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TMI Blog2018 (12) TMI 1552X X X X Extracts X X X X X X X X Extracts X X X X ..... d has been in operation for nearly 40 years. The appellant-society filed application before the CIT (E) for registration u/s 12A of the Act so as to be able to claim exemption u/s 11 of the Income-tax Act, 1961 (in short 'the Act'). It has been further submitted by the Ld. Counsel for the assessee that the Ld. CIT(E) rejected the application of the appellant assessee mainly for the reason that there was no dissolution clause in the Memorandum of Association ('MOA') / Trust Deed of the appellant assessee. The Ld. CIT(E) observed that in case of trust / society established for charitable or religious purposes, the income or any property of such trust or institution should be applied for such purposes only and that no part of income or any property of trust or the society should be used or applied directly or indirectly for the benefit of any person referred to in sub section (3) of section 13 i.e. the author of the trust or founder of the institution, any family member of such author or founder, any trustee of the trust or manager of the institution, any relative of such author or founder person or member trustee or manager and even any concern in which any of such person has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... H.No. 60, Sector -5, Chandigarh No. SDA.MOA/2018 05 Feb 2018 To The Registrar, Registrar of Firms& Societies Punjab, Sectro 17, Chandigarh Sub:- ADDITON/ AMENDMENT TO "MEMORANDUM OF ASSOCATION" SRI DASMESH ACADEMY TRUST 1. Reference discussion held in your office in Jan 2018 on the subject 2. Following Registers containing Minutes of Board of Governess Meeting held since 1978 onwards are sent herewith addition desire:- 3. (a) Registrar containing Board of Governors Meeting from Ser No. 01 to 06. (b)Register containing Board of Governors Meeting from Ser No.07 to 19. 2. Last Meeting of Board of Governors was held on 15 May 2007 (MS-3) 3. Term of "Board of Governors was NOT extended further by the Members of the Dasmesh Trust. 4. During the meeting of Member of Sri Dasmesh Academy Trust held on 17 July 2017, under the Chairmanship of Sardar Parkash Singh Badal, it was decided to Add the amendment to Memorandum of Association vide Sub Hed (Item No. III) of the Minutes, Copy of Minutes are enclosed. 5. Copy of letter signed by Sardar Parkash Singh Badal for obtaining approval of Amended Memorandum of Association, along with its enclosure are f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ortgages, promissory notes or other obligations or securities founded or based upon all or any of the properties and assets of the Trust or without any securities and upon such terms and conditions as they may think fit; (xi) to make, draw, accept, endorse and negotiate the Central Government and other promissory notes, bills, cheques or other negotiable instruments; (xii) to invest the funds of the Trust in or upon such securities as they may deem fit and from time to time transpose any investment (xiii) To make such rules and bye-laws as they may from time to time, consider to be necessary for regulating the management of the Academy and the affairs of the Trust; (xiv) to delegate all or any of its powers to the Governing Body or to anyone or more members of its body of its officers; and (xv) to do all such other sets and things as may be requisite in order to further the objects of the Trust. (xvi) if upon winding up or dissolution of the Trust the remains after the satisfaction of all its debts and liabilities, any property whatsoever, the same shall not be paid to or distributed among the members of the society but shall be transferred to the Punjab Governmen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e the several persons, whose signatures, occupations and addresses are given hereunder, are desirous of being formed into an Association in accordance with the provisions of the Societies Registration Act, 1980, in pursuance of this Memorandum of Association and in testimony of this, we have subscribed our respective names and signatures hereto on the day of August in the year 2017 at Chandigarh. 1. S.Parkash Singh Badal Son of late S. Raghuraj Singh Vill & PO Badal Distt. Muktsar to generate Signature digitally. 2. S. Surjit Singh Rakhra S/o Sh. Kartar Singh Rakhra Palace, Patiala to generate Signature digitally. 3. S. Balwinder Singh Bhundar, M.P Kothi No. 256, Sector 11-A Chandigarh to generate Signature digitally. 4. Air Marshal Manmohan Singh (Retd.) PVAS,AVSM,-Vr C S/o S.Iqbal Singh Kothi No. 198, Sector 18 A Chandigarh to generate Signature digitally. 5. GP Capt Amarjeet Singh Grewal, FRGS (Retd) S/O S. Dalip Singh H.No.5782, Duplex Modern Hous ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rh 9. Surprisingly, the said 'MOA,' whereby, the four persons as mentioned above have been decided to be admitted as members of the trust and who have put their signatures against their names conveying their consent for admitting them to membership of Trust, are themselves signatory of the said amended resolution. The fact on the file revels that the said resolution is not a valid resolution as the persons who were proposed to admitted as members of the trust are themselves signatory of the amended 'MOA' making whole of the documents as invalid and illegal. 10. Now coming to the original Memorandum of Association (MOA) of dated 17.02.1978, Clause 4 (e) of the 'MOA', speaks about the first members of the Governing Body to whom the management of the affairs of the trust is entrusted. The said original 'MOA' is reproduced as under:- "MEMORANDUM OF ASSOCAITION 1. The name of Society is "Sri Dashmesh Trust" hereinafter for the sake of brevity referred to as "The Trust" 2. The Objects for which the Trust is established are to set up and carry on the administration and management of an academic institution at Anandpur Sahib to be known as 'Sri Dashmesh Academy' hereinafter called ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... powers to the Governing body or to anyone or more members of the its body or its officers; and xv) to do all such other acts and things as may be requisite in order to further the objects of the Trust. 4 (a) the signatories to this Memoraudum of Association may admit to the membership of the Trust the following persons subject to their agreeing in writing to joint the membership of the Trust:- 1. Col P.S.Gill, Ltd. Governor, GOA, Panaji 2 Air Chief Marshal Arjan Singh, 7-A, Kauthilya Marge New Delhi 3. Shri Yagya Datt Sharma, M.P. 30, Dr.Rajendra Prasad Road, New Delhi 2. Maj.Gen A.K.Luthra, 52, Sector 4, Chandigarh (b) in the event of any vacancy arising in the membership of the Trust, due to any cause whatsoever, the remaining members may supply the vacancy by Co-opting any persons who may agree in writing to join the membership of the trust. c) One of the members of the Trust may be appointed to be an Honorary Secretary of the Trust. d) The Trust will be Supreme body for regulating the affairs of the Academy. (e) The name and addressees and occupations of the first members of the Governing body to which the rule of the Trust, the ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... members from amongst the Trustees to be elected by themselves Members Sd/ 3. Principal and Director of the Academy Member Secretary Sd/ 4. Secretary to the Government of Punjab, Education Department Ex-official member Sd/ 5. Secretary to the Government of Punjab, Finance Department -do- Sd/ 6. Secretary to Government of Punjab, Defence Service Welfare Department -do- Sd/ 7. Two eminent educationists to be nominated by the Trust Co-opted member Sd/ 8. One member to be nominated by the Punjab Defence and Scrutiny Relief Fund Committee. Nominated Member Sd/ 9. Member Secretary of the Trust ex officio Member Sd/ (b) The Chief Minister of the Punjab shall be Ex-officio Chairman of the Board and the Principal and Director of Sri Dashmesh Academy shall be ex-officio Member Secretary of the Board. c) The term of the Board shall be three years (d) The seat of a nominated Member of the Board shall become vacant if he / she dies. Resigns, become of unsound mind, is declared insolvent, is convicted of criminal offence, involving moral turpitude, ceases to be a member of the committee/trust accepts any paid job or office of profit in the Academy or enters int ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... responsible for the Academic Wing including its administration and shall deal with the Board of Governors for the said purpose. (c) The Member Secretaries shall be responsible for ensuring that all moneys are expanded on the purpose of which they are granted or allotted. (d) They shall prepare and submit to the Trust and the Board for their approval, annual statement of the accounts and budget estimates; (e) They shall keep the record of the meeting of the Trust and the Board. (f) They shall exercise such powers and perform such duties as may be delegated agreed or assigned to them by the Trust and the Board either generally or specifically. MEETING OF THE BOARD OF GOVERNORS (8) (a) The Board shall meet at least thrice a year and a copy of the proceedings of each meeting shall be furnished to the Chairman as soon as possible after the meeting. (b) The quorum of the meeting of the board will be five. (c) The Chairman, if present, shall preside over the meeting of the Board and in his absence, the members present shall elect one from amongst themselves to preside. SUITS BY OR AGAISNT THE TRUST 9. All suits, complaints and applications by the Trust in an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hich means that the Chairman of the Governing Body / Board of Governors has to be a person who is the serving / present Chief Minister of Punjab and not to be a private person in his individual name or capacity. 