registration u/s 12A(a) of the Act. This was not done in this case. 4.1 Sub-section(2) of section 1 of the I.T. Act, 1961 says that the Act extents to the whole of India, In this case, one of the trustees resides abroad and the arguments of the assessee are silent on the status of that trustee i.e. whether she is subject to Indian Income-tax Act or not ? Expediency requires that a trustee should be a person within the reach of the arm of Indian Courts. The trust deed does not contain specific proviso regarding any amendment and approval if any to be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... abroad and therefore it has to be assessed as an AOP. It is pertinent to mention here that Indian Trust Act, 1882 is not applicable to Charitable Trust. However, as pointed out by the Ld. A.R, the Hon'ble Apex Court in the cases of Sheikh Abdul Kayum Vs. Mulla Alibhai (1963) 3 SCR 623 and State of Uttar Pradesh Vs. Bansi Dhar Ors. (1974) 1 SCC 446, it was held that the general principles of trust adumbrated in the provisions of the Trust Act can be applied by invoking the universal rules of equity and good conscience even though provisions of the Trusts Act proprio vigore do not apply to public charitable trusts. A caveat is added therein that care must certainly be exercised not to import by analogy what is not germane to the general law of trust. Therefore, it is evident that the principles laid down in the Indian Trust Act, 1882 may be applied in the case of Pubic Charity Trust considering the universal law of equality and good conscious. Section-7 of the Indian Trusts Act, 1882 lays down as to who may create a Trust i.e. (a) by every person competent to contract, and (b) with the permission of a principal Civil Court of original jurisdiction, by or on behalf of a minor; ..... X X X X Extracts X X X X X X X X Extracts X X X X
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