Commissioner Of Income Tax, Rohtak v. Dev Dayanand Charitable Education Trust

ITA No. 497 of 2010 IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH Commissioner of Income Tax, Rohtak Versus Dev Dayanand Charitable Education Trust ITA No. 497 of 2010Date of Decision: 10.11.2010 ....Appellant. ...Respondent. CORAM:-HON'BLE MR. JUSTICE ADARSH KUMAR GOEL.HON'BLE MR. JUSTICE AJAY KUMAR MITTAL. PRESENT: Mr. I.P. Singh, Advocate for the appellant. AJAY KUMAR MITTAL, J. 1.The revenue has preferred this appeal under Section 260Aof the Income Tax Act, 1961 (in short “the Act”) against the order dated13.11.2009 passed by the Income Tax Appellate Tribunal, Delhi Bench'B', New Delhi in ITA No. 3554/Del/2008 claiming following substantialquestion of law:- “Whether the Hon'ble ITAT is justified in law indirecting the CIT to allow registration u/s 12AA of theIncome Tax Act, 1961 to the entity which cannot becalled a trust as envisaged in sections 11, 12, 12A,12AA of the Income-tax Act, 1961 in so far as it is aclosely held one like a private discretionary trustvesting absolute powers in the founder chairman who has powers of nominating trustees, secretaryand treasurer and right to reversion of properties incase of any dissolution and where the document ofits creation is silent as to whether the propertieswould be in the name of the trust or in trustees?” 2.The facts necessary for adjudication of the present appealmay be noticed. The assessee trust came into existence vide trustdeed dated 23.11.2007 for charitable purposes, and was registered withthe Sub Registrar, Rohtak on 27.11.2007. The assessee moved anapplication under Section 12A(1)(a) of the Act on 31.3.2008 forregistration under the Act, but the same was declined vide order dated22.9.2008 by the Commissioner of Income Tax, Rohtak (in short “theCIT”) on the ground that no amount has been applied to charitable orreligious purpose during the relevant year. Feeling aggrieved, theassessee went in appeal and the Tribunal vide order dated 13.11.2009allowed the appeal and directed the CIT to register the assesseeunder Section 12AA of the Act, which gave rise to the department toapproach this Court by way of instant appeal. 3.We have heard learned counsel for the appellant. 4.Learned counsel for the revenue has assailed the finding ofthe Tribunal and relied upon the judgment of Kerala High Court in Self Employees Service Society v. Commissioner of Income-Tax, [2001]247 ITR 18 (Ker) in support of his submissions that no charitable oreducational activity was carried out during the financial year and,therefore, the assessee-trust is not entitled to registration under the Act. ITA No. 497 of 2010 5.The findings recorded by the Tribunal in paras 8 and 9 are relevant for the decision of this appeal, which are as under:- 3.We have heard learned counsel for the appellant. 4.Learned counsel for the revenue has assailed the finding ofthe Tribunal and relied upon the judgment of Kerala High Court in Self Employees Service Society v. Commissioner of Income-Tax, [2001]247 ITR 18 (Ker) in support of his submissions that no charitable oreducational activity was carried out during the financial year and,therefore, the assessee-trust is not entitled to registration under the Act. ITA No. 497 of 2010 5.The findings recorded by the Tribunal in paras 8 and 9 are relevant for the decision of this appeal, which are as under:- “8.We have considered the rival contentions and gonethrough the record carefully. Expression “charitablepurposes” has been defined in sub-section (15) ofsection 2 of the Act. It provides that charitablepurpose includes relief of the poor, education,medical relief and the advancement of any otherobjects of general public utility. Section 12AAcontemplates that Learned Commissioner in order tosatisfy himself about the objects of the trust and thegenuineness of its activities, would call for suchdocuments or information from the trust as he thinksfit for verifying the activity as well as objects of thetrust. Now, in the present case, in clause No.3 of thetrust deed, assessee has provided many aims andobjects. Accordingly to its stand, its main object wasto run a gurukul for girls at Village Singpura of DistrictRohtak. This gurukul would cater educational needsof girls in the rural area. In order to fulfil that object ithas taken two acres of land on lease at a nominalrate of Rs.5000/- from the chairperson Smt. KalyanDevi. It has applied for permission to run suchgurukul with appropriate authority under Departmentof School Education, Haryana. Such permission hasbeen granted to it provisionally and letter of such permission has been placed at page 22 of the paperbook. This was also filed before the LearnedCommissioner. The assessee has raisedconstruction of school building. Thus it has takenactive step in fulfilling its aims and objects which areundisputedly charitable in nature. The grievance of Learned Commissioner is thatarticle 10(2) empowers the trustee to makeamendment in the rules and regulations hence it is aprivate discretionary trust. In our opinion, such typeof apprehension can be judged at the time ofassessment proceedings. If any person has misusedthe trust fund or assessee failed to apply its incomeas provided in the act for charitable purpose then thatamount can always be brought to tax. These factorsare not very relevant while considering the issue inrespect of grant of registration. LearnedCommissioner is required to see prima facie whetherobjects of the trust are charitable or not and itsactivities are genuine or not. To our mind, assesseehas substantiated both these issues with the help ofdocumentary evidence. If it was not interested infulfilling its aims and objects, it would have notsought permission from the appropriate authority,department of school education, Haryana for runninga Kanya gurukul. Similarly, it would have not started construction of the building. Learned Commissionerhas rejected the claim of assessee on suspicion andanticipation of incidence of future, therefore, we allowthe appeal of the assessee and direct the LearnedCommissioner to grant registration under section12AA as per Act.” 6.The Tribunal had specifically recorded that the objects ofthe trust were charitable and its activities were genuine and on the basisof that finding concluded that the assessee was fulfilling the requirementof being for charitable purposes. The said finding has not been shownto be perverse in any manner. 7.Further, the judgment relied upon by the learned counselfor the revenue was on its own fact situation therein and, therefore,does not advance the case of the revenue as it has no applicability tothe facts of the present case. construction of the building. Learned Commissionerhas rejected the claim of assessee on suspicion andanticipation of incidence of future, therefore, we allowthe appeal of the assessee and direct the LearnedCommissioner to grant registration under section12AA as per Act.” 6.The Tribunal had specifically recorded that the objects ofthe trust were charitable and its activities were genuine and on the basisof that finding concluded that the assessee was fulfilling the requirementof being for charitable purposes. The said finding has not been shownto be perverse in any manner. 7.Further, the judgment relied upon by the learned counselfor the revenue was on its own fact situation therein and, therefore,does not advance the case of the revenue as it has no applicability tothe facts of the present case. 8.In view of the above, no substantial question of law arisesin this appeal for consideration of this Court. Accordingly, the appeal isdismissed. (AJAY KUMAR MITTAL) JUDGE (ADARSH KUMAR GOEL)JUDGE