GURUKUL FOUNDATION,BHUBANESWAR vs. CIT(EXEMPTION), HYDERABAD

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ITA 289/CTK/2018Status: DisposedITAT Cuttack03 December 2018AY 2018-197 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal held that the CIT(Exemption) failed to consider the amended trust deed which addressed the deficiencies. The amended deed incorporated clauses for activities within India, beneficiary, dissolution, and irrevocability.

What were the facts?

The assessee's application for registration under Section 12AA and approval under Section 80G was rejected by the CIT(Exemption). The rejection was based on the original trust deed allowing activities outside India and lacking essential clauses like beneficiary, dissolution, and irrevocability.

What were the issues?

Whether the CIT(Exemption) erred by not considering the amended trust deed and rejecting the application for registration and approval based on the original deed.

Which sections of the Income-tax Act were involved?

Section 12AA,Section 80G,Section 11(1)(a)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, CUTTACK BENCH, CUTTACK

Before: S/SHRI N.S SAINI & PAVAN KUMAR GADALE

For Appellant: Shri Dilip Kumar Mohanty, AR
For Respondent: Shri S.M.Keshkamat, CIT (DR)
Hearing: 03/12Pronounced: 05/12

IN THE INCOME TAX APPELLATE TRIBUNAL, CUTTACK BENCH, CUTTACK

BEFORE S/SHRI N.S SAINI, ACCOUNTANT MEMBER AND PAVAN KUMAR GADALE, JUDICIAL MEMBER

ITA No289/CTK/2018

Gurukul Foundation, VIM- Vs. CIT (Exemptions), 198, Sailashree Vihar, PS: Hyderabad. Chandrasekharpur, Bhubaneswar. PAN/GIR No.AACTG 8341 C (Appellant) .. ( Respondent)

Assessee by : Shri Dilip Kumar Mohanty, AR Revenue by : Shri S.M.Keshkamat, CIT (DR)

Date of Hearing : 03/12/ 2018 Date of Pronouncement : 05/12/ 2018

O R D E R Per N.S.Saini, AM

This is an appeal filed by the assessee against the order of

the Commissioner of Income Tax(Exemption), Hyderabad dated

26.4.2018.

2.

The sole issue involved in this appeal is that the

Commissioner of Income Tax(Appeals), Hyderabad was not

justified in rejecting the application for grant of registration

u/s.12AA of the Act and approval u/s.80G of the Act.

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3.

The brief facts of the case are that the Commissioner of

Income Tax (Exemption), observed that Clause (xv) of the Trust

Deed reads as under:

“(xv) “To publish and or publishing books, pamphlets, periodicals and newspapers, journals, magazines, course materials in India or outside for the recognition of education and culture.”

4.

A reading of the same shows that the assessee intends to

carry out its activities outside India, whish is contrary to the

provisions of section 11(1)(a) of the Act and, therefore, is not

eligible for registration u/s.12AA of the Act. He further observed

that the assessee has not filed his income and expenditure

account and thus, violated the Rule 17A of Income tax Rules. He

also observed that some of the basic clauses such as beneficiary

clause, dissolution clause, irrevocability clause, etc are not

incorporated in the trust deed. Therefore, he rejected the grant of

registration under section 12AA of the Act to the assessee and

consequently, rejected the grant of approval u/s.80G of the Act.

5.

Ld Authorised Representative of the assessee submitted that

the Commissioner of Income Tax (Exemption) failed to consider

the amended trust deed dated 7.3.2018 filed by the assessee on

16.3.2018 and on the contrary took into consideration the pre-

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ITA No 289/CT K/ 2018

amended trust deed dated 3.8.2017. In the amended trust deed,

clause 6 of the amended trust deed read with clause 4 of the pre-

amended trust deed clarifies that “ if any one or more of the

objects are held not to be objects of a public charitable nature, the

trustees shall not carry out such object or objects as if the same

are not incorporated in these present but the validity of the trust

created by these presents as a trust of public charitable purposes

shall not be effected in any manner”. Further, he submitted that

clause 55(d) of the amended trust deed provides as under:

“Any of the clauses of this trust deed to the extent that it is repugnant to any claim for exemption or concessions for treatment as a public charitable institution under trust law or for purposes of exemption under Income tax or Direct Tax laws will be treated a void and modified so to be in accord with the requirements of aforesaid laws".

6.

He further submitted that the trust deed is dated 3.8.2017

and the application for registration u/s.12AA was filed on

6.10.2017 and since a year has not completed from the date of

the trust deed of the assessee, therefore, no income and

expenditure and balance sheet was drawn by the assessee trust

and, therefore, same could not be filed.

7.

With regard to non-availability of beneficiary clause,

dissolution clause and irrevocability clause, ld Authorised

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Representative of the assessee submitted that at page 15 of the

amended trust deed dated 7.3.2018, clause 53(a) reads as under:

“The trust shall be public educational and charitable trust open to all persons irrespective of caste, creed or religion or any community.”

8.

With regard to dissolution clause, it was submitted that

clause 53(c) of the amended trust deed dated 7.3.2018 reads as

under:

“In the event of the above trust being dissolved, it would be open to the Trustee to transfer the property of the Trust in favour of similar trusts having similar objects and not to disburse amongst the existing trustee.” 9. With regard to irrevocable clause of the trust deed, he

submitted that clause 55(e) reads as under:

“The trust will be an irrevocable charitable trust.”

10.

Hence, he pointed out that refusal to grant registration to

the assessee trust by the Commissioner of Income Tax

(Exemption) is not based on any tangible material and hence,

order of the Commissioner of Income Tax (Exemption) should be

set aside and the Commissioner of Income Tax (Exemption) be

directed to grant registration to the assessee trust.

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ITA No 289/CT K/ 2018

11.

Ld Departmental Representative could not controvert the

submission of ld Authorised Representative of the assessee.

12.

We have heard the rival submissions, perused the orders of

lower authorities and materials available on record. In the instant

case, application for registration under section 12AA of the Act

was rejected by the CIT( Exemptions) on the ground that Cl. No.

(xv) of the trust deed empowers the trustee to carry on activities

outside India which is in violation of section 11(1)(a) of the Act

and the trust deed does not provide what will happen to trust

property on dissolution of the trust and as well as the trust deed

does not provide that the benefit shall be conferred without any

discrimination on the basis of caste, creed and religion.

13.

Ld Authorised Representative of the assessee submitted that

the original trust deed dated 3.8.2017 was modified on 7.3.2018

and the modified trust deed was fled before the CIT(Exemption)

on 16.3.2018, which he failed to take into consideration. He

pointed out from the modified trust deed that:

Clause 53(a) provides as under:

““The trust shall be public educational and charitable trust open to all persons irrespective of caste, creed or religion or any community.” Clause 53 (c) provides as under:

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ITA No 289/CT K/ 2018

” “In the event of the above trust being dissolved, it would be open to the Trustee to transfer the property of the Trust in favour of similar trusts having similar objects and not to disburse amongst the existing trustee.” Clause 55(e) provides as under: ”The trust will be an irrevocable charitable trust”

14.

Ld Departmental Representative could no controvert the

submission of ld Authorised Representative of the assessee that

modified trust deed has not been taken into consideration by the

CIT (E).

15.

In these circumstances, in our considered opinion, it shall be

in the interest of justice to set aside the impugned order of the

CIT(E) and restore the matter back to his file for adjudication

afresh after taking into consideration the modified trust deed.

Needless to mention that the assessee shall be allowed reasonable

opportunity of hearing before adjudicating the issue afresh.

16.

In the result, appeal of the assessee is allowed for statistical

purposes.

Order pronounced on 05 /12/2018. Sd/- sd/- (Pavan Kumar Gadale) (N.S Saini) JUDICIALMEMBER ACCOUNTANT MEMBER Cuttack; Dated 05 /12/2018 B.K.Parida, SPS

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ITA No 289/CT K/ 2018

Copy of the Order forwarded to : 1. The Appellant : Gurukul Foundation, VIM- 198, Sailashree Vihar, PS: Chandrasekharpur, Bhubaneswar

2.

The Respondent. CIT(E), Hyderabad 3. The CIT(A)- 4. Pr.CIT- Cuttack 5. DR, ITAT, Cuttack By order 6. Guard file. //True Copy// Sr. Pvt. Secretary, ITAT, Cuttack

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