TMI Blog2017 (8) TMI 1315X X X X Extracts X X X X X X X X Extracts X X X X ..... E K.S.JHAVERI AND HON'BLE MR. JUSTICE INDERJEET SINGH For the Appellant : Mr.Sameer Jain For the Respondent : Mr. Mahendra Gargiya JUDGMENT 1. Since in all these appeals, common questions of law and facts are involved, they are decided by this common judgment. 2. By way of these appeals, the appellants have challenged the judgment and order passed by the tribunal whereby the tribunal has allowed the appeals of the assessee, reversing the view taken by the Commissioner of Income Tax Jaipur-III, Jaipur vide judgment and order dated 30.09.2009 whereby the registration under Section 12A was rejected. 3. This court while admitting the appeal has framed the following substantial questions of law:- D.B. Income Tax Appeal No.224/2010 admitted on 13.12.2010:- (i) Whether granting registration to a private trust u/s. 12A was legal and proper especially when Sections 2(15),11, 12 Section 13 specifically restricts use and application of voluntarily contribution/income for the benefit of private person u/s.13(3)? (ii) Whether applications of Rajasthan Public Trust Act, 1959 can be applied to the private trust especially when they are covered by the Indi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to perjure themselves, if they could not establish their ownership over the endowment and its property, and derive the material benefit of getting its income. Such instances are not few. The richer the endowment, the greater the temptation to swallow the same. To such impious Pujaris, Managers and Mahants, nothing matters, consideration neither of this world nor the next, if they could only serve their selfish end. Such instances, justify the passing of and the utility of this Act. These days the Trusts and Temples have assumed great importance. This is because the State has thought it advisable to introduce legislation for the governance for safeguarding the interest of the beneficiaries and for avoiding the cases of magnificence and to check misappropriation and criminal breach of trust. As expressed by the late Hon ble Justice Chagle C.J. of Bombay, in his judgment that The whole attempt and the whole object is to see that the properties settled on public and charitable trusts are properly managed and are properly administered, that the trustees keep proper accounts that the trustees render those accounts, answer questions put to them arising out of those accounts and every ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e in The Trustees of Tribune Press, Lahore v. The Commissioner of Income-tax, Punjab, Lahore (1939) 2 M.L.J. 444 : L.R. 66 I.A. 241 : I.L.R. (1939) Lah. 475 (P.C.), has negatived this opinion, but we cannot read the judgment in that sense. The passage which has just been quoted from the judgment of the Privy Council speaks of the test of general public utility. As this is the test so far as the Indian Income-tax Act is concerned it is not necessary to consider whether the trust here would be deemed to be charitable in England. Even assuming that the Court may have regard to Muslim ideas in deciding whether a Muslim trust fulfils the test of general public utility, it cannot be said that that part of the trust deed which relates to the setting aside of income for the descendants of the donor constitutes a trust for general public utility. The beneficiaries are to be members of the donor's own family. The utility is not of a public, but clearly of a private nature. For these reasons we would answer the first question in the negative. The second question calls for no discussion. The position is that the muthavalli has in his hands income belonging to a private trust. Income of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it may be essential for other purposes as, for example, for the purpose of section 92 of the Code of Civil Procedure. What is eseential for the Income-tax Act is whether it enures to the benefit to the public or not, whoever may control the fund. Therefore, even if the funds are controlled by a body of persons which is not a public body in any sense, but if the fund enures to the benefit of the public , it wold still be charitable purpose within the meaning of the Income-tax Act. Therefore, it did not agree with the contention that because the control of the fund is not left to the public, it must be concluded that it is not a public charitable trust. The court held that it is not a condition essential for determining a charitable trust for the purposed of the Indian Income-tax Act. All that is required is that the fund is spent or accumulated for religious and charitable purposes. The Jodhpur Bench of ITAT in case of Smt. Mansukhi Devi Bihani Jan Hitkari Trust Vs. CIT 277 ITR 140 (AT) (Jodh.) after discussing the facts of the case observed that in the case before them, it is not in dispute that application for registration has been made in the prescribed form i.e. Form No. 10 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... himself about the genuineness of the activity of the trust and about the object of the trust. At this stage he is not required to ponder into the provisions of section 13. The applicability of section 13 is to be looked by the AO at the time of assessment. The ld.CIT has not brought on record any positive evidence that the activities of the trust are not genuine or the funds of the trust are not applied for its object. He only assumed that since the trusties are getting benefit by way of gujara bhatta and other facilities perpetually, the activities of the trust are not genuine. This can not be a reason for refusing the registration u/s 12AA. In case of Modern Defence Shishkan Sansthan Vs. CIT 108 TTJ 732 (Jodh.) it was held that at the stage of consideration of the issue of registration under section 12AA, it is not a sine qua non to examine the aspect of the application of income. When the Commissioner has not doubted the aims and objects of the society, he cannot throw away the application of registration on this pretext. In case of Dream Land Educational Trust Vs. CIT 109 TTJ (Asr.) 850, it was held that for grant of registration under section 12AA, only relevant consideratio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 394 (All HC). He has also relied upon para 5.2 of the Circular No.14/2015 (F.No.197/38/2015-ITA.I) dated 17.08.2005 which reads as under:- There is no provision under the Act which calls for denial of exemption merely on account of appointment or removal of trustees. Although answer to sucha situation would normally depend on the factual implication of such arrangement, the samej should generally not be a ground for denying exemption unless the nature of activities of the trust or institution get changed or modified or no longer remain to exist solely for educational purpose and not for purposes of profit . Hence denial of exemption would not be justifiable only on the ground of induction of new trustees or removal of existing ones. 12. We have heard counsel for the parties. 13. Before proceeding with the matter, it will not be out of place to mention here that in all the questions of law, the question which consideration before us is whether taking into account, the observations made in paragraph 10, the view taken by the tribunal is just and proper. At the time of registration, the authority is required to look whether it is registered under the state Act or under any ..... X X X X Extracts X X X X X X X X Extracts X X X X
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