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2017 (7) TMI 1392 - AT - Income TaxExemption u/s 11 - denying the assessee registration u/s 12AA - transfer of the funds from M/s Mata Narayan Kaur Charitable Trust to the assessee trust of ₹ 1.57 crores appear to be a method to transfer funds from a non functional trust headed by the husband to a trust headed by wife to preclude the possibility of the dissolution of the donor trust - HELD THAT:- Assessee trust had received donation of ₹ 1.57 crores from M/s Mata Narayan Kaur Charitable Trust. Whether the said donation was to preclude dissolution of the donor trust or that it was made from accumulated funds which had not been utilized in the specified time frame, have no effect nor do they affect the genuineness of the assessee trust. Whatever may have been done by the donor trust, may have an impact on the genuineness of the donor trust and there is no reason in holding the donee trust to be ingenuine on that account. Besides it is an uncontroverted fact that the donor trust was also enjoying exemption u/s 12AA of the Act and any such donation made by a charitable trust are entitled to be treated as donation of the said trust. For the above reason, we reject the contention of Ld.CIT(Exemptions) that since the donations were received from M/s Mata Narayan Kaur Charitable Trust, they make the activities of the assessee trust ingenuine. Author of the assessee trust is the sole trustee of the trust and since trust involves receipt and custody of money it has violated the provisions of Indian Trust Act, 1882 which requires the number of trustees to be atleast two in such cases - We find no merit in this contention of the Ld.CIT(Exemptions) also. Merely because the trust by virtue of clauses in the Trust Deed remain with a particular family has no reason to hold that it is a family trust for the benefit of particular family. Merely because the trusteeship remains with the particular family it does not mean that the trust is for the benefit of a particular family only. Trustees are only guardians of the trust and no benefit enures to them. In the absence of any finding by the Ld.CIT(Exemptions) that the benefits from the assessee trust accrue or arise to a family only, there is no merit in the finding of the Ld.CIT(Exemptions) that the assessee trust is family trust not intended for public benefit. Carried out no charitable activity in the year - Assessee has demonstrated before us that it had filed adequate replies before the Ld.CIT(Exemptions) demonstrating that it had carried out charitable activities in the impugned year which was the first year of coming into existence since it was formed only on 23.12.2015. We find that the assessee had adduced evidence of having carried out charitable activities thereafter also. Moreover, even before us the Ld. counsel for the assessee has adduced voluminous evidences to demonstrate that that it was involved continuously in carrying out charitable activities as per its stated objects. CIT(Exemptions), we find, has not dealt with and considered the submissions of the assessee. We, therefore, consider it fit to restore the issue back to the file of the Ld.CIT(Exemptions) to reconsider submissions of the assessee vis-à-vis charitable activities carried out by it and thereafter adjudicate the issue of grant of registration under section 12AA of the Act in accordance with law.
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