Commissioner Of Income Tax (Exemptions) 3Rd Floor, Kailash Heights, Lal Kothi, Tonk Road, Jaipur v. M/S Arihanth Charitable Trust, 402 Ganpati Plaza, Veer Durga Das Nagar, Pali

HIGH COURT OF JUDICATURE FOR RAJASTHAN BENCH ATJAIPUR D.B. Income Tax Appeal No. 279 / 2017 Commissioner of Income Tax (Exemptions) 3rd Floor, Kailash Heights, Lal Kothi, Tonk Road, Jaipur. ----Appellant Versus M/s Arihanth Charitable Trust, 402 Ganpati Plaza, Veer Durga Das Nagar, Pali. ----Respondent _____________________________________________________ For Appellant(s) : Mr. Daksh Pareek on behalf of Mr. Sameer Jain _____________________________________________________ HON'BLE MR. JUSTICE K.S. JHAVERI HON'BLE MR. JUSTICE VIJAY KUMAR VYASOrder 14/11/2017 1.By way of this appeal, the appellant has challenged thejudgment and order of the Tribunal whereby the Tribunal hasallowed the appeal of the assessee. 2.Learned counsel for the appellant framed the following substantial questions of law:- “i. Whether on the facts and circumstances ofthe case an in law the Hon’ble ITAT is justified inallowing the appeal of the assessee for statisticalpurposes by setting aside the order underSection 12AA (1) (b) of CIT (E), Jaipur? ii. Whether on the facts and circumstances ofthe case and in law the Hon’ble ITAT is justifiedin holding that it is not necessary that the trustshould be established under an instrument, inspite of the fact that as per the Rajasthan PublicTrust Act, 1959, the trust within the period oftwo years from the date of its creation it to beregistered by the office of Asst. Commissionerhaving jurisdiction over such places? Iii. Whether on the facts and circumstances of the case and in law the Hon’ble ITAT is justifiedin setting aside the order of CIT(E), Jaipur inrefusing the registration u/s 12AA to the trust,which is not a legal trust in the state of Rajsthanin view of Section 17(1) of the Rajasthan PublicTrust Act, 1959?” 3.While considering the matter of assessee, the Tribunal in Paragraph 3.2 which reads as under:- “3.2. We have heard rival contentions, perused thematerial available on record and gone through theorder of id. CIT (Exemptions). We find that under theidentical facts, the Coordinate Bench of the Tribunalin ITA No. 4941/Del/2011 & 3061/Del/2013 has heldas under:- “13. A plain reading of Rule 17A(a) makes itclear that where the Trust is created, or theinstitution is established, under aninstrument, the instrument in original,together with one copy thereof, has to befiled along with prescribed Form No. 10Afor registration of the institution/Trust u/s12A of the Act. However, the second limb ofRule 17A(a) provides that where the Trust iscreated, or the Institution is established,otherwise than under an instrument, thedocument evidencing the creation of thetrust or the establishment of the institution,together with one copy thereof, has to befiled along with the statutory Form No. 10Afor registration of the Institution/ Trust u/s12AA/12A of the Act. Thus, the applicableRule 17A itself provides that it is notnecessary that the Institution/ Trust shouldbe established under an instrument. TheRule 17A does not prescribe that in case theInstitution/Trust is established otherwisethan under an instrument, what type ofdocument evidencing the creation of theTrust or the establishment of theInstitution, has to be filed, meaning therebythat the document evidencing the creationof Trust of the establishment of Institutioncould be of any type. As per the provisionsof the Indian Trust Act, the trust can becreated even orally and if the assessee is able to give some evidence of creation ofsuch Trust by a word of mouth, the sameshall be eligible for registration u/s12AA/12A of the Act, provided suchevidence is filed and the other conditionsunder the statute are satisfied.” In view of the decision of the Coordinate Bench,we deem it proper to restore this appeal of theassessee before the id. CIT (Exemptions) to decidein accordance with law laid down by theCoordinate Bench.” able to give some evidence of creation ofsuch Trust by a word of mouth, the sameshall be eligible for registration u/s12AA/12A of the Act, provided suchevidence is filed and the other conditionsunder the statute are satisfied.” In view of the decision of the Coordinate Bench,we deem it proper to restore this appeal of theassessee before the id. CIT (Exemptions) to decidein accordance with law laid down by theCoordinate Bench.” 4.The Delhi High Court has confirmed the judgment byDivision Bench on 01.08.2016, wherein, the Division Bench ofDelhi High Court in Paras 5 to 9 observed as under:- “5. It was sought to be urged before the ITAT by theRevenue that there is a specific requirement of filingdocuments for creation of a Trust along with anapplication for grant of exemption. In the impugnedorder, the ITAT referred to Rule 17A (a) of the IncomeTax Rules, 1962 which itself envisages the possibility ofthe Trust being created “otherwise than under aninstrument” in which event it is sufficient if “thedocument evidencing the creation of the trust or theestablishment of the institution, together with onecopy thereof’ is provided. The proviso to Rule 17A(a)permits the Commissioner to accept even a certifiedcopy in lieu of the original if the instrument ordocument in original cannot conveniently beproduced. It was rightly pointed out by the ITAT that itis therefore not essential that there must be aninstrument evidencing the creation of a Trust. 6. The fact of the matter was that the Assesseeclaimed that it is an institution/trust created in theyear 1159AD and no formal deed of trust was executedat that time. The 17[th] Karmapa, who is the supremespiritual Head of Karma Kagyu Lineage, made adeclaration of Trust on stamp paper on 29[th] day ofMarch, 2011 at Delhi setting out the entire history ofthe Trust along with aims, objects and purposes.Various provisions with regard to the management ofthe Trust and its properties and the maintenance ofaccounts etc. were also set out. It was stated that theobjects of the trust were wholly charitable and religious in nature. The ITAT has in its impugned orderset out in some detail the contents of the said affidavitregarding the creation of the Trust in Central Tibet in1159 AD and its objectives and activities over theyears. The Court concurs with the ITAT that a formaldeed of trust was not necessary for the grant ofregistration under Section 12A/12AA of the Act. 7. On the question whether the objects and purposesof the Trust were charitable thereby qualifying forregistration, the ITAT has set out in its impugned orderin detail, the objects of the Trust as declared in theaffidavit filed by the 17[th] Karmapa. It concluded fromreading of the various aims and objects that they werecharitable in nature. It has been rightly pointed out bythe ITAT that it is not necessary that present aims andobjects of the Trust should be the same at the time ofits establishment. As further rightly pointed out, thestage for examining if the income of the Trust wasbeing applied for its objects would arise only when areturn of income is filed by the Trust. The said issuewould not affect the grant of registration. 8. The ITAT also examined whether the fact that theTrust was for the benefit of a particular communitywould debar it from exemption and registration underSection 12AA/12A of the Act. The said question was,and in the view of this Court rightly, answered in thenegative. In particular the Court concurs with theconclusion of the ITAT that “It is now well-settled thatan objects beneficial to a section of the public is anobjects of general utility. The intention of theinstitution/trust should be impersonal in nature andfor a sufficiently defined and identifiable section of thepublic.” 8. The ITAT also examined whether the fact that theTrust was for the benefit of a particular communitywould debar it from exemption and registration underSection 12AA/12A of the Act. The said question was,and in the view of this Court rightly, answered in thenegative. In particular the Court concurs with theconclusion of the ITAT that “It is now well-settled thatan objects beneficial to a section of the public is anobjects of general utility. The intention of theinstitution/trust should be impersonal in nature andfor a sufficiently defined and identifiable section of thepublic.” 9. Lastly, the question was whether the fact that the 17[th]Karmapa who is the supreme head of the Trust was takingfood and clothes and meeting his basic needs from the fundsof the Trust resulted in a violation of Section 13 of the Act?The ITAT correctly held that “Section 13 does not debar themain whole-time trustee/trustee from meeting their basicneeds from the funds of the institution/trust particularlywhen they are not deriving any monetary benefit from theinstitution/trust.” 5. In our considered opinion the view taken by the Tribunal is just and proper and no interference is called for. No substantial question of law arises. 6.In our considered opinion, it is misconceived. 7. The appeal is dismissed. (VIJAY KUMAR VYAS),J. (K.S. JHAVERI),J. Chouhan/04