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2015 (9) TMI 909 - ITAT MUMBAI

2015 (9) TMI 909 - ITAT MUMBAI - TMI - Entitlement for exemption u/s 11 - whether the terms and clauses of the trust deed which were the basis of grant of registration u/s 12A of the Act have been altered after grant of such registration, the very foundation of registration having been removed by voluntary act of the assessee? - Held that:- Non-intimation of the amendments in the Trust Deed to the Department cannot ipso-facto lead to cancellation of registration because the statutory requirement .....

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e objects of the assessee Trust has undergone changes but the amendments are merely enabling clauses which provide only ‘means’ or ‘power’ to achieve objects in the Trust Deed. In our considered opinion, having regard to the aforesaid fact situation, it would be inappropriate to construe the amendments of 1957 and 1979 as insertions of any new objects of the assessee Trust, rather the amendments only seek to provide enabling powers to the Trust to accomplish its original objects which are in the .....

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e ‘powers’ conferred upon the Trustees as being incidental to accomplish the purpose of the Trust.

In our considered opinion, the amendments in 1975 &1979, which have been noticed above only seek to enable the Trustees to carry out activities for accomplishing the purpose of the Trust which we have found earlier to be for a ‘charitable purpose’ as per original Trust deed. Therefore, factually speaking, even if one has to consider the amendments of 1975 & 1979 made in the Trust Deed, i .....

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ining to the assessment year 2009-10, which in-turn has arisen from the order passed by the Assessing Officer dated 28/12/2011 under section 143(3) of the Income Tax Act, 1961 (in short the Act ). 2. In this appeal, the solitary Ground of appeal raised by the Revenue reads as under:- That on the facts and circumstances of the case and in law, the Ld. CIT(A) erred in holding that the assessee is entitled for exemption u/s 11 of the Income-tax Act, 1961 and there by directing the AO to allow exemp .....

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has been set up vide Trust Deed dated 19/3/1969. In the return of income filed for the assessment year under consideration assessee claimed exemption under section 11/12 of the Act. The Assessing Officer has denied the exemption under section 11/12 to the assessee on the ground that the objects of the assessee Trust have been amended after the grant of Registration under section 12A of the Act without getting itself re-registered with the Director of Income Tax(Exemption) under section 12A of th .....

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s already registered under section 12A for more than 40 years which had not been cancelled; that the original objects of the assessee Trust were charitable which have not been deleted/changed; that even the amendments in the objects remain charitable and do not cause any detriment to the original objects as mentioned in the original Trust Deed; that it is a case where the original objects of providing medical relief, educational help, relief to poor and other objects of general public utility co .....

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the CIT(A) the only point raised by the Revenue is that since the terms and clauses of the Trust deed which formed the basis of grant of registration under section 12A of the Act originally have been altered after grant of such registration, therefore, the very foundation of registration stands removed by the voluntary action of the assessee. 5.1 According to the Ld. Departmental Representative the registration under section 12A of the Act dated 27/11/1973 does not survive because of the subsequ .....

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nder section 12A, it cannot automatically claim benefits under sections 11/12 and that the Assessing Officer is not bound by the registration granted earlier under section 12A of the Act, because the same would not survive. The Ld. Departmental Representative also referred to the discussion in the assessment order, wherein reliance has been placed on the judgement of the Hon ble Allahabad High Court in the case of Allahabad Agricultural Institute & Another vs. Union of India And Others,291 I .....

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sessee continues to be registered with the DIT(Exemption) under section 12A of the Act and on the basis of such registration its recognition under section 80G of the Act has been renewed every three years and that even after amendments carried out in the Trust Deed in 1975 and 1979 the Assessing Officer in scrutiny assessment for the assessment years 2004-05,2007-08 and 2008-09 allowed the exemption under section 11/12 of the Act. Ld. Representative for the assessee also relied upon the decision .....

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judgment of the Hon ble Allahabad High Court relied upon by the Assessing Officer in the case of Allahabad Agricultural Institute & Another (supra) and after following the ratio of the judgement of Hon ble Supreme Court in the case of CIT vs. Surat City Gymkhana, 300 ITR 214(SC) held that registration under section 12A of the Act was a fait accompali to hold back the Assessing Officer from further probe into the object of the Trust. Ld. Representative for the assessee emphasized that the ori .....

