SHRI PANCHAMURTI EDUCATION SOCIETY,NAGPUR vs. COMMMISSIONER OF INCOME TAX (EXEMPTIONS), PUNE

The ld.CIT(E) in his order dated 29.09.2017 stated that the application so filed by the assessee was carefully considered and

During the course of hearing, the ld. AR submitted that the assessee society is a public charitable trust registered with the Charity Commissioner, Nagpur vide Registration No. F–742(N) on 11.05.1965. the assessee society is also registered under the Societies Registration Act vide registration certificate dated 11.05.1965. It was submitted that the assessee society approached the Charity Commissioner of Nagpur for framing of Scheme under section 50A of the Maharashtra Public Trust Act, as in the old bye–laws, there was no provision regarding the mode of succession of trustees, the tenure of trustees etc. and the Assistant Charity Commissioner, Nagpur by an order dated 30.09.2014 approved the scheme.

It was submitted that the said scheme contains the objects of the trust which are all educational in nature and the assessee society is currently running the following educational institutions namely Mount Everest Primary School, Pandit Nehru Higher Secondary School and Vasantrao Naik Polytechnic College. It was submitted that the said school and colleges are running since past ‘50’ years, wherein the primary and secondary schools are aided by the Government of Maharashtra, whereas the Polytechnic college is unaided. It was submitted that the assessee society has been regularly filing its income tax returns along with the audited financial statements and the returns of income & audited financial statements for the preceding three years

It was submitted that while considering the application for exemption under section 12AA of the Act, the ld.CIT(E) has to be satisfy himself on two grounds namely the objects of the society and genuineness of the activities undertaken by the assessee in pursuance of the stated objectives. It was submitted that on the perusal of the impugned order, it is very much evident that the ld. CIT(E) was satisfied about the objects, as well as activities carried out in pursuance of the stated objects being charitable in nature. However, the ld CIT(E) has rejected the application seeking registration merely on technical grounds as so stated by him that there was no dissolution clause in the trust deed.

In this regard, it was submitted that w.e.f. 01.06.2016, there has been an amendment in the Income tax Act, wherein Section 115TD(c) has been introduced, wherein upon dissolution of the trust, if the assets are not transferred to any other trust or educational institution within the period of 12 months from the end of the month, in which the dissolution takes place, then the accreted income of such specified person shall be charged at maximum marginal rate. It was submitted that there is an inbuilt provision under the Act in case of any such

It was further submitted that the absence of the clause of dissolution in the Trust Deed would be in no manner be an impediment in the operation of the statute as the Maharasthra Public Trust Act duly takes care of such contingency and in support reliance was placed on the Hon’ble Bombay High Court decision in case of CIT(E) v/s Tara Educational & Charitable Trust (ITA No. 247 of 2015 dated 31.07.2017), wherein at para 4 and 5, the Hon’ble High Court was pleased to held as under:– "4. The registration of the Trust has to be done on compliance of the provisions of Section 12AA of the Act. The authority is required to consider the genuineness of the activities of the Trust and the section does not lay down that unless and until the clause of dissolution of the Trust is incorporated in the Trust Deed, the Trust cannot be registered.

Further, reliance was placed on the decision of Hon’ble Rajasthan High Court in case of CIT(E) v/s Narsighji Ka Mandir 185 DTR 30 and the decision of the Hon’ble Punjab and Haryana High court in case of CIT v/s Ajit Educational & Public Welfare Society 2018 Tax Pub(DT) 6698.

It was further submitted that the assessee has since applied for the amendment in its by–laws through an application under section 50A of the Maharashtra Public Trust Act, 1950 for the incorporation of the dissolution clause in its bye–laws and the said application was allowed by the Deputy Charity Commissioner, Nagpur vide order dated 26.07.2018. It was accordingly submitted that application so filed by the assessee seeking registration under section 12AA may therefore be directed to be allowed.

Per contra, the ld. CIT/DR has relied on the order and findings of the ld. CIT(E).

We have heard the rival contentions and perused the material available on record. We find that no adverse findings have been recorded by the ld CIT(E) regarding the objects of the assessee society being charitable in nature and genuineness of the activities carried out by the assessee society in pursuit of the said objectives on or before filing the application seeking registration u/s 12AA of the Act. As far as dissolution clause in the trust deed is concerned, we find that once the assessee has submitted to the jurisdiction of the Charity Commissioner and there are inbuilt provisions contained in the Bombay Public Trust Act of 1950 and the scheme so applied and approved by the Charity Commissioner, there is no valid and justifiable reason to reject the application so filed by the assessee society seeking registration u/s 12AA of the Act. We find that the dicta laid down by the Hon’ble Jurisdictional High Court in case of CIT(E) v/s Tara Educational & Charitable Trust (Supra) squarely applies in the facts of the present case and respectfully following the same, the ld CIT(E) is hereby directed to grant registration to the assessee society under section 12AA of the Act.