13. Even as per amended regulation attached with the original Memorandum of Association 1978, it has been resolved that the management of the affairs of 'Sri Dashmesh Academy Trust' shall be entrusted to Board of Governors whose Chairman will be the Chief Minister of Punjab and further that other ex.officio officers of the Government as mentioned above, will also be part of the Board of Governors. However, a perusal of the letter dated 5.2.2018 addressed to the Registrar of Firms and Societies, Punjab (as reproduced in earlier para) reveals that the last Meeting of the Board of Governors was held on 15.5.2017 and that the term of Board of Governors was not extended further by Members of 'Sri Dashmesh Academy Trust', which means that the members of the assessee trust have conveniently stepped back and stopped entrusting the management affairs of the trust to the Governing body as against object clause mentioned in the original 'MOA' as well as alleged amended 'MOA' of the y ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2017 The Asstt. Commissioner of Income Tax (Exemptions) CHANDIGARH Re : Application u/s 12AA of Income Tax Act In the case of _Sri Dasmesh Academy Trust Dear Maam', This refers to your letter F. No. CIT(E)/CHD/12AA/2017-18/1491 dated 02.06.2017 on the above captioned subject. The parawise reply of the same as under:- 1. The assesses owns land and building, the Govt. of Punjab allotted the land by a special Gazette Notification, copy attached as Annexure 'A'. 2. The Sri Dashmesh Academy Trust was formed by Ministry of Defence and Govt. of Punjab to educate the children of serving and Ex-defence personnels and the poor children of the area. 3. The copy of Memorandum of Association along with its registration has already been placed on record earlier. 4. The copies of the bank statement are attached as Annexure 'B'. All the payment relates to the direct expenditure made for running the school 5. The trust receives the grants from Punjab Govt. and Ministry of Defence as per the specific requirement from time to time. 6. The copies of Income Tax returns for the last three assessment years are attached as Annexure 'C'. The assesses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... paid as per the CBSE guidelines. 5. The trust/society runs a school from 3rd class to +2 level with the facility of hostel and day boarding for the defence people and the poor students of the area. The concessional fee is charged to all the deserving and poor students. The school is open to all the applicants/students desirous to be claimants under the RTE Act. 6. The assessee is claiming deduction u/s 10(23) (iiiab) of Income Tax Act as the entire capital cost (100%) of the school / academy has been met by the Ministry of Defence and the Govt of Punjab. Further they regularly send the grants for all specific needs to meet the capital or revenue expenditure. The trust has not been accepting any grants or donations from the other parties except at one time SGPC had sent certain grant for specific capital expenditure. Since the trust is substantially finance by the Central & State Governments thus being eligible for the said deductions. Further I wish to add that there were two income tax assessments u/s 143(3) where the deduction has been allowed u/s 10(23) (iiiab) of Income Tax Act. 7. The Memorandum of the trust incorporated in financial year 197778 and there was no spec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... who are government officials of high rank of Secretary to the government of Punjab like, three Administrative Secretaries of Punjab Government (Education, Finance & Defence) etc. It had always been represented as a Government organization however, after accumulating land and building and funds from the State and Central Government, the members of the trust conveniently captured the control of the trust by not further extending the term of Board of Governors, clearly against the objects of 'MOA' of 1978 as well as the amended regulation attached with it and even against the alleged amended 'MOA' of 2017. 15. It is pertinent to mention here that as on the date, Sardar Parkash Singh Badal is not the Chief Minister of Punjab. In fact Caption Amrinder Singh has assumed the office of Chief Minister of Punjab on 16.3.2017 and he is supposed to preside over the meeting of the Board of Governors. Further, as per clause 4(e) of the original' MOA' as well as amended 'MOA', the governing body to which management of the affairs of the trust are entrusted has to be constituted has to include one member to be nominated by Punjab Defence and Security Relief Fund Committee, three Administrative S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... trust, the facts speak that the trust has been supposed to be governed by the officials of the Government under the Chairmanship of Chief Minister of Punjab as pleaded by the assessee society, itself, before the CIT(E) but has now given its control to the private persons who are no more in the Government. This fact has been conveniently concealed from the CIT(E) that the term of Board of Governors has not been extended since 15.5.2007 and that after year 2007, there is no control of the Government or any official of the Government on the trust after the year 2007 and that the Members of the trust, who are private persons, themselves have established control over the Trust. A totally false and wrong pleadings have been made by the assessee Trust before the Income Tax Authorities that it is a Government controlled organization . The facts on the file speaks that the trustees in violation of the 'MOA' and 'Regulations' of the trust have shifted control & management of the Trust from the state and central government officials unto themselves. Under the circumstances, the Ld. CIT(E) had a valid and reasonable apprehension that in case of dissolution, the properties of the trust, which a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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