COMMISSIONER OF INCOME TAXEXEMPTIONS vs. M/S ARIHANTH CHARITABLE TRUST

HIGH COURT OF JUDICATURE FOR RAJASTHAN BENCH AT JAIPUR D.B. Income Tax Appeal No. 279 / 2017 Commissioner of Income Tax (Exemptions) 3rd Floor, Kailash Heights, Lal Kothi, Tonk Road, Jaipur. ----Appellant Versus M/s Arihanth Charitable Trust, 402 Ganpati Plaza, Veer Durga Das Nagar, Pali. ----Respondent _____________________________________________________ For Appellant(s) : Mr. Daksh Pareek on behalf of Mr. Sameer Jain _____________________________________________________ HON'BLE MR. JUSTICE K.S. JHAVERI HON'BLE MR. JUSTICE VIJAY KUMAR VYAS Order 14/11/2017 1. By way of this appeal, the appellant has challenged the judgment and order of the Tribunal whereby the Tribunal has allowed the appeal of the assessee. 2. Learned counsel for the appellant framed the following substantial questions of law:- “i. Whether on the facts and circumstances of the case an in law the Hon’ble ITAT is justified in allowing the appeal of the assessee for statistical purposes by setting aside the order under Section 12AA (1) (b) of CIT (E), Jaipur? ii. Whether on the facts and circumstances of the case and in law the Hon’ble ITAT is justified in holding that it is not necessary that the trust should be established under an instrument, in spite of the fact that as per the Rajasthan Public Trust Act, 1959, the trust within the period of two years from the date of its creation it to be registered by the office of Asst. Commissioner having jurisdiction over such places? Iii. Whether on the facts and circumstances of

(2 of 5) [ITA-279/2017] the case and in law the Hon’ble ITAT is justified in setting aside the order of CIT(E), Jaipur in refusing the registration u/s 12AA to the trust, which is not a legal trust in the state of Rajsthan in view of Section 17(1) of the Rajasthan Public Trust Act, 1959?” 3. While considering the matter of assessee, the Tribunal in Paragraph 3.2 which reads as under:- “3.2. We have heard rival contentions, perused the material available on record and gone through the order of id. CIT (Exemptions). We find that under the identical facts, the Coordinate Bench of the Tribunal in ITA No. 4941/Del/2011 & 3061/Del/2013 has held as under:- “13. A plain reading of Rule 17A(a) makes it clear that where the Trust is created, or the institution is established, under an instrument, the instrument in original, together with one copy thereof, has to be filed along with prescribed Form No. 10A for registration of the institution/Trust u/s 12A of the Act. However, the second limb of Rule 17A(a) provides that where the Trust is created, or the Institution is established, otherwise than under an instrument, the document evidencing the creation of the trust or the establishment of the institution, together with one copy thereof, has to be filed along with the statutory Form No. 10A for registration of the Institution/ Trust u/s 12AA/12A of the Act. Thus, the applicable Rule 17A itself provides that it is not necessary that the Institution/ Trust should be established under an instrument. The Rule 17A does not prescribe that in case the Institution/Trust is established otherwise than under an instrument, what type of document evidencing the creation of the Trust or the establishment of the Institution, has to be filed, meaning thereby that the document evidencing the creation of Trust of the establishment of Institution could be of any type. As per the provisions of the Indian Trust Act, the trust can be created even orally and if the assessee is

(3 of 5) [ITA-279/2017] able to give some evidence of creation of such Trust by a word of mouth, the same shall be eligible for registration u/s 12AA/12A of the Act, provided such evidence is filed and the other conditions under the statute are satisfied.” In view of the decision of the Coordinate Bench, we deem it proper to restore this appeal of the assessee before the id. CIT (Exemptions) to decide in accordance with law laid down by the Coordinate Bench.” 4. The Delhi High Court has confirmed the judgment by Division Bench on 01.08.2016, wherein, the Division Bench of Delhi High Court in Paras 5 to 9 observed as under:- “5. It was sought to be urged before the ITAT by the Revenue that there is a specific requirement of filing documents for creation of a Trust along with an application for grant of exemption. In the impugned order, the ITAT referred to Rule 17A (a) of the Income Tax Rules, 1962 which itself envisages the possibility of the Trust being created “otherwise than under an instrument” in which event it is sufficient if “the document evidencing the creation of the trust or the establishment of the institution, together with one copy thereof’ is provided. The proviso to Rule 17A(a) permits the Commissioner to accept even a certified copy in lieu of the original if the instrument or document in original cannot conveniently be produced. It was rightly pointed out by the ITAT that it is therefore not essential that there must be an instrument evidencing the creation of a Trust. 6. The fact of the matter was that the Assessee claimed that it is an institution/trust created in the year 1159AD and no formal deed of trust was executed at that time. The 17th Karmapa, who is the supreme spiritual Head of Karma Kagyu Lineage, made a declaration of Trust on stamp paper on 29th day of March, 2011 at Delhi setting out the entire history of the Trust along with aims, objects and purposes. Various provisions with regard to the management of the Trust and its properties and the maintenance of accounts etc. were also set out. It was stated that the objects of the trust were wholly charitable and

(4 of 5) [ITA-279/2017] religious in nature. The ITAT has in its impugned order set out in some detail the contents of the said affidavit regarding the creation of the Trust in Central Tibet in 1159 AD and its objectives and activities over the years. The Court concurs with the ITAT that a formal deed of trust was not necessary for the grant of registration under Section 12A/12AA of the Act. 7. On the question whether the objects and purposes of the Trust were charitable thereby qualifying for registration, the ITAT has set out in its impugned order in detail, the objects of the Trust as declared in the affidavit filed by the 17th Karmapa. It concluded from reading of the various aims and objects that they were charitable in nature. It has been rightly pointed out by the ITAT that it is not necessary that present aims and objects of the Trust should be the same at the time of its establishment. As further rightly pointed out, the stage for examining if the income of the Trust was being applied for its objects would arise only when a return of income is filed by the Trust. The said issue would not affect the grant of registration. 8. The ITAT also examined whether the fact that the Trust was for the benefit of a particular community would debar it from exemption and registration under Section 12AA/12A of the Act. The said question was, and in the view of this Court rightly, answered in the negative. In particular the Court concurs with the conclusion of the ITAT that “It is now well-settled that an objects beneficial to a section of the public is an objects of general utility. The intention of the institution/trust should be impersonal in nature and for a sufficiently defined and identifiable section of the public.” 9. Lastly, the question was whether the fact that the 17th Karmapa who is the supreme head of the Trust was taking food and clothes and meeting his basic needs from the funds of the Trust resulted in a violation of Section 13 of the Act? The ITAT correctly held that “Section 13 does not debar the main whole-time trustee/trustee from meeting their basic needs from the funds of the institution/trust particularly when they are not deriving any monetary benefit from the institution/trust.” 5. In our considered opinion the view taken by the Tribunal is just and proper and no interference is called for. No

(5 of 5) [ITA-279/2017] substantial question of law arises. 6. In our considered opinion, it is misconceived. 7. The appeal is dismissed. (VIJAY KUMAR VYAS),J. (K.S. JHAVERI),J. Chouhan/04