TMI Blog2023 (6) TMI 178X X X X Extracts X X X X X X X X Extracts X X X X ..... does not fall within the ambit of proviso to section 2(15) of the Act. Trust created for the purpose of discharging statutory obligations of another parent trust - Any trust that has been created for the purpose of managing the statutory obligations of employees of the parent trust would certainly fall within the ambit of advancement of general public utility and, hence, to be considered as a charitable activity as defined u/s 2(15) of the Act. We direct the ld.CIT(E) to grant registration u/s 12AA of the Act to the assessee trust. Accordingly, the grounds raised by the assessee are allowed. - ITA No.1201/Del/2022, ITA No.761/Del/2021 And ITA No.762/Del/2021 - - - Dated:- 1-6-2023 - Shri C.M. Garg, Judicial Member And Shri M. Balaganesh, Accountant Member For the Assessee : Shri Anand Chaudhuri, Advocate For the Revenue : Sh. Mohd. Gayasuddin Ansari,CIT,DR ORDER PER M. BALAGANESH, AM: These appeals by the above two assessees in ITAs No.1201/Del/2022, 762/Del/2021 and 761/Del/2021 for AYs 2018-19, 2020-21 and 2021-22 respectively are directed against the order of the Commissioner of Income Tax (Exemption), Delhi [hereinafter referred to as ld. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the assessee trust cannot be rejected merely on the ground that it is for the benefit of a restricted group of employees of the company ICRW . However, we find some merit in the argument of the Ld. DR that trust has been engaged in discharging the statutory obligation of the company ICRW of making gratuity payment to their employees. But in this regard the competent authority has not examined the activities actually carried out by the trust, sources of funds and how the same are distributed to the employees, whether by way of creating the trust, the company is getting some benefit of saving of money, whether any activity of welfare of the employees other than making gratuity payment has been carried out by the trust etc. The assessee has also not filed any information with regard to its activities before us. Therefore, examining those issues need enquiry at the end of the Ld.CIT(E). In view of the above facts and circumstances and the interest of substantial justice, we feel it appropriate to restore this issue back to the Ld. CIT(E) for re-examination of the application of the assessee trust as per the provisions of the law, in the light of the decision of the Hon ble Supreme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an agent to discharge the statutory liability of ICRW of making gratuity payment to its employees. 8. Further, the ld. CIT(E) observed that despite specific show-cause notice issued by him, the assessee trust had not furnished any documentary evidences indicating the purpose of formation of its trust and, ultimately, concluded that the assessee trust was formed only for the limited purpose of managing the statutory obligations in the form of gratuity payable to the employees of ICRW. Accordingly, he concluded that the said purpose would not fall within the ambit of charitable purpose as defined u/s 2(15) of the Act and dismissed the application seeking registration u/s 12AA of the Act. Aggrieved, the assessee is in appeal before us. 9. At the outset, we find that the observation of the ld.CIT(E) that no documentary evidences were furnished by the assessee trust to prove the purpose of its creation, its financial statements, etc., made by the ld.CIT(E) is factually incorrect and totally contradictory to the observations made in his own order in para 5. In para 5 of the impugned order, we find that the ld.CIT(E) had reproduced the reply given by the assessee in response to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t by the assessee is a charitable activity as per section 2(15) of the Act. It is not in dispute that the assessee s case does not fall within the ambit of proviso to section 2(15) of the Act, which provides a restriction, if the charitable purpose is not for advancement of general public utility. Hence, the assessee s case does not fall within the ambit of proviso to section 2(15) of the Act. 11. In respect of another observation made by the ld.CIT(E) that any trust that has been created for the purpose of discharging statutory obligations of another parent trust could not be considered as a charitable purpose within the meaning of section 2(15) of the Act, we find that this issue has been addressed by the Hon ble Supreme Court in the case of ACIT (Exemption) