9911796707
TMI Blog2012 (2) TMI 651X X X X Extracts X X X X X X X X Extracts X X X X ..... TAN, income and expenditure, receipt and payment account and the balance sheet of the trust along with the audit report in Form No.10B for financial year 2007-08, 2008-09 and the copies of income-tax return of financial year 2007-08 and 2008-09. The notices were issued to the assessee seeking certain details and these notices were complied with. The grant of registration has been refused by learned CIT (A) on the following grounds:- i) All the trustees of the trust belonged to the same family, thereby closely related to each other; ii) Even after amendment in the trust deed, all the properties of the trust as well as absolute financial control remained in the hands of the five trustees and also the crucial power to transfer the assets of the trust to any or many members of the Board of trustees which permits the trustees to get the property of the trust in question transferred in their name; iii) In case of transfer of any of the leased asset back to its owner, it is not clear that whether any compensation or consideration will be obtained by the trust from its owner. iv) The donated land transferred by the trustee has been entered into the books of account of the trust at ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... trust deed that the trust and trustees will be subject to sections 2 (15), 11,12, 12A, 13, 80(G), then, there is no scope for the trust to indulge in any non-charitable activity and in case the trust involve in activity other than charitable, there are provisions in the Income-tax Act itself to take care of that situation. He submitted that at the time of registration what has to be seen is that whether the objects mentioned in the trust deed are charitable or not and the activities of the trust are genuine or not. He submitted that all the factors upon which ld. CIT has denied the grant of registration are irrelevant and the registration has wrongly been refused to the trust. 6. Referring to the first objection of ld. CIT that control of the trust is vested in one family, he submitted that it is the usual feature of a trust. When any charitable trust is created, it will be the desire of that person to keep control of the trust. Having control over the trust cannot be viewed otherwise in the absence of any material to show that the activities are not performed in accordance with the objects. He further submitted that for efficient running of the charitable activities general powe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2 (Mad) wherein similar proposition has been laid down that at the stage of grant of certificate u/s 12A, the only inquiry which would possibly be made would be whether the applicant society has actually made an application in time and whether the accounts of the society are maintained in the manner as suggested by that Section and scope of inquiry cannot go beyond that. iii) Dev Dayanand Charitable Education Trust vs. CIT, decision of the Tribunal dated 13th November, 2009 in ITA No.3554/Del/2008, copy placed on record, wherein it has been held that the power to make amendment in the rules given in the trust deed cannot make the trust a private discretionary trust as such type of apprehension can be judged at the time of assessment proceedings. If any person has misused the trust fund or assessee failed to apply its income as provided in the Act for charitable purposes, then, that amount can always be brought to tax and these factors are not very relevant while considering the issue in respect of grant of registration. What is required to be seen by the ld. CIT is whether prima facie the objects of the trust are charitable or not and its activities are genuine or not. iv) Shri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sons as stated in Column No.15 of the said report are reproduced below:- "15. Information on any other points (not covered in points 1 to 14 above). The trust was created on 02.06.2006 and running three educational institutions i.e. Smt. Shanti Devi Law College, Smt. Shanti Devi School of Nursing & Smt. Shanti Devi College of Nursing. The registered address fo the trust is H.No.315-L, Model Town, Rewari. The trustees of the trust are as follows:- 1. Smt. Shanti Devi W/o Rao Abhay Singh, H.No.315-L, Model Town, Rewari. 2. Smt. Shakuntala Yadav, s/o Sh. Ajay Singh Yadav, H.No.315-L, Model Town, Rewari, 3. Shri Balwant Singh Yadav, S/o Sh. Chunni Lal, VPO Gokalgarh. 4. Mr. Chiranjiv Rao S/o Shri Ajay Singh Yadav, H.No.315-L, Model Town, Rewari. 5. Smt. Latika Yadav D/o Sh. Ajay Singh Yadav, H.No.315-L, Model Town, Rewari. From the above it is evident that the trust has been created by one family and the registered address of the trust is also their home address. As per the trust deed, all powers lie in the hands of Chairman/Secretary and these persons are mother and son. Further as per para 6 of the trust deed under "Power of Trustees", the Chairman/Secretary can ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... one family and the registered address of the trust is also their home address. In our opinion, such fact cannot come into the way for grant of registration as it is a usual feature of creation of charitable trust. Unless it is shown that any benefit has been obtained by any of the trustees, settler or their family members, this factor has no relevance for grant of registration to the assessee trust. 13. The second objection raised by the ACIT is that all powers of the trust lies in the hands of the Chairman/Secretary and these persons are mother and son. It is also the case of ACIT that as per para 6 of the trust deed under the powers of the trustee, the Chairman/Secretary can transfer cash, immovable property of the trust to anybody as per their wish. It may be mentioned here that the said clause has been amended on 23rd December, 2009 by deleting the words "Chairman/Secretary" and inserting in place thereof the words "Board of trustees." The amended clause read as under:- "6. That the [the words Chairman/Secretary and deleted] Board of Trustees may on behalf of the trust keep any money, movable or immovable property in the name of one or more persons as may be decided from ti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... serious doubt. As against these objections of ld. CIT, it is the case of the learned AR that the assessee has submitted all the evidences to substantiate the increase in the corpus and donations and the percentage of profit cannot be a ground for rejection of application for grant of registration as these factors can be examined by the Assessing Officer at the time of assessment. It is also the case of the learned AR that ld. CIT has not mentioned any particulars about the discrepancy in all these factors. We find substance in such argument of the learned AR. Though these factors have been mentioned by the ld. CIT in his order, but, he has not pointed out how these factors have rendered the activity of the assessee to be non-genuine activity. The assessee is stated to be running three educational institutions and this fact has been accepted by ld. ACIT in his report, therefore, what is relevant to see is that whether there is any irregularity in the accounts maintained by the assessee and its activities. No material whatsoever has been brought on record to point out any particular irregularity in this regard. In the absence thereof, the refusal to grant registration will be unjust ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
