COMMISSIONER OF IT ROHTAK vs. DEV DAYANAND CHARITABLE EDUCATION TRUST

ITA No. 497 of 2010 -1- IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH ITA No. 497 of 2010 Date of Decision: 10.11.2010 Commissioner of Income Tax, Rohtak ....Appellant. Versus Dev Dayanand Charitable Education Trust ...Respondent. CORAM:- HON'BLE MR. JUSTICE ADARSH KUMAR GOEL. HON'BLE MR. JUSTICE AJAY KUMAR MITTAL. PRESENT: Mr. I.P. Singh, Advocate for the appellant. AJAY KUMAR MITTAL, J. 1. The revenue has preferred this appeal under Section 260A of the Income Tax Act, 1961 (in short “the Act”) against the order dated 13.11.2009 passed by the Income Tax Appellate Tribunal, Delhi Bench 'B', New Delhi in ITA No. 3554/Del/2008 claiming following substantial question of law:- “Whether the Hon'ble ITAT is justified in law in directing the CIT to allow registration u/s 12AA of the Income Tax Act, 1961 to the entity which cannot be called a trust as envisaged in sections 11, 12, 12A, 12AA of the Income-tax Act, 1961 in so far as it is a closely held one like a private discretionary trust vesting absolute powers in the founder chairman

ITA No. 497 of 2010 -2- who has powers of nominating trustees, secretary and treasurer and right to reversion of properties in case of any dissolution and where the document of its creation is silent as to whether the properties would be in the name of the trust or in trustees?” 2. The facts necessary for adjudication of the present appeal may be noticed. The assessee trust came into existence vide trust deed dated 23.11.2007 for charitable purposes, and was registered with the Sub Registrar, Rohtak on 27.11.2007. The assessee moved an application under Section 12A(1)(a) of the Act on 31.3.2008 for registration under the Act, but the same was declined vide order dated 22.9.2008 by the Commissioner of Income Tax, Rohtak (in short “the CIT”) on the ground that no amount has been applied to charitable or religious purpose during the relevant year. Feeling aggrieved, the assessee went in appeal and the Tribunal vide order dated 13.11.2009 allowed the appeal and directed the CIT to register the assessee under Section 12AA of the Act, which gave rise to the department to approach this Court by way of instant appeal. 3. We have heard learned counsel for the appellant. 4. Learned counsel for the revenue has assailed the finding of the Tribunal and relied upon the judgment of Kerala High Court in Self Employees Service Society v. Commissioner of Income-Tax, [2001] 247 ITR 18 (Ker) in support of his submissions that no charitable or educational activity was carried out during the financial year and, therefore, the assessee-trust is not entitled to registration under the Act.

ITA No. 497 of 2010 -3- 5. The findings recorded by the Tribunal in paras 8 and 9 are relevant for the decision of this appeal, which are as under:- “8. We have considered the rival contentions and gone through the record carefully. Expression “charitable purposes” has been defined in sub-section (15) of section 2 of the Act. It provides that charitable purpose includes relief of the poor, education, medical relief and the advancement of any other objects of general public utility. Section 12AA contemplates that Learned Commissioner in order to satisfy himself about the objects of the trust and the genuineness of its activities, would call for such documents or information from the trust as he thinks fit for verifying the activity as well as objects of the trust. Now, in the present case, in clause No.3 of the trust deed, assessee has provided many aims and objects. Accordingly to its stand, its main object was to run a gurukul for girls at Village Singpura of District Rohtak. This gurukul would cater educational needs of girls in the rural area. In order to fulfil that object it has taken two acres of land on lease at a nominal rate of Rs.5000/- from the chairperson Smt. Kalyan Devi. It has applied for permission to run such gurukul with appropriate authority under Department of School Education, Haryana. Such permission has been granted to it provisionally and letter of such

ITA No. 497 of 2010 -4- permission has been placed at page 22 of the paper book. This was also filed before the Learned Commissioner. The assessee has raised construction of school building. Thus it has taken active step in fulfilling its aims and objects which are undisputedly charitable in nature. 9. The grievance of Learned Commissioner is that article 10(2) empowers the trustee to make amendment in the rules and regulations hence it is a private discretionary trust. In our opinion, 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 purpose then that amount can always be brought to tax. These factors are not very relevant while considering the issue in respect of grant of registration. Learned Commissioner is required to see prima facie whether objects of the trust are charitable or not and its activities are genuine or not. To our mind, assessee has substantiated both these issues with the help of documentary evidence. If it was not interested in fulfilling its aims and objects, it would have not sought permission from the appropriate authority, department of school education, Haryana for running a Kanya gurukul. Similarly, it would have not started

ITA No. 497 of 2010 -5- construction of the building. Learned Commissioner has rejected the claim of assessee on suspicion and anticipation of incidence of future, therefore, we allow the appeal of the assessee and direct the Learned Commissioner to grant registration under section 12AA as per Act.” 6. The Tribunal had specifically recorded that the objects of the trust were charitable and its activities were genuine and on the basis of that finding concluded that the assessee was fulfilling the requirement of being for charitable purposes. The said finding has not been shown to be perverse in any manner. 7. Further, the judgment relied upon by the learned counsel for the revenue was on its own fact situation therein and, therefore, does not advance the case of the revenue as it has no applicability to the facts of the present case. 8. In view of the above, no substantial question of law arises in this appeal for consideration of this Court. Accordingly, the appeal is dismissed. (AJAY KUMAR MITTAL) JUDGE November 10, 2010 (ADARSH KUMAR GOEL) gbs JUDGE