9911796707
TMI Blog1985 (1) TMI 72X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessment proceedings and after enquiries. The ITO did not regard the revised return as valid under s. 139(5) and proceeded to decide the question on the basis of the contentions raised before him that the income from the schools did not belong to the assessee. There were two kinds of schools run by the assessee one the primary pre-primary, and the other a High School. With regard to the former, a trust called "Haeems Education Trust" was started on 28th April, 1970 and registered soon thereafter with Charity Commissioner and regarding the latter another trust called "Nelson Education Trust" was started in 1996 and duly registered in the year. The assessee stated before the ITO that the former trust was created because the Ahmedabad Municipal Corporation made it compulsory that the Primary Schools be owned by a Public Charitable Trust if recognition from the Schools Board was desired. He duly produced the following documents before the ITO. (a) Copy of Trust deed. (b) Copy of Registration Certificate under Bombay Public Trusts Act. (c) Copies of two inspection reports of Municipal School Board wherein it is specifically mentioned the name of Haeems Education Trust ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pierce the veil of unreality." 4. The AAC has confirmed the order of the ITO relying upon the same grounds as those of the ITO. According to him the assessee had not fulfilled the conditions prescribed in s. 12(a) of the Act because the original registration was not renewed as no account had been filed by the trust with the Charity Commissioner. He has further observed that the trustees of both the trusts are either family members or closely connected with the assessee. 5. Before us the ld. counsel for the assessee relied upon a number of documents which were placed before the ITO. He also relied upon the audited accounts in respect of trust for the High School showing the grant therein for the year ended 31st March, 1974 and argued that the assessee had acted upon the trust. However, his most important argument was that the Charity Commissioner's certificate regarding the trust was a judgment in rem and the ITO could not go behind it. The implication was that if the trust duly recognised by the certificate of the Charity Commissioner as valid, the income from the schools is that of the trust and not that of the assessee. He relied upon the decision of the Gujarat High Court ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in rem." However, the High Court has subsequently gone on to state as follows: "Theses cases clearly indicate that scheme framed under s. 92 precluded the assertion of any private rights. It is not necessary for me to decide, but on a Prima facie view it appears to me, that schemes framed under s. 50 of the present Act should have the same effect. As I have pointed out above, the schemes of these other sections mentioned by me also appear to be to provide a complete machinery and to provide for exclusion of jurisdiction of Civil Court to decide these questions." This last quotation shows that the High Court itself has stated that it was not necessary for it to decide the question whether the order of the Charity Commissioner was a judgment in rem or not. It rather chose to rest its decision on the fact that a complete machinery had been provided by the aforesaid section under the Bombay Public Trusts Act and for the exclusion of jurisdiction of a Civil Court. On the other hand, we have to consider the decision of the Gujarat High Court in the case of CIT vs. Thobhandas Jivanlal Gajjar (1977) 109 ITR 296 (Guj). The High Court in that case has observed as follows: "It ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e doctrine of judgment in rem would apply to only Civil Courts and not to the ITO having statutory authority. Sec. 41 of the Indian Evidence Act enumerates these kinds of judgments. There is no basis for expanding the categories mentioned therein. In any case, in the aforesaid two judgements in the cases of Thobhandas Jivanlal and Keshavlal Punjaram the High Court has stated that the statutory authority i.e., the ITO has exclusive jurisdiction for the purpose of assessment to decide the question even though once decided by a Civil Court. It is true that the Court was not concerned with the decision of the charity Commissioner but then in the case of Ishwarlal Kanalal the Court was not concerned with the jurisdiction of the ITO. Under s. 80 of the Bombay Public Trusts Act it is the Civil Court's jurisdiction which is outset and not that of the ITO and we note that in the case of Thobhandas Jivanlal, the High Court has stated that the ITO has exclusive jurisdiction to decide the question of income. Therefore, we hold that in spite of the certificate of the Charity Commissioner the ITO could consider the question of existence or otherwise of the trust. This, however, does not finally ..... X X X X Extracts X X X X X X X X Extracts X X X X
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