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Income Tax Appellate Tribunal, “A” BENCH, CHENNAI
Before: SHRI CHANDRA POOJARI & SHRI CHALLA NAGENDRA PRASAD
आदेश / O R D E R
PER CHANDRA POOJARI, ACCOUNTANT MEMBER This appeal by assessee is directed against the order of the Commissioner of Income Tax (Exemptions), Chennai, dated 20.07.2015.
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The assessee has raised the followings grounds:-
‘’The order of the learned Commissioner of Income Tax is bad and erroneous in law and against the principles of natural justice. 02. The learned Commissioner of Income Tax erred in rejecting the application for registration u/s.12AA without going through the trust deed properly on the sole reason that the trust deed did not contain Author or Founder.
3. The learned CIT erred in not considering the pages 2 & 3 of the trust deed dated 03.09.20143, more particularly clauses (A) to (E) which clauses specifically mention about founder. 04. The learned CIT erred in not at all considering the details filed in the course of the proceedings before him.’’
The facts of the case are that the assessee applied for registration u/s.12AA vide his application dated 28.11.2014. The Commissioner of Income Tax (exemptions) on merit observed that It is seen from the Trust Deed filed that there is no Author/Founder/Settler of the Trust. The names of Sri S. Selvarajan, Sri. S. Rajendran, Sri. S. Latha, Sri. K. Duraisamy and Sri. A. R. Prabhakaran are mentioned as 1st part, 2nd part, 3rd part, 4th part and 5th part respectively. Further, it is also mentioned that the above parties would be collectively called as 'BOARD OF TRUSTEES' or 'BOARD'. Hence, from the Trust Deed it is not clear as to who is the Author of the Trust. It is a common knowledge that a trust has three parties to it. They are - (i) Author (ii)
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Trustees and (iii) Beneficiaries. In the absence of anyone of these parties, a trust, in the true sense, cannot be said to have been formed.
In this context one may beneficially refer to Section 3 of India Trust Act, 1882, which defines the term "Trust" as well as other terms such as "Author" of the Trust, 'Trustee" and "Beneficiary". While the "Author" of the Trust has been defined as the person, who reposes or declares the confidence in relation to some properties, the Trustee is the person who accepts the confidence of the Author of the Trust. The person, for whose benefit the confidence is accepted, is called the "Beneficiary. In the above background, when the Deed of the applicant trust was gone through, it was ·found that while Trustees are appointed in the Trust, there is no Author". In the absence of "Author" or "Founder", no trust can ever come into existence not granted the registration u/s.12AA of the Act. Against this, the assessee is in appeal before us.
We have heard both the sides and perused the material on record. We have gone through the copy of the trust deed furnished before us. Admittedly reference of founders was made in clause (A) and clause (D) in page Nos.2 and 3 of the trust deed respectively and the object of the trust as charitable under the provisions of the I.T.A.No. 1905/Mds/2015 :- 4 -:
Income Tax Act,1961 as per clause (V) page no.6 of the trust deed.
However, there is confusion regarding the author, trustees and beneficiaries in the mind of the Commissioner of Income Tax (Exemptions). He would have suggested necessary amendments in the trust deed. Without giving the assessee any chance to amend the trust deed with regard to author, trustees and beneficiaries out rightly rejected the registration u/s.12AA of the Act. In our opinion, it is appropriate to give one more opportunity to the assessee to make necessary amendments to the satisfaction of the Commissioner of Income Tax (Exemptions) so as to fulfil necessary requirements u/s.12AA of the Act. Accordingly, we remit the entire file to the Commissioner of Income Tax (Exemptions) to consider the case of the assessee for granting registration u/s.12AA of the Act, and the assessee is also directed to carry out necessary amendments in the trust deed to the satisfaction of the Commissioner of Income Tax (Exemptions) and also the assessee has to satisfy regarding genuineness of the activities carried on by the assessee. With these observations, we remit the issue back to the file of the Commissioner of Income Tax (Exemptions) for fresh consideration.
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In the result, the appeal of the assessee in is partly allowed for statistical purposes.