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TMI Blog2014 (4) TMI 821X X X X Extracts X X X X X X X X Extracts X X X X ..... same shall be transferred to the trust having similar objects. He, therefore, issued show-cause notices dated 07.10.2013 and 22.10.2013 asking the assessee to produce original documents for verification and to explain the above mentioned discrepancies. The assessee-trust vide its letter dated 14.10.2013 and 24.10.2013 explained that the assessee is not registered under the trust act but registered as "Institution" under section 25 of Companies Act. Regarding the dissolution clause in the memorandum of association, the assessee explained that "if upon winding up or dissolution of the company there remains, after satisfaction of all the debts and liabilities and property whatsoever the same shall not be distributed amongst the members of the company but shall be given or transfer to such other company having object similar to the objects of the company, to be determined by the members of this company at or before the time resolution or in default in thereof, by the high-court of judicature that has or may acquire jurisdiction in the matter." 3. After considering the aforesaid submissions, the ld Commissioner of Income-tax, Jamnagar in paragraph 4 of the impugned order observed that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt craves leave to add, to amend, alter, or withdraw any or more grounds of appeal on or before the hearing of appeal." 4. At the time of hearing before the Tribunal, on behalf of the assessee-trust, Shri J C Ranpura, CA appeared and filed a paper-book containing 56 pages, which inter-alia include copy of application for registration u/s 12A(a) in form No.10A and copy of the Memorandum of Association and Articles of Association alongwith copies of Certificate of Incorporation and License u/s 25 of the Companies Act, 1956. The counsel of the assessee-trust also furnished the synopsis of arguments, wherein it was contended that the assessee-company in the name and style as Shrimati Sulochanadevi Education Foundation was incorporated under the provisions of section 25 of the Companies Act, 1956 with effect from 18.09.2012 as per the certificate of incorporation No.U80903GJ2012NPL72004-2012-2013. License u/s 25 of the Companies Act, 1956 issued by the Registrar of Companies, Gujarat dated 28.08.2012 approving nonprofit making company for promoting objects of the nature specified in Section 25 sub-section (1) clause (a) of the said Act which intends to applied its profit if any or othe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or in default in thereof, by the high-court of judicature that has or may acquire jurisdiction in the matter." Referring to the aforesaid clause, the ld counsel of the assessee pointed out that the company is always managed by its members and no other authority can interfere as the right of member is concerned under the Companies Act, 1956 and accordingly decisions of members in case of company, Trustee in case of trust and executive members in case of society is final and binding to authorities with condition of accountability and transparency. As per mandate of the office procedure Volume-II, Chapter-5, Para 2.7(vi), in case of dissolution it is net assets after meeting all its liabilities should not revert to its founder, members, directors, donors etc. but used for its objects. This is absolutely taken care in dissolution clause as mentioned above as question of revert of assets to the member is out of question. The ld counsel of the assessee also pointed out that as per the conditions and clauses of Companies Act, 1956, it is difficult to accept the wording of ld CIT "the ultimate power of transfer in case of dissolution should not be determined by t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n u/s 12AA of the Income-tax Act, 1961; therefore the view taken by him be upheld. 9. Having heard both the sides, I have carefully gone through the orders of the authorities below. In clause X of Memorandum of Association on page 5 and clause 52 of Articles of Association on page 10, it is clearly mentioned the conditions of winding-up/dissolution, which is reproduced hereunder:- "If upon winding up or dissolution of the company there remains, after satisfaction of all the debts and liabilities any property whatsoever the same shall not be distributed amongst the members of the company but shall be given or transfer to such other company having object similar to the objects of this company, to be determined by the members of this company at or before the time resolution or in default in thereof, by the high-court of judicature that has or may acquire jurisdiction in the matter." The main objects of the company to be pursued on incorporation are contained in clause A(1) of the Memorandum of Association, wherein it is clearly mentioned that "no objects of the company shall be carried out on commercial basis". In clause X of Memora ..... 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