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discussion shows, the only plea raised by the Assessing Officer to deny the exemption under section 11/12 of the Act is to the effect that there has been an addition in the object clause of the assessee Trust, subsequent to the grant of registration under section 12A of the Act, which has not been intimated to DIT(E). Thus, as per the Assessing Officer, it has to be presumed that the registration originally granted under section 12A of the Act does not survive, which would lead to the denial of .....

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tained in the original Trust Deed dated 19/3/1969 are concerned, they are charitable in nature because not only assessee was granted registration under section 12A of the Act on 27/11/1973 but it has also been allowed exemption under section 11/12 of the Act. The moot question is as to whether assessee can be said to be a charitable institution even after the amendment to the Trust Deed dated 20/3/1975 and 19/7/1979. The aforesaid point is relevant because in the impugned order of assessment the .....

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per the statutory requirements, which prescribe that either the activities being carried out are not genuine or that they are not being carried out in accordance with the objects, meaning thereby that the amended objects being pursued are noncharitable. 7.3 In fact the decision in the case of Board of Control for Cricket in India. vs. ITO (supra) relied upon by the Ld. Departmental Representative before us is a case where the amendments in the Memorandum of Association were found to be substant .....

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of the amendments in the Trust Deed to the Department cannot ipso-facto lead to cancellation of registration because the statutory requirement of cancellation of registration contained in section 12AA(3) of the Act prescribe that the cancellation of registration cannot be effectuated unless a case is made out that the new objects do not fit-in with the existing objects (i.e. new objects are non-charitable in nature) or that the activities are in-genuine. A pertinent question is as to whether, on .....

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context of the objects of medical purpose and relief to poverty, the activities enumerated inter-alia, included:- aid and relief in kinds such as giving clothes, grains and free distribution of medicines or providing free medical aid. Subsequently, in the 1975 amendment, the activities of aid or relief in kind has been supplemented by enabling providing of loan and relief in cash also. 7.5 Further, the medical purpose and other objects meant for the benefit of general public in India was contai .....

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f public charitable purpose in India. In the amendment made in 1975 such activities was supplemented by incorporating the activity of giving loans alongwith the activity of giving grants and contributions to institutions carrying on work for public charitable purposes in India. 7.7 Lastly, in the original Trust Deed assessee was having activity of providing grants and contributions to institutions established for carrying on an object of general public utility not involving an activity for profi .....

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ee Trust has undergone changes but the amendments are merely enabling clauses which provide only means or power to achieve objects in the Trust Deed. In our considered opinion, having regard to the aforesaid fact situation, it would be inappropriate to construe the amendments of 1957 and 1979 as insertions of any new objects of the assessee Trust, rather the amendments only seek to provide enabling powers to the Trust to accomplish its original objects which are in the fields of educational purp .....

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plish the purpose of the Trust. In our considered opinion, the amendments in 1975 &1979, which have been noticed above only seek to enable the Trustees to carry out activities for accomplishing the purpose of the Trust which we have found earlier to be for a charitable purpose as per original Trust deed. Therefore, factually speaking, even if one has to consider the amendments of 1975 & 1979 made in the Trust Deed, in our view it does not signify that the registration granted to the asse .....

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rol for Cricket in India (supra) is concerned, the same has been rendered in the context of the fact situation therein. In the case of Board of Control for Cricket in India (supra), the Tribunal found the amendments to the Memorandum of Association as being substantive, which included amendment of rules and regulations providing for promotion of commercial interests towards administration of IPL Championship League, etc. Quite clearly in the present case, there is no such fact situation and for .....

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and health and running of Angadwadies in 600 villages and five High Schools with hostel facilities in backward areas. It was also specifically noted that the Trust was running 190 bedded General hospital at Dissa, where poor people were being treated. Similarly, in the assessment order for assessment year 2007-08 passed under section 143(3) of the Act dated 11/12/2009, the Assessing Officer has noticed the activities of the assessee in the field of education, income generation for Angadwadies, d .....

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