CULTURAL ALLIANCE OF CAMBAY,MUMBAI vs. ITO (HQ) (E), MUMBAI

Facts in brief are that the applicant applied for the registration u/s 12A of the Act on 5.9.2012 accompanying the therewith various documents such as copy of trust deed, audited accounts, registration cerritficate of charity commissioner and note on activities undertaken etc 2 I.T .A. N o .3 8 5 1/ Mu m /2 0 1 3 The DIT(E) observed that the objects of the applicant were for the mutual benefit og the members and so were the activities undertaken and therefore issued a show cause notice to the assessee which was relied vide letter dated 21.03.2013.The various reasons cited by the DIT(E) for rejection of registration to the trust inter alia the fact that the trust was formed for the benefit of particular community. It was also observed from the rules and regulation for membership of the applicant trust that it was only available to the person whose father or forefather Cambay caste residing within the Mumbai municipal jurisdiction and also any female married to non Cambay person would be eligible to became member and people belonging to Jain community could also became member. Thus the DIT(E) came to the conclusion that the trust was formed for the benefit of particular community. As regards the activities carried on by the trust it was found that they were for the benefit of members of the trust and not for public at large. The DIT(E) rejected the registration to the trust by observing as under:- “6. As regards the activities undertaken by the applicant trust, it is observed that it has carried out sports and cultural activities for the benefit of its members rather than the public at large. It would be pertinent to refer to the following extract from the FAQ's (Frequently Asked Questions) section of the website of the applicant trust:- "10. What will be the CAC's (Applicant 's) activities? On the sports side, CAC (Applicant) intends to arrange for 1 CRICKET Tournament where only members can participate. On the cultural activities side, CAC (Applicant) intends to give minimum two 3 I.T .A. N o .3 8 5 1/ Mu m /2 0 1 3 programmes. This can be Garba Dandiya Musical Night, Drama. Cinema etc. followed by dinner" Further, it is seen from perusal of the homepage of the website that the applicant trust has carried out following events /activities:- (i) Practice Match at Hindu Gymkhana (ii) Practice Match at Matunga Gymkhana (iii) CAC Inaugural Programme on 23.04.2011 (iv) 'Maa Baap Ne Bhulso Nahin and Dikri Vahal No Dariyo’ on 17.06.2012 (v) Dandiya Raas on 24.10.2012 (vi) Yatra Pravas to Sahapur on 3rd & 4th November, 2012 (vii) Player's Auction (viii) 'Yash Mangal Cup' 2013 cricket tournament on 05.01.2013, 06.0l.2013 and 13.0 .2013. It is obvious that the above mentioned activities undertaken by the applicant for benefit of its members can by no means be said to be charitable in nature.

Thus, it is found that while the applicant has been constituted as a public trust, it is actually operating as a mutual association engaged in promotion of sports and cultural activities for the benefit of its members rather the public at large. In other words, the activities undertaken by the applicant are at variance with the objects of the applicant trust. The applicant is undertaking activities which are not authorized or permitted by its own objects stated in the trust deed. Therefore, it is seen that the activities carried out by the applicant are not in accordance with the object of the applicant trust. While considering grant of registration, the registering authority is not obliged merely to look at the instruments creating the trust and shut its eyes towards the activities actually carried out by it. It is well settled that the activity must conform to the purpose of the trust and that nay diversion from the objects is not legally permissible at all. In fact, a digression from the stated objects is fatal to registration. Under the circumstances, I am unable to satisfy myself about the genuineness of activities of the applicant trust which is a precondition for grant of registration. As the applicant trust has failed to comply with the mandatory requirements prescribed u/s 12AA read with rule 17A, its application for grant of registration is rejected”.

The ld.Counsel for the assessee drew our attention to copy of Trust Deed placed at page 27 to 29 of the paper book and submitted that the trust was constituted for various charitable activities carried on by the assessee-trust as stated in para 5 of the trust deed and strongly objected to the observations of the DIT(E) as contended in para 6 of the order of DIT(E) raising the objections to the activities undertaken by the applicant trust such as (i) Practice Match at Hindu Gymkhana, (ii) Practice Match at Matunga Gymkhana, (iii) CAC Inaugural Programme, (iv) 'Maa Baap Ne Bhulso Nahin and Dikri Vahal No Dariyo (v) Dandiya Raas, (vi) Yatra Pravas to Sahapur, (vii) Player's Auction and (viii) 'Yash Mangal Cup' 2013 cricket tournaments. The ld. Counsel further submitted that the assessee- trust had carried out these activities to raise the funds to meet its day to day expenditures and to carryout its activities as contained the in the object clause of the trust deed. The ld.counsel further submitted that to comment on the nature of the activity of the applicant trust was premature at the time of registration. The ld. Counsel therefore submitted that the objection of the DIT(E) were wrong and the denial of registration at the initial stage was totally bad in law.

On the other hand, the ld. DR relied on the order of DIT(E) and submitted that the registration was rightly denied to the applicant as the assessee did not carry any activity as contained in the trust deed or any other charitable activity and also that the trust was constituted for the 5 I.T .A. N o .3 8 5 1/ Mu m /2 0 1 3 benefit of particular community. The nature of activity carried on was purely for the benefit of the members of the applicant trust and thus prayed that the order of DIT(E) be upheld.

We have carefully considered the rival contentions and perused material placed before us. Having perused the order of DIT(E) we find from the DIT(E) came to the conclusion that the activity of the assessee trust were being constituted for the mutual benefit of the members who belonged to particular community and not for the charitable purposes for the public at large. The ld. counsel for the assessee further submitted that the activity of the organizing practice matches and other as stated by the DIT(E) in para 6 of the order were organized for the purpose of public at large by the members and the DIT(E) was wrong in holding that these activities were carried out for the benefit of the members of the trust only. Further, we find from the trust deed that various objects as contained in clause 5 of the trust deed are charitable in nature which are reproduced as under :