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Income Tax Appellate Tribunal, MUMBAI BENCHES “D”, MUMBAI
Before: SHRI SAKTIJIT DEY & SHRI N.K. PRADHAN
ORDER PER N.K. PRADHAN, A.M This appeal has been filed by the applicant- trust. It is directed against the order dated 25/04/2013 passed by the Director of Income Tax (Exemptions)[in short ‘DIT(E)’] Mumbai under section 12AA (1)(b)(ii) r.w.s 12A of the Income Tax Act 1961, (hereinafter ‘the Act’).
Briefly stated, the facts are that the applicant- trust filed an application for registration in the prescribed Form No. 10A on 17/10/2012 under section 12 A of the Act. It was constituted by a Deed of Trust dated 26/02/2007. It was registered with the Charity Commissioner, Mumbai on 16/04/2007. The DIT(E) rejected the application for the grant of registration on the following reasons: a. That the trust deed does not have a “dissolution clause” to the effect that the trust is irrevocable and that if for some reason its objects cannot be carried out by the trustees who decide to dissolve or wind up the trust, then as per the provisions of the Bombay Public Trust Act 1950, its net assets will be given to another trust having similar objects and under no circumstances, these will be distributed among the trustees. b. That the trust deed of the applicant contains mixed charitable and uncharitable objects. c. That the trust deed of the applicant has among its objects religious ones. d. That no activities have been carried out by the applicant till the date of application and as a result genuineness of activities carried on by the applicant could not be verified.
3. Before us, the learned counsel of the applicant submitted that the trust is registered under the Bombay Public Trust Act, 1950 vide Registration No. E- 24096 and in the event the trust is wound up, the corpus and the properties would get transferred to another trust having similar objects.
Regarding the “dissolution clause”he relied on the order dated 18/07/2014 of the ITAT Mumbai “E” Bench in the case of Tara Educational and Charitable Trust vs. DIT(E) for the AY 2012-13 (ITA No. 1247/Mum/2013) and ITAT Mumbai “C” Bench in the case of M/s Organisation for Autistic Individuals vs. Office of the Directorate of Income Tax(E) dated 30/09/2013 (ITA No. 1935 /M/2013).
Regarding granting registration under section 12AA in the case of a trust with both charitable and religious objects, the learned counsel placed reliance on the decision of the Hon’ble Madras High Court in the case of DIT(E) Vs. Seervi Samaj Tambaram Trust (2014) 362 ITR 199 (Mad) and the order of the ITAT Hyderabad “A”Bench in the case of Sree Pinnamaneni Sree Ramdasu Charitable Trust Vs. DIT(E) dated 26/11/2013 (ITA No. 710/Hyd/2013).
Regarding the carrying out of the activities by the trust, the learned counsel relied on Seervi Samaj Tambaram Trust (supra) and M/s Organisation for Autistic Individuals (supra).
Before us the learned DR submitted that the procedure for registration has undergone a change after the insertion of section 12AA by the Finance (2) Act 1996 with effect from 01/04/1997. He also relied on the order of the ITAT Rajkot Bench “SMC”in the case of Mohanlal Kanjibhai Pansara Education & Charitable Trust vs. CIT (2013) 36 taxmann.com 338 (Rajkot).
The learned DR specifically referred to clause 33 of the Deed of Trust which reads as under :
“33. Reimbursement of Trustees: “
“the Managing Trustee and other trustees shall be entitled to reimburse themselves of the amount by them for the trust out of their own pockets. The decision of managing trustee in this respect shall be final and conclusive. “
We have carefully considered the matter and also perused the material placed on record before us. We have gone through the objects of trust. We find that a large portion of the objects aims to achieve charitable purposes. Only a few objects are meant for religious purposes. In the case of CIT vs. Dawoodi Bohra Jamat (2014) 364 ITR 31 (SC), it is held that when the objects of the assessee are not indicating of a wholly religious purpose but are collectively indicative of both charitable and religious purposes, exemption cannot be denied. Therefore, registration cannot be denied to the trust on the above ground. In the instant appeal, the objects of the applicant are collectively indicative of both charitable and religious purposes
We find that the reliance placed by the learned counsel of the applicant on the decision of the Hon’ble Madras High Court on Seervi Samaj Tambaram Trust (supra) wherein it has been held that registration under section 12AA can be granted to the trust with both charitable and religious objects and that the trust is entitled for registration under section 12AA when activities were not started by the trust, is squarely applicable to the present case.
We also find that the orders of the coordinate bench in the case of Tara Educational and Charitable Trust (supra) and M/s Organisation for Autistic Individuals(supra) in respect of “dissolution clause” are squarely applicable to the present case.
We further find that the order in the case of Mohanlal Kanjibhai Pansara Education & Charitable Trust (supra) relied on by the learned DR relates to a case wherein as per the trust deed the activities proposed to be carried out were not charitable in nature. This is not the case in the present appeal.
Regarding the change in the position of law after the insertion of section 12AA, we find that the decisions relied on by the learned counsel of the applicant relate to the amended section.
6. In view of the above, we direct the Director of Income Tax (Exemption), Mumbai to grant registration to the applicant under section 12AA of the Act.
In the result, the appeal filed by the applicant is allowed.
Order pronounced in the open court on 26/08/2016.
Sd/- Sd/- (SAKTIJIT DEY) (N.K. PRADHAN) JUDICIAL MEMBER ACCOUNTANT MEMBER Mumbai; Dated: 26/08/2016 AG(On Tour)
Copy of the Order forwarded to : 1. The Appellant 2. The Respondent. 3. The CIT(A)- 4. CIT 5. DR, ITAT, Mumbai 6. Guard file. BY ORDER, //True Copy// (Dy./Asstt. Registrar) ITAT, Mumbai
Date Initials
Dictated on Computer
Draft dictated on: 09/08/2016 Sr. PS/PS
2. Draft placed before author: 11/08/2016 Sr. PS/PS
Draft proposed & placed before the second JM/AM member:
4. Draft discussed/approved by Second JM/AM Member:
5. Approved Draft comes to the Sr. PS/PS: Sr. PS/PS
Order pronounced on: 26/08/2016 Sr. PS/PS
7. File sent to the Bench Clerk: 26/08/2016
Date on which file goes to the Head Clerk: Sr. PS/PS
Date on which file goes to AR
Date of dispatch of Order: