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TMI Blog2018 (10) TMI 787X X X X Extracts X X X X X X X X Extracts X X X X ..... Shri Satish Kumar in favour of five trustees. The main objects of the Trust as given in the deed are as under: - Main objects of the Trust are: In furtherance, but not in limitation, of the foregoing charitable and educational purposes, the Trust shall: (1) be dedicated to promoting and improving emergency medicine and care on a global basis through advocacy, training, and education of physicians and allied health care personnel internationally; (2) alone or in cooperation with other foundations, institutions, associations and other organizations, conduct any and all activities and do any and all acts and things which may be necessary, useful, suitable or proper in connection with or for the furtherance, accomplishment or attainment of such charitable and educational purposes as are lawful for a Trust formed under the Indian laws; (3) to solicit, collect, accept, hold, invest, reinvest and administer any gifts, grants, bequests, devises, benefits of trusts and property of any sort, without limitation as to value or amount, for such Charitable Purposes, and make grants and contributions of income and principal as the Board of Trustees may from time to time determine, to in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... management structure, including subsidiary units as necessary. (17) Create assets and transport facilities to accommodate any of the above activities. 3. The Trust was stated to be established for the benefit of humanity at large and class of people mentioned above without discrimination of caste, religion, creed or sex. Looking to its objects which was charitable in nature, trust has applied for registration u/s.12AA before the ld. CIT(E) vide application dated 26.03.2015 and also application for exemption u/s.80G. 4. Ld. CIT (E) on the perusal of the Trust deed noted that there were five initial trustees, and all were Non-Resident Indian, i.e., who have taken the citizenship of the foreign country. According to ld. CIT (E) in terms of Explanation-1 to Section 60 and Section 73 of the "The Indian Trust Act" a non-resident cannot be a trustee of an Indian resident trust unless he is domiciled in India. Based on this reasoning, he has rejected the assessee's application for grant of registration u/s.12AA and application for exemption u/s.80G. The relevant observation of the ld. CIT(E) reads as under: "3. In this connection, it is pertinent to mention that Explanation 1 to 60 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on u/s.12A, wherein one, Mr. Milakh Raj Arora who was ordinary resident of India was residing in Ludhiana, Punjab on permanent basis and has replaced by one of the non-Indian trustees. The list of the trustees was also enclosed along with copy of 'Form 10A' filed before the ld. CIT (E) duly signed by Mr. Milakh Raj Arora. Thus, he submitted that Explanation-1 to Section 60 of the Indian Trust Act does not apply in the present case, as one of the trustees is ordinary resident and Indian citizen. He further submitted that Section 12AA requires that ld. CIT(E) has to satisfy himself about the objects which should be in the nature of 'charitable purposes' and also about the genuineness of the activities of the Trust. There is no adverse finding or opinion of the ld. CIT(E) on the objects, therefore, registration cannot be cancelled. In support, he strongly relied upon the decision of ITAT Jaipur Bench in the case of Sidha Sthan Shri Kapleshwar Mahadev Sanyas Ashram Trust vs. CIT(E), ITA Nos.655 & 656/JP/2017 dated 28th September 2007, (2018) 162 DTR (JP) (Trib) 202. He further submitted that all the other trustees otherwise were basically from Indian origin and their parents were stayi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... trustees from the date of the creation of the trust. Illustrations (a) A bequeaths certain property to B and C, his executors, as trustees for D.B. and C Prove A's will. This is in itself an acceptance of the trust, and B and C hold the property in trust for D. (b) A transfers certain property to B in trust to sell it and to pay out of the proceeds A's debts. B accepts the trust and sells the property. So far as regards B, a trust of the proceeds is created for A's creditors. (c) A bequeaths a lakh of rupees to B upon certain trusts and appoints him his executors. B serves the lakh from the general assets and appropriates it to the specific purpose. This is an acceptance of the trust." 8.1 The aforesaid section clearly provides that every person capable of holding property may be a trustee, but where trust involves the exercise of discretion, he (trustee) cannot execute it unless he is competent to contract. Thus, a person who may be trustee must be capable of holding a property of which the Trust is declared and must be competent to deal with the property as required by the Trust or as directed by the beneficiaries. The Ld. CIT (E) in his order has also mentioned that under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... estator, and those relative to a continuing trustee include a refusing or retiring trustee if willing to act in the execution of the power." Section 73 thus, deals with the appointment of a new trustee on death, or is absent from India for the period of more than 6 months or domiciled outside India, etc. This section merely provides that a new trustee may be unfit to be appointed in case the said person is domiciled abroad for a period of six months continuously; or leaves India for the purpose of residing abroad, etc. In such a case, it is considered that there is a personal incapacity to act in a Trust by such person. This inter-alia means that he is considered to be unfit for the office of the trustee and the said section presume that vacancy has occurred and the provision authorizes the appointment of a new trustee in his/her place. This provision also does not forbid the appointment of NRI, albeit acts as an impediment to their appointment. Section 73 per se cannot invalidate a Trust, but rather provides bar for appointment of non-resident as a trustee. 8.3 Similarly, Section 60 r.w.s. Explanation-1 of the Indian Trust Act reads as under: - "60. The beneficiary has a right ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... refore, it cannot be held that simply because other four trustees were non-resident and the assessee trust is not a valid trust. We accordingly, hold that assessee is a valid trust under the Indian Trust Act, 1882. 10. Now coming to the 'objects' as given in the 'Trust Deed', prima facie, it appears that all the objects are ostensibly for the charitable purposes. However, the ld. CIT(E) has not examined the objects and the genuineness of the activities of the assessee trust which is required to be examined while considering the registration u/s 12AA, and therefore, in all fitness of mater, we deem it proper that this matter of registration should be restored back to the file of the ld. CIT(E) who shall examine the 'objects' of the Trust as well as genuineness of its activities; and if the assessee trust's 'objects' are charitable and is actually carrying out charitable activities for the benefit of public at large, then registration u/s.12AA should be granted. Consequently, the application for exemption u/s.80G should also be examined in that light. With this direction, appeal of the assessee is treated as allowed for statistical purpose. 11. In the result, the appeal of the ass ..... X X X X Extracts X X X X X X X X Extracts X X X X
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