SHRI MAHASHRAMAN FOUNDATION,MUMBAI vs. CIT (EXEMPTION), MUMBAI

1. In the facts and circumstances of the case and in law, the 1. In the facts and circumstances of the case and in law, the 1. In the facts and circumstances of the case and in law, the learned Commissioner of Income tax (Exemptions) has erred in learned Commissioner of Income tax (Exemptions) has erred in learned Commissioner of Income tax (Exemptions) has erred in passing an order /s 12AB of the Act, rejecting the approval passing an order /s 12AB of the Act, rejecting the approval passing an order /s 12AB of the Act, rejecting the approval sought by the appellant sought by the appellant for its registration as a charitable for its registration as a charitable trust, in violation of principles of natural justice, without trust, in violation of principles of natural justice, without trust, in violation of principles of natural justice, without considering the documentary evidences and the explanations considering the documentary evidences and the explanations considering the documentary evidences and the explanations furnished by the appellant. furnished by the appellant. The ground raised by the assessee in ITA No. 3.1 The The ground ground raised raised by by the the assessee assessee in in ITA ITA No. No. 3184/Mum/2022 reprod 3184/Mum/2022 reproduced as under:

2. In the facts and circumstances of the case and in law, the 2. In the facts and circumstances of the case and in law, the 2. In the facts and circumstances of the case and in law, the learned Commissioner of Income tax (Exemptions) has erred in learned Commissioner of Income tax (Exemptions) has erred in learned Commissioner of Income tax (Exemptions) has erred in passing a non passing a non-speaking order us 80G(5) (vi) of the Act, us 80G(5) (vi) of the Act, violating the principles of natural justice, merely stating the violating the principles of natural justice, merely stating the violating the principles of natural justice, merely stating the application to be incomplete, without pointing out the specific application to be incomplete, without pointing out the specific application to be incomplete, without pointing out the specific defects in this regard. defects in this regard. 4. Before us, the Ld. Counsel of the assessee submitted that Before us, the Ld. Counsel of the assessee submitted that Before us, the Ld. Counsel of the assessee submitted that there was a delay of 18 days in filing the appeal y of 18 days in filing the appeals. The Ld. Counsel . The Ld. Counsel drawn out attention to the affidavit by the trustee Shri Madanlal drawn out attention to the affidavit by the trustee drawn out attention to the affidavit by the trustee Nathulal Tater and submitted that he was out of the town due to Nathulal Tater and submitted that he was out of the town due to Nathulal Tater and submitted that he was out of the town due to Shri Mahashraman Foundation. 3 Shri Mahashraman Foundation & 3184/Mum/2022 3183 & 3184/Mum/2022 unavoidable personal reasons and therefore he could not seek unavoidable personal reasons and therefore he could not seek unavoidable personal reasons and therefore he could not seek professional guidance. The Ld. Departmental Representative (DR) guidance. The Ld. Departmental Representative (DR) guidance. The Ld. Departmental Representative (DR) did not object for condoning the delay in filing the appeal. We are of did not object for condoning the delay in filing the appeal. We are of did not object for condoning the delay in filing the appeal. We are of the opinion that there is sufficient and reasonable cause for not the opinion that there is sufficient and reasonable cause for not the opinion that there is sufficient and reasonable cause for not complying in limitation period for filing the appeal and accordingly, complying in limitation period for filing the appeal and accordingly complying in limitation period for filing the appeal and accordingly we condoned the delay and admit we condoned the delay and admitted the appeals for adjudication. the appeals for adjudication.

