TaxTMI 
TaxTMI 
2015 (11) TMI 115
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.... 1. The Ld. CIT (A) has erred in upholding the action of the ld. Assessing Officer by denying exemption U/s.11 & U/s.12 of the Act for the following reasons. i) That the induction of a minor Ms.Thara Bhaskaran as a Trustee has rendered the trust void ab-inito. ii) That the Trustees reside outside India. iii) That the Trust is a private Trust. iv) That the absence of saving clauses in Trust Deed. 2. The Ld. CIT (A) has erred in confirming the order of the Ld. Assessing Officer for levying interest U/s.234B of the Act. On this issue we have on several occasions held that, levy of interest U/s. 234B of the Act is consequential and therefore it is disposed off accordingly. 3. The brief facts of the case are that the assessee is a public ....
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....hat there are four essential elements of a valid charitable trust - Charitable or Religious object: The object or purpose of the trust must be a valid charitable purpose according to law. Capacity to create Trust: The founder or settlor should be capable of creating a trust and dedicating his property to that trust. Certainty of object and dedication thereto : The settlor should indicate precisely the object of the trust and the property in respect of which it is made. The property should be dedicated to the trust and the owner must divest himself of the ownership of that property. Concurrence with the law: The trust or its objects must not be opposed to the provisions of any law for the time being in force. It is submitted that a....
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.... Bhaskaran). Having held the trust to be legally invalid the Ld. Assessing Officer denied the benefit of Section.11 & 12 of the Act and assessed the income of the assessee trust as AOP at maximum marginal rate. 4. On appeal, the Ld. CIT(A) endorsed the view of the ld. Assessing Officer with the following observations:- "Decision 4. The only issue involved in the appeal is whether the trust is a valid one entitled for registration U/s I2A(a) of the Act and in consequence entitled for exemption u/s 11 of the Act or not ? The AO held that the assessee trust is not entitled for exemption u/s 11 of the Act as one at the trustees was a minor and not competent to hold the post of trustee. Perusal of the trust deed dated 10.02.1989 reveals t....
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....the whole of India, In this case, one of the trustees resides abroad and the arguments of the assessee are silent on the status of that trustee i.e. whether she is subject to Indian Income-tax Act or not ? Expediency requires that a trustee should be a person within the reach of the arm of Indian Courts. The trust deed does not contain specific proviso regarding any amendment and approval if any to be obtained from the CIT/DIT(Exernptions) as the case may be. Perusal of the records reveals that Mr. Sethu Bhaskaran, Founder Trustee, Mrs. Kamala Bhaskaran and Mrs Tharkeswari, trustees at No.104. Prinsep St. 5.02, Singapore-188653. The other two trustees viz. Mr. Sethu Kumaran and Mrs. Sethu Rani only reside in India. The above discrepancies a....
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....he materials available on record. It is apparent from the orders of the Revenue that the Ld. DIT(E) at the time of granting registration U/s.12AA of the Act has recognized the assessee Trust as a valid charitable trust. When the case came up for assessment, the facts with respect to the creation of the trust, appointment of trustees and its existence has not changed. However, the Ld. Assessing Officer as well as the Ld. CIT (A) opined that the trust is invalid because one of the trustees is a minor and another trustee is residing abroad and therefore it has to be assessed as an AOP. It is pertinent to mention here that Indian Trust Act, 1882 is not applicable to Charitable Trust. However, as pointed out by the Ld. A.R, the Hon'ble Apex ....
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....years, Mr.L.Sowmiya Murthy, aged 40 Mrs.Kamala Bhaskaran aged 52, and Ms.Thara Bhaskaran aged 16 years as the Trustees of the Trust. As per Section-10 of the Indian Trusts Act, 1882 any person capable of holding property may be a trustee but where the trust involves the exercise of discretion, he cannot execute unless he is competent to contract. Further, no one is bound to accept a trust. A Trust is accepted by any words or acts of the trustees indicating it reasonable certainty of such acceptance. A trustee may also disclaim to be a trustee and shall prevent the trust property from vesting in him. A disclaimer by one or two or more co-trustees vests the trust property in the others and makes him or them sole trustee or trustees from the d....