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TMI Blog2015 (12) TMI 1415X X X X Extracts X X X X X X X X Extracts X X X X ..... he conditions for registration. The third conclusion drawn by CIT(A) that certain clauses of trust deed envisage control of the company over the activities of the trust and serve the interest of the settler company. It is seen that, sometimes settler wants to have some sort of control over the affairs of the trust so as to ensure that Trust work in the direction of its objects and for this purpose , the settler also become one of the trustee of the trust and exercise control over the affairs of the trust. In the case in hand, the settler has not become trustee. Further, CIT(A) has not brought on record how the trust has served the interest of the company. If it was so , before refusing the registration, he was required to clearly record such activities in his order. We are of view that doubt raised by the CIT(A) that the trust would serve the interest of the settler company, is without any evidences and based only on the presumptions and possibilities. The object clauses containing welfare of the employees had already been removed through supplementary deed and now there was not any object which was in violation of charitable object as defined in section 2(15) of the Act. Fou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee before the learned Commissioner of Income Tax, on 21.03.2013. While examining the object as well as the genuineness of the activity of the assessee Trust, the learned Commissioner of Income Tax observed from the Trust deed dated 18.10.2012 that the Trust was created for public charitable purposes in consequence to a resolution passed by the Board of Directors of M/s Grasim Bhiwani Textiles Ltd. (hereinafter called, the company ) on 21.07.2012, and employees of the company were made trustees of the Trust. 2.2 The learned Commissioner of Income Tax further observed in respect of objects of the trust as under: (i) that the clause 4(b)(v) of the deed contained rendering of services to the person of high order, however, the Trust could not clarify meaning of the term persons of high order . (ii) that sub-clause (j) and (k) of clause 5 of the Trust deed contained objects related to the welfare of the employees of the company and welfare of the families and their wives through part time tailoring classes, vocational training centers etc. 2.3 The Commissioner of Income Tax also observed certain clauses in the trust deed indicating direct and indirect control of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... executing the supplementary deed and the route of amendment of original deed via court was not required. The Commissioner of Income Tax, however, distinguished the facts of the said case and observed that there was no mistake in the original trust deed and the amendments have been incorporated after demonstrating the discrepancies by him. He further observed that despite the amendments, certain clauses which existed in the original deed, which indicated control of the company over the trusts, for example, sub clause (f) of clause 23 of the deed i.e. the Trust would be required to take prior permissions of the Board of Directors of the company before taking any major decisions, and clause 15 of the deed i.e., it was the discretion of the company to decide who shall preside over the meetings of the trustees. The learned Commissioner of Income Tax concluded that the constitution of the trust could not be amended by a supplementary deed registered with the Sub-Registrar in the garb of rectification of mistake and trust was always irrevocable by its inherent nature and the amendment routed without the permission of the court was not having any legal sanctity. Regarding genuineness of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rieved, the assessee is before us. 5. At the time of hearing, the learned Authorized Representative of the assessee referring to page no. 5 of the paper book of the assessee, drawn our attention to the objects of the trust. He further submitted that the learned Commissioner of Income Tax had neither given any finding that the objects of the trust were not in the nature of non-charitable nor the activities were of ingenuine nature and after the amendments in the trust deed, the trust satisfied all the conditions for registration under Section 12AA of the Act. The learned Authorized Representative further relied on the judgment of the Hon ble Rajasthan High Court in the case of Laxminarain Lath v/s CIT (Supra) and the Hon ble Punjab Haryana High Court reported in 366 ITR 378 and also relied on the decision of ITAT, Jodhpur Bench in the case of Sh. Agarwal Panchayat Vs. Income Tax Officer, (2015) 173 TTJ (Jd) (UO) 61. 5. On the other hand, the learned Commissioner of Income Tax (Departmental Representative) submitted that the assessee entity was not a trust in practice but it was subsidiary or supporting entity to the company to execute the task which the company was otherwise ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing the trust under the original settlement deed by executing the supplementary deed. The Hon ble Court further held that the Income Tax authorities could ignore the supplementary deed if it was not found to be genuine and found to be fictitious or shame. The Hon ble High Court further referring the judgment of Hon ble Calcutta High Court said as under : In D.K. Sain v. Nandarani Dassi [1969] 73 CWN 877, the settler, Madhoo Soodon Sain, had created a trust for the benefit of himself and his son, Motilal Sain, his daughter-in-law, Nandarani, their sons and daughters as also grandsons and grand-daughters. Subsequently, by a deed of rectification, the settler, Madhoo Soodon Sain, made an alteration in the original trust deed and the question was whether it was permissible for the settler to make the said rectification, as stated in the deed of rectification, was that the trust deed did not represent the true intention of the settler and that certain words had crept in which were contrary to his intention. A learned judge of the Calcutta High Court upheld the said deed of rectification executed by the settler on the view that the original trust deed was not in consonance with the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Rajasthan in the case of Laxminarayan Lath Trust (Supra), the amendment carried out in the trust deed through supplementary deed without approval of Court was a valid one and there was no illegality in the same. 6.5 The second conclusion of the ld. Commissioner of Income-tax that certain provisions of the trust deed were not clear. We are of the opinion that non10 clarity of one or two words in the deed can t be a ground for refusing the registration if otherwise the trust fulfills the conditions for registration. 6.6 The third conclusion drawn by the ld. Commissioner of Income-tax that certain clauses of trust deed envisage control of the company over the activities of the trust and serve the interest of the settler company. It is seen that, sometimes settler wants to have some sort of control over the affairs of the trust so as to ensure that Trust work in the direction of its objects and for this purpose , the settler also become one of the trustee of the trust and exercise control over the affairs of the trust. In the case in hand, the settler has not become trustee. Further, the learned Commissioner of Income-tax has not brought on record how the trust has served the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f evidences as far as the charitable activities carried out by the trust are concerned. We are of considered opinion that under section 12AA of the Act, the jurisdiction of the Commissioner of Income-tax is confined to satisfying himself about the objects of the trust and the genuineness of the activities and for this purpose and he is authorized to make such enquiries as he may deem fit. In the case in hand, the Commissioner has not taken any objection to the charitable nature of the trust. In fact, the objects of the trust as declared in the trust deed are all charitable objects and there is no finding recorded by the Commissioner to the contrary. The reasons given by the learned Commissioner of Income-tax are based on possibilities of misuse of control by the settler company and therefore reasons for refusal are extraneous to section 12AA of the Act. For the above reasons, the order passed by the learned Commissioner of Income-tax under section 12AA is set aside and we direct the Commissioner of Income-tax to allow the registration to the Trust. 8. In the result, the appeal filed by the assessee is allowed. The decision is pronounced in the open court on 16th December, 201 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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