“4. The submissions of the assessee has been carefully 4. The submissions of the assessee has been carefully 4. The submissions of the assessee has been carefully considered. As per the submissions the intention of the considered. As per the submissions the intention of the considered. As per the submissions the intention of the assessee is to grant the premises of the trust to its assessee is to grant the premises of the trust to its assessee is to grant the premises of the trust to its members to organize camps, seminars, events or similar members to organize camps, seminars, events or similar members to organize camps, seminars, events or similar activity etc. on temporary basis activity etc. on temporary basis against fees or charges against fees or charges as decided by the managing committee of the trust. as decided by the managing committee of the trust. as decided by the managing committee of the trust. However, if one goes through language of the clause, it However, if one goes through language of the clause, it However, if one goes through language of the clause, it gives gives gives an an an entirely entirely entirely different different different meaning. meaning. meaning. Temporary Temporary Temporary permission to use the premises for an activity is entirely permission to use the premises for an activity is entirely permission to use the premises for an activity is entirely different from what different from what has been mentioned in the object has been mentioned in the object clause 28 i.e. "to give occupation of the premises clause 28 i.e. "to give occupation of the premises clause 28 i.e. "to give occupation of the premises constructed by the foundation at anytime ...." In my constructed by the foundation at anytime ...." In my constructed by the foundation at anytime ...." In my considered view, the above clause is liable for a considered view, the above clause is liable for a considered view, the above clause is liable for a probable/potential misuse in alienating property held by probable/potential misuse in alienating property held by probable/potential misuse in alienating property held by the trust. It is a settled law that premises or property of a It is a settled law that premises or property of a It is a settled law that premises or property of a public charitable trust cannot be alienated or given public charitable trust cannot be alienated or given public charitable trust cannot be alienated or given occupation to any members/category of members which occupation to any members/category of members which occupation to any members/category of members which may result in a potential abuse of the property. While the may result in a potential abuse of the property. While the may result in a potential abuse of the property. While the Shri Mahashraman Foundation. 4 Shri Mahashraman Foundation & 3184/Mum/2022 3183 & 3184/Mum/2022 intention of the managing trustee vide th intention of the managing trustee vide the above e above submissions may be honorable, it would not be desirable submissions may be honorable, it would not be desirable submissions may be honorable, it would not be desirable to have such an object in the objects clause of the trust to have such an object in the objects clause of the trust to have such an object in the objects clause of the trust deed deed deed which which which is is is potentially potentially potentially hazardous.Under hazardous.Under hazardous.Under the the the circumstances, I am not in a position to accede to the circumstances, I am not in a position to accede to the circumstances, I am not in a position to accede to the applicant's request for grant of applicant's request for grant of registration under Section registration under Section 12AB of the Act. 12AB of the Act.” 5.1 Before us, the Ld. Counsel of the assessee has filed an Before us, the Ld. Counsel of the assessee has filed an Before us, the Ld. Counsel of the assessee has filed an affidavit by the trustee which reads that said clause No. 28 will not affidavit by the trustee which reads that said clause No. 28 will not affidavit by the trustee which reads that said clause No. 28 will not be acted upon and that the said clause should be considered to be upon and that the said clause should be considered to be upon and that the said clause should be considered to be never been the part of the Memorandum of Association. The Ld. part of the Memorandum of Association. The Ld. part of the Memorandum of Association. The Ld. Counsel of the assessee accordingly submitted that matter may be Counsel of the assessee accordingly submitted that matter may be Counsel of the assessee accordingly submitted that matter may be restored back to the file of the Ld. CIT(E) and before him the restored back to the file of the Ld. CIT(E) and before him the restored back to the file of the Ld. CIT(E) and before him the assessee will file revised/modified Memorandum of Association after assessee will file revised/modified Memorandum of Association after assessee will file revised/modified Memorandum of Association after removing the clause 28. In our opinion, the clause 28. In our opinion, the bone of contention was bone of contention was the clause 28 and the assessee has willingly agreed for removing the clause 28 and the assessee has willingly agreed for removing the clause 28 and the assessee has willingly agreed for removing the said clause from memorandum of association from memorandum of association. Therefore, we feel . Therefore, we feel it appropriate to restore the matter of grant registration u/s 12AA of it appropriate to restore the matter of grant registration u/s 12AA of it appropriate to restore the matter of grant registration u/s 12AA of the Act to the file of the Ld. CIT(E) for deciding afresh in accordance the Act to the file of the Ld. CIT(E) for deciding afresh in accordance the Act to the file of the Ld. CIT(E) for deciding afresh in accordance with law.

5.2 Since, the registration of the trust u/s 80G of the Act is Since, the registration of the trust u/s 80G of the Act is Since, the registration of the trust u/s 80G of the Act is consequent to the Registration u/s 12AA of the Act and therefore, Registration u/s 12AA of the Act and therefore, Registration u/s 12AA of the Act and therefore, the appeal of the assessee against Registration of u/s 80G of the the appeal of the assessee against Registration of u/s 80G of the the appeal of the assessee against Registration of u/s 80G of the Act is also restored back to the file is also restored back to the file of the Ld. CIT(E) for deciding of the Ld. CIT(E) for deciding afresh in accordance with law. afresh in accordance with law.

Shri Mahashraman Foundation. 5 Shri Mahashraman Foundation & 3184/Mum/2022 3183 & 3184/Mum/2022