TMI Blog2017 (7) TMI 1392X X X X Extracts X X X X X X X X Extracts X X X X ..... o be treated as donation of the said trust. For the above reason, we reject the contention of Ld.CIT(Exemptions) that since the donations were received from M/s Mata Narayan Kaur Charitable Trust, they make the activities of the assessee trust ingenuine. Author of the assessee trust is the sole trustee of the trust and since trust involves receipt and custody of money it has violated the provisions of Indian Trust Act, 1882 which requires the number of trustees to be atleast two in such cases - We find no merit in this contention of the Ld.CIT(Exemptions) also. Merely because the trust by virtue of clauses in the Trust Deed remain with a particular family has no reason to hold that it is a family trust for the benefit of particular family. Merely because the trusteeship remains with the particular family it does not mean that the trust is for the benefit of a particular family only. Trustees are only guardians of the trust and no benefit enures to them. In the absence of any finding by the Ld.CIT(Exemptions) that the benefits from the assessee trust accrue or arise to a family only, there is no merit in the finding of the Ld.CIT(Exemptions) that the assessee trust is family t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for seeking registration u/s 12A to the CIT(Exemptions). The Ld.CIT(Exemptions) observed that the assessee was an ongoing entity in operation since 23.12.2015. The CIT (Exemptions) also found that its stated objects were to provide medical relief by running hospitals, dispensaries, etc. and to promote education amongst the needy and economically weaker section of the society particularly amongst girls, widows and orphans, then to establish schools for employment generation for the weaker sections of the society and to advance any other objects related to or connected to the fulfillment of the above. Thereafter the Ld.CIT(Exemptions) issued notices to the assessee seeking clarification on various issues. Due reply was filed by the assessee. After considering the same Ld.CIT(Exemptions) concluded that the genuineness of the activities carried out by the assessee had not been established for the reason that; a) no corroborative evidence was filed by the assessee to prove whether the charitable activities carried by it were one off episodes or undertaken on a systematic basis involving the assessee s outreach in seeking out the needy as per its stated objects; b) despite the ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ributions received by the trust, as envisaged u/s 12 of the l.T. Act and whether any specific direction has been received by the persons making voluntary contributions. (iii) The originals of Trust Deed/Bye-laws of the trust along with the Registration Certificate. (iv) Copies of Bank Statements through which activities are being propagated. The receipts of the school and the different items of expenditure that are being claimed may be highlighted. (v) Complete details of the Donations received or intended to be received and documentary evidence as regards to Grants received. (vi) The copies of the I.T Returns filed since inception. (vii) Donations received under FCRA alongwith relevant details such as copy of the return for FCRA-and the copy of specified bank account. (viii) Details of corpus fund and whether the same are with any written specific directions. (ix) Details regarding charitable activities being conducted by the trust clarifying as to which specific limb under section u/s 2(15) of the I.T.Act the activities are being pursued. (x) Receipts and payment accounts of the trust since inception. (xi) Explanation if any exemption is already being c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .2016 submitted as under;- The rationale behind this transfer is that M/s Mata Narayan Kaur Charitable Trust, Ludhiana is 30 year old charitable trust and doing various chanties infield of medical and education etc, since then. It also enjoys exemption u/s 12AA of the Income Tax Act. Mr. Gurparshad Singh Grewal is a founder and sole trustee of this trust. His date of birth is 30.06.1931 and now he is 86 years old so due to his age he is not able to manage the affairs of the trust so in order carrying the same objects of charity a new trust i.e. M/s Har Nihal Charitable Trust has been created in which his wife Mrs. Sarbinder Grewal is a Managing Trustee. So this amount of ₹ 1,57,00,000/- has been transferred to M/s Har Nihal Charitable Trust to carry out same objects of M/s Mata Narayan Kaur Charitable Trust. With respect to the above no evidence has been adduced how the two trusts in contention had similar objects arid operations. If we go by the claimed activities of the applicant rust and draw analogy it would be safe to assume that the transferor trust also did not pursue its stated objects of opening hospitals, dispensaries etc and had accumulated over the years l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s may be specified by the Trust or the Board of Trustees as the case may be. Appointment of Trustees: (i) The Founder of this Trust shall be the first Sole Trustee of this Trust. She will hold the office for life or till she voluntarily resigns or otherwise ceases to be a Trustee under any of the provisions of law. (ii) In case of vacation of the office of the Sole Trustee by reason of death, incapacity or on account of any of the reasons (s) mentioned in clause (9) of this Trust Deed, her place as Sole Trustee will be taken by her daughter, Smt. Kushal Dhillon, who shall in that eventuality, be the sole Trustee for life or till she voluntarily resigns or otherwise ceases to be a Trustee under any of the provisions of law. (iii) In case Smt. Kushal Dhillon does not assume responsibility for any reason, whatsoever, in that eventuality Smt. Sarbrinder Grewal shall nominate any other person/ persons to be Trustee/Trustees. (iv) In case of vacation of the office of Trustee, for any reason whatsoever, by Smt. Sarbrinder Grewal and Smt.Kushal Dhillon, the Sole Trustee/Board of Trustees may with unanimous consent of all the Trustee, in case there are more than one Truste ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Exemption) vis- -vis contravention of the provisions of Indian Trust Act, 1882 by having sole trustee administering the trust which involved receipt and custody of money. 7. Having heard both the parties and having perused the order of the Ld.CIT(Exemption) and also documents placed before us, we find that the Ld.CIT(Exemption) had denied exemption for various reasons which according to him cumulatively led to the conclusion that the assessee trust was not genuinely involved for charitable activities though its objects appear to be charitable. We shall be dealing with each reason given by the Ld.CIT(Exemption) individually. 8. We shall first be taking up the reason pointed out by the Ld.CIT (Exemption) that the transfer of the funds from M/s Mata Narayan Kaur Charitable Trust to the assessee trust of ₹ 1.57 crores appear to be a method to transfer funds from a non functional trust headed by the husband to a trust headed by wife to preclude the possibility of the dissolution of the donor trust. During the course of proceedings before him the Ld.CIT (Exemption) had found that the assessee trust had received contribution of ₹ 1.57 crores from M/s Mata Narayan Kaur Ch ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r trust was also enjoying exemption u/s 12AA of the Act and any such donation made by a charitable trust are entitled to be treated as donation of the said trust. For the above reason, we reject the contention of Ld.CIT(Exemptions) that since the donations were received from M/s Mata Narayan Kaur Charitable Trust, they make the activities of the assessee trust ingenuine. 10. The next reason given by the Ld.CIT(Exemptions) is that the author of the assessee trust is the sole trustee of the trust and since trust involves receipt and custody of money it has violated the provisions of Indian Trust Act, 1882 which requires the number of trustees to be atleast two in such cases. 11. This contention of the Ld.CIT(Exemptions), we hold, is to be outrightly rejected, since the provisions of the Indian Trust Act, 1882 do not apply to charitable trusts at all. 12. Further, Ld.CIT(Exemptions) has held that clause of the Trust Deed of the assessee trust requiring the daughter of the sole trustee of the assessee trust to take her place in the eventuality of her vacating the office, shows that it is a family arrangement not intended for public benefit. 13. We find no merit in this cont ..... X X X X Extracts X X X X X X X X Extracts X X X X
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