TMI Blog2011 (11) TMI 351X X X X Extracts X X X X X X X X Extracts X X X X ..... has already amended its Trust Deed, therefore, registration is to be granted to the assessee. - Decided in favor of assessee. - IT Appeal No. 1395 (Kol.) of 2010 - - - Dated:- 18-11-2011 - S. V. Mehrotra And N. Vijaya Kumaran, JJ. S. M. Surana and Ashish Rastogi for the Appellant R. K. Saha for the Respondent ORDER S. V. Mehrotra, Accountant Member The assessee had filed an Application dated 26.10.2009 before ld. Commissioner of Income Tax, Durgapur for approval under section 80G(5)(vi) of the Income Tax Act, 1961. The assessee had also enclosed the Deed of Trust dated 05.08.1999 alongwith the application. 2. Ld. CIT noticed that Clause 9 of the Trust Deed abundantly made it clear that the Trustees could invest and keep invested the Trust Fund in any business undertaking whether authorized by the Indian Trust Act or not as they shall in their absolute discretion think fit. Further Clause 17 of the Trust Deed empowered the trustees to modify the Trust Deed and/or provision, rules or regulations in an absolute manner. Thus, he concluded that both the clauses gave the trustees a free hand whereby income or assets ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pose of managing the trust affairs and properties and carrying out the objects of the Trust aforesaid shall be vested in the Trustees and without prejudice to the generality of the objects and powers above mentioned they shall have power to do all or any of the following things that is to say :- (d) To invest and keep invested the Trust Funds either in the purchase or mortgage of immovable properties or in shares debentures or other securities of any business undertaking and investments whether authorized by the Indian Trusts Act or not and to alter, vary or transpose such investments from time to time as the Trustees shall in their absolute discretion think fit . Ld. counsel further referred to clause 13 13.1, which reads as under :- 13. It is expressly declared that no part of the Trust Property or its income shall be applied for any purpose which is not Trust purpose. 13.1 All the powers and provisions hereof shall be construed as being subject to the restriction and limitation herein contained and contained in Income Tax Act, 1961, and statutory modification thereof . With reference to aforementioned two clauses, ld. counsel s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rlier assessment years and besides Hari Charan Garg Charitable Trust was also granted approval under section 10(23C)(vi) of the Income Tax Act by CCIT, Kolkata vide order dated 23.09.2009 . He further referred to the conditions subject to which exemption under section 10(23C)(vi) was granted, which inter alia, reads as under :- 6. In view of the aforesaid facts and circumstances of the case approval for grant of exemption under section 10(23C)(vi) is accorded to the assessee-trust for assessment year 2009-10 subject to the conditions mentioned hereunder:- . (c) the Institution will not invest or deposit its funds (other than voluntary contributions received and maintained in the form of jewellery, furniture, etc.) for any period during the previous years relevant to the assessment years mentioned above otherwise than in any one or more of the forms or modes specified in sub-section (5) of section 11 of the I.T. Act, 1961 . He, therefore, submitted that in order to avail exemption under section 10(23C)(vi), the assessee could not utilize the Trust fund solely as per clause 9 of the Trust Deed. Ld. counsel referred to the decision of the Hon' ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he finds that the income has not been applied for charitable purposes, then to that extent, he can deny exemption under section 11. Thus, primarily section 11 deals with the taxability of income part of Trust or Institution. Whereas section 80G deals with the deduction to be granted to a donor in respect of donations given to the Trust or Institution. Section 80G(5) lays down various conditions for granting registration to Trust or Institution before it can receive donation, which may be eligible for deduction in the hands of donor. Since donations are given by the public at large, which has no knowledge of the actual clauses of the Trust Deed, therefore, legislature has laid down stringent conditions before granting registration to a Trust or Institution under section 80G. In this regard, we may further refer to section 12, sub-section (3), which reads as under :- 3. Notwithstanding anything contained in section 11, any amount of donation received by the trust or institution in terms of clause (d) of sub-section (2) of section 80G in respect of which accounts of income and expenditure have not been rendered to the authority prescribed under clause (v) of sub-section 5C of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y part of the income or assets of the institution or fund for any purpose other than a charitable purpose . From the bare reading of this condition, it is evident that if there is any provision for transfer or application at any time of the whole or any part of the income or assets of the fund for any purpose other than a charitable purpose, then the said institution or Trust would not be eligible for registration under section 80G(5) though it may have registration under section 12A, 10(23C), etc. The contention of ld. counsel is that the Trust Deed cannot be read in isolation and in order to find out the true import of the Trust Deed all the clauses have to be read together. We find considerable force in the submissions of learned counsel. Merely if a provision has been incorporated in the Trust Deed, but by reading all the clauses together, it is evident that the impugned clause cannot be acted upon then mere incorporation of the impugned clause in the Trust Deed would be of no consequence as far as registration under section 80G(5) is concerned. Provision in Trust Deed contemplated under section 80G(5)(ii) is such provision which can be acted upon but such a provision whi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se of establishment of the society or the trust. If the commissioner is convinced that the purpose of the society or the trust is not charitable, nothing debars him from denying the approval but, at the same time, if he is satisfied that the objects of the trust, as set out in the deed of declaration, were charitable, then having regard to the object of the provision, the approval should not be denied on mere technicalities. As a matter of fact, the power to grant or negative the claim for approval is coupled with a duty . Thus, Commissioner was required to find out the real purpose, as distinguished from the ostensible purpose of establishment of the Society or the Trust. He could not deny the registration solely on the basis of one clause, which could not be acted upon in view of the restriction contained in other clauses. The mandate of the section is also very clear that there should be a provision for the transfer or application of income or assets of the institution for the purposes other than charitable purpose. This provision should be capable of acted upon by the management, then only the registration could be denied in view of section 80G(5)(ii). However now, in any ..... X X X X Extracts X X X X X X X X Extracts X X X X
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