The Director Of Income Tax (Exemptions) Hyderabad v. $ M/S Ramoji Foundation, Ramoji Film City Ranga Reddy District, Andhra Pradesh

*THE HONOURABLE THE CHIEF JUSTICE SRI KALYAN JYOTISENGUPTA AND THE HONOURABLE SRI JUSTICE SANJAY KUMAR + I.T.T.A. No.583 of 2013 % 18-12-2013 The Director of Income Tax (Exemptions) Hyderabad … Appellant Vs. $ M/s Ramoji Foundation, Ramoji Film City Ranga Reddy District, Andhra Pradesh … Respondent ! COUNSEL FOR APPELLANT : Sri J.V.Prasad, learned SeniorStanding Counsel for Income Tax ^ COUNSEL FOR RESPONDENT : Sri S.Ravi, learned Senior Counsel appearing for Sri Ch.Pushyam Kiran <GIST >HEAD NOTE: ? CITATIONS: (1996) 217 ITR 699 AIR 1996 Supreme Court 620 HON’BLE THE CHIEF JUSTICE SRI KALYAN JYOTI SENGUPTAANDHON’BLE SRI JUSTICE SANJAY KUMAR I.T.T.A.No.583 of 2013 JUDGMENT:(per Hon’ble the Chief Justice Sri Kalyan Jyoti Sengupta ) Pre-admission notice has been issued to the respondentand in response thereto Mr. S.Ravi, learned Senior Counselappears on behalf of the respondent-assessee. Now the question is whether we admit this appeal or not. Mr.J.V.Prasad, learned Senior Standing Counsel for Income Taxappearing on behalf of the appellant insists that the appeal shouldbe admitted on the following suggested questions of law: (1) Whether, on the facts and circumstancesof the case and having regard to the decision of theHon’ble Supreme Court in CIT Vs. Kamala TownTrust (1996) 217 ITR 699), the Tribunal is correct inlaw in holding that amendment of the trust deed neednot be made by approaching the appropriate CivilCourt? (2) Whether, on the facts and circumstancesof the case, the Tribunal is correct in law in directingthe DIT (E) to grant registration to the assessee trustunder Section 12AA of the Income-tax Act, 1961? We have heard the learned Counsel for the parties and gonethrough the impugned judgment and order of the learned Tribunal. Mr.J.V.Prasad says that the learned Tribunal was notcorrect in holding that without approaching the Civil Court, therectified trust deed can be accepted. Mr.S.Ravi has produced the trust deed before us and hepointed out the relevant clause thereof. The trustees have beengiven power by the settler itself to rectify the trust deed, ifnecessary. Mr.J.V.Prasad submits that without approaching the CivilCourt, as it could be found from the aforesaid judgment of theHon’ble Supreme Court relied on by the learned Tribunal in thecase of CIT Vs. Kamala Town Trust (1996) 217 ITR 699, the trustdeed could not be rectified and consequently the rectified portionof the trust deed cannot be said to be binding. It is true that the learned Tribunal has not decided thismatter in so many terms as indicated by Mr.J.V.Prasad. We haveexamined the trust deed and vide clauses 18 and 19, the trusteeshave been given power to amend, alter, change or modify theprovisions of the trust deed with a condition mentioned therein. We set out clauses 18 and 19 of the trust deed as under: “18.Subject to the prior approval of Director ofIncome-tax (Exemptions), any amendment, alteration,changes or modifications to the provisions of theTrust Deed may be carried out in such a way thatthey shall not alter the basic character and charitableobjects of the Trust. 19.The Trustees subject to clause 18 supra,shall have power by two-thirds majority decision toadd or alter of the objects for which this Trust isconstituted provided that such additional or alteredobject is of charitable nature falling within thedefinition thereof under the relevant provisions of theIncome-tax Act, 1961. The Trustees shall havepower at any time by two-thirds majority decision toadd or alter any of the other presents of this Deedwhich shall thereafter be treated as forming part ofthis Deed.” We are of the view that when the power had been given to 19.The Trustees subject to clause 18 supra,shall have power by two-thirds majority decision toadd or alter of the objects for which this Trust isconstituted provided that such additional or alteredobject is of charitable nature falling within thedefinition thereof under the relevant provisions of theIncome-tax Act, 1961. The Trustees shall havepower at any time by two-thirds majority decision toadd or alter any of the other presents of this Deedwhich shall thereafter be treated as forming part ofthis Deed.” We are of the view that when the power had been given to the trustees by the settler, it can be amended without approachingthe Civil Court provided all the conditions laid down by the settlerare fulfilled. The approach of the Civil Court is required wherethere is no such power. No law has been produced before us thatthe trustees without approaching the Civil Court in spite of thespecific power being given by the settler cannot change the trustdeed. According to us, when the power has been given to thetrustees by the settler, no further power basically from the CivilCourt is required. This is the exact mindset of the Hon’bleSupreme Court in the aforesaid judgment. We have got thecorresponding judgment of the Hon’ble Supreme Court inCommissioner of Income-tax, Kanpur V. Kamla Town Turst (AIR1996 Supreme Court 620). At page 629 in paragraph-16 of thejudgment, the Hon’ble Supreme Court observed as follows: “The aforesaid decision of the Rajasthan HighCourt also takes a view which is almost parallel to theview taken by the Delhi High Court though the bindingnature of the rectification order of the Civil Court onthe Income-tax Officer is not highlighted as no suchoccasion arose for Rajasthan High Court topronounce on the same on the facts of that case. However, the fact remains that after due rectificationof the original Trust Deed either by the settlor himselfby executing a supplementary deed or by getting itrectified through competent Civil Court under therelevant provisions of the Specific Relief Act, thetrustees would be bound to carry out the amendedand rectified objects of the trust and if they fail to doso they would be guilty of breach of trust for whicheven proper proceedings can be initiated againstthem under Section 92 of the Code of CivilProcedure”. Thus, in the aforesaid decision of the Hon’ble SupremeCourt, nowhere it is stated that, in spite of having power to amend the trust deed, the trustees have to approach the Civil Court andget it rectified and such rectified trust deed is a bindinginstrument. Therefore, we hold that the learned Tribunal hascorrectly dealt with the matter in this case and the rectified trustdeed can be relied on by the Revenue Authorities for the purposeof registration. Accordingly, the appeal is dismissed. No order as to costs. ___________________ K.J. SENGUPTA, CJ __________________ SANJAY KUMAR, J 18.12.2013 Gsn L.R. Copy to be marked: YES