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TMI Blog2019 (2) TMI 44X X X X Extracts X X X X X X X X Extracts X X X X ..... rtion from the tax net when the said interest which is received/accrued is being utilized for the attainment of the objectives of the trust and the Ld. CIT(E) has not disputed on any of the activities undertaken by the trust. 4. That the Ld. CIT(E) has ignored the fact that the original Trust Deed was also registered by the Sub-Registrar, Ludhiana and the same has not been disputed, but has questioned the authority of the Registering Officer in supplementary Trust Deed which is same as in original Trust Deed." 3. The brief facts of the case are that the Appellant is an ongoing entity and is in operation since 18.09.1979 duly registered under Society Registration Act and had filed an application on dated 14.10.2016 for registration u/s 12A of the Income Tax Act, 1961 (hereinafter called as the 'Act') before the Ld. CIT(E), Chandigarh, which was taken into consideration and opportunity of hearing was given to the Appellant on 17.04.2017, however, the same was not availed and sought adjournment, thereafter, the case was again re-fixed on 24.04.2017. The Ld. CIT(E) sought certain clarification/ documents from the Appellant as mentioned in para no.4 of the impugned order, in response ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be necessary and useful for the public. g) To grant aid for the construction, repair and maintenance of wells for the issue of the public. h) To construct public roads, parks and gardesn and/or maintain and/or grant aid for the construction or maintenance of or repair of the same for the use of the public. i) To help the people during natural calamites such as floods, famine, earthquake, fire, pestilence and other such occasions by opending of free kitchens, cheap canteens and by giving gifts and/or donations to the suffered people or institutions or any other monetary help in cash or in any other kind. j) To provide grants or money, food, medical books, agriculturist supplies and implements or otherwise to or for the benefit of persons or organizations who are either suffering or are pledged to fight hunger and disease. k) To purchases, store and maintain articles of furniture and utensils of general public utility and lend the same to the needy persons at the time of marriage and/or any other occasion. l) To grant aid to poor persons. m) To help or grant aid for such public charitable objects as the trustees in their discretion may think proper. n) To do all other ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d the money into building and running Dharmshala on rent which is Rs. 750/- per A.C Room. The Appellant has also booked its building for marriage and other functions, which are not covered under charitable purpose u/s 2(15) of the IT Act. Further financial statements do not confirm to the stated ostensible activities as claimed by the Appellant as the same is not supported by any evidence. We have perused the material placed on record inter alia the receipt of the Hall and Rooms booked by the Appellant, from which it clearly reflects that the Appellant is charging very nominal charges such as 11,000/- for one programme in Hall and Rs. 750/- for per room per day . From clause-'f' of objects of the trust deed, it reflects that trust is formed to establish or promote the establishment of and/or render aid to Dharamshala, Auditoriums, Prayer Homes, Musafarkhanas, Pravachan places and such other institutions which may be necessary and useful for the public. Further from clause-'d' of the objects, it reflects that the trust has been established to acquire, maintain and/or grant aid to hospitals, medical schools, Medicals Colleges, Nursing Institutions, Sanitariums, Trave ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... st deeds also do not have sanction of the competent court which invariably is the High Court wielding jurisdiction. Till such amendments are accepted by the competent Court the documents submitted to project that dissolution clause has been introduced, the same are not legally tenable. Further, the Ld. CIT(E) has observed that it is seen that a supplementary trust deed has been submitted to the Sub- Registrar, Ludhiana. Whether the same has been registered and whether the Sub-Registrar is competent to do the same in the case of public charitable trust, has not be evidenced. It is also confounding that eight trustees have been newly introduced in one go. The reasons espoused that it was to replace those who had died clearly are pointers towards a planning at this (despite its creation in 1979) to seek exemption. 4.6 Specific query was raised to the Ld. A.R., qua registration of the dissolution clause, introduction of new trustees and registration of supplementary trust deed, who although submitted some material downloaded from the internet but could not specify exact position, however Ld. DR Sh. Alok Kumar with all fairness, assisted the Court. 4.7 In this case, some of the truste ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... point a new trustee under section 73, the beneficiary may, without instituting a suit, apply by petition to a principal Civil Court of original jurisdiction for the appointment of a trustee or a new trustee, and the Court may appoint a trustee or a new trustee accordingly. Rule for selecting new trustees.-In appointing new trustees, the Court shall have regard (a) to the wishes of the author of the trust as expressed in, or to be inferred from, the instrument of trust; (b) to the wishes of the person, if any empowered to appoint new trustees; (c) to the question whether the appointment will promote or impede the execution of the trust; and (d) where there are more beneficiaries than one, to the interests of all such beneficiaries. 4.9 According to section 73 of the Indian Trusts Act, any person appointed a trustee disclaims, or any trustee, either original or substituted, dies, or is for a continuous period of six months, absent from [India] or leaves [India] for the purpose of residing abroad, or is declared an insolvent, or desires to be discharged from the trust, or refuses or becomes, in the opinion of a principal Civil Court of original jurisdiction, unfit or personally i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the board of trustees and therefore situation clearly seems to be covered by sub clause (a) of section 73 of the Indian Trusts Act and in our opinion there is no embargo and impediment in appointment of new trustees, except as specified in section 73 of the Act, which otherwise is not applicable to the instant case, hence we are of the considered view that new trustees have been appointed in accordance of law. 4.12 Now coming to second question qua registration of Supplementary Trust Deed dated 27-03-2014. Certain documents are compulsory required to be registered under section of the Indian Registration Act 1908. For the sake of clarity and ready reference the relevant provisions are reproduced herein: PART III OF REGISTRABLE DOCUMENTS 17. Documents of which registration is compulsory.- (1) The following documents shall be registered, if the property to which they relate is situate in a district in which, and if they have been executed on or after the date on which, Act No. XVI of 1864, or the Indian Registration Act, 1866 (20 of 1866), or the Indian Registration Act, 1871 (8 of 1871), or the Indian Registration Act, 1877 (3 of 1877), or this Act came or comes into force, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Indian Registration Act. 1908. Hence, we do not have any hesitation to held that the observation of the Ld. CIT(E) without specifying any provision of law, just mentioning that further, amendment of the trust deed on 27.03.2014 incorporating dissolution clause and at the same time introduction of new trustees are also reiteration of the motive of the applicant to seek registration under this section merely to save on taxes on interest income. The changes in the trust deed also do not have sanction of the competent Court which invariably is the High Court wielding jurisdiction. Till such amendments are accepted by the competent Court the documents submitted to project that dissolution clause has been introduced. However, the apparent reason why its case was dismissed earlier, the same are not legally tenable. It is seen that a supplementary trust deed has been submitted to the sub-registrar, Ludhiana. Whether the same has been registered and whether the Sub-Registrar is competent to do the same in the case of Public Charitable Trust has not been evidenced. The components of the trust deed (till the amendments are accepted by the competent Court) are held to be restrictive and to th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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