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Malkolak Knowledge Centre Versus Director of Income Tax

Registration under 12AA rejected - the objectives of the Trust are not charitable in nature, merely because the objectives included the words “consultancy, investment advisory and an investment agency - Held that:- Remit the issue back to the file of the DIT (E) to consider de novo and give an opportunity to the assessee who shall amend the present objects of the Trust with specific objects towards Research and Development and also DIT (E) shall verify whether assessee has deleted the clause whi .....

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ed against the order of the Director of Income Tax (Exemptions) dated 28.03.2014 u/s 12AA of the Act, 1961. 2. Briefly stated, Malkolak Knowledge Centre is a Trust formed vide Trust Deed executed on 17.03.2005. The Trust had filed an application in Form No.10A on 25.09.2013 seeking registration u/s 12AA of the Income Tax Act, 1961. The Director of Income Tax (Exemptions) while rejecting the Registration under 12AA of the Act, held as follows: 2. From the preamble to the Trust Deed, which was exe .....

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gency are not charitable in nature. Thus, it shows the applicant trust in this case has not been formed with, entirely charitable objectives and hence, under such circumstance, it will not be eligible for registration u/s 12AA of the Act. 2.1 Further, from the objects of the assessee trust, it is noticed that it also intends to engage in consultancy activities. In this context, it is relevant to refer to the first object clause 3(a) which reads as under: To devise and conduct programs to promote .....

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(b), the trustees are empowered to apply whole or any part of income of the trust or the trust fund to anyone or more of the objects of the trust. Similar stipulation is there in the clause, 4(n), where it is mentioned "to set apart and/or allocate the whole or a part of the income or the corpus of the Trust Fund or part thereof for any of the objects of the Trust". In view of the same and since the assessee trust in this case, is having objects of both charitable and non-charitable na .....

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itable, and the trustees in their discretion are to apply the income to any of the objects, the whole trust fails and no part of the income is exempt from tax. Where the objects are distributive, each and every one of the object must be charitable in order that the trust might be upheld as a valid charity. If no definite part of the property or its income is allocated to charitable purposes and it would be open to the trustees to apply the whole income to any of the non-charitable objects, no .....

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n the first one i.e sub-clause (2), there is reference to establishing different wings/units at state, national and international. levels and in the sub-clause (3), there is mention to conduct academic and research exchange tours, campaigns etc. in India and abroad. From such objectives, showing intention to carry out such activities abroad, it shows the assessee Intends to apply its income also outside India. Under that circumstance, having regard to the provisions of section 11(1)(a), where th .....

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Knowledge Centre (MKC) started conducting seminars and publishing news letters to promote academic activities. It has setup a centre for marine studies in Goa and started research and training activities. It is further stated, MKC also conducted the following training programme during financial year 2012-13: 1. Advancing frontiers for Bio-technology 2. Workshop on Robotics - today and tomorrow 3. Indian Pharmaceutical Industry perspectives 4. Orientation on molecular and immunological techniques .....

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ed on by the Trust are not verifiable. 5. Similarly, the DIT (E) observed in the proceedings, the assessee filed some printed broachers in/respect of Malkolak Institute of Marine Studies (M-IMS), under the logo of Malkolak Knowledge Centre and showing its address at 8, Vimal Apartments, Nagali Hill, Dona Paula, Goa. Further, it has filed a printed brochure in respect of Malkolak Institute of Life Sciences, under the logo of Malkolak Knowledge Centre. The address of such institute of life science .....

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7. The ld Counsel for the assessee Shri B. Vijaya Kumar appeared before us. The ld Counsel submitted before us that the assessee would amend the objects which are not charitable in nature. The ld Counsel fairly pointed out that the DIT (E) had pointed out that the objective included the following phrase: Whereas the settler is desirous of establishing a Knowledge Center in the form of a trust for the purpose of promotion of Academics, Research & Development, consultancy investment advisory a .....

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ilities of Research and Development for the under privileged. In this context, the Bench directed him to incorporate objects which clearly state the intention of the Trust and to take note that the Trust Deed to be having objects purely charitable and should be devoid of mixed objects. 8. The ld DR raised no objection for the matter to be sent back to the file of the DIT (E) for giving an opportunity to the assessee afresh and amend the objects of the Trust which are to be charitable in nature. .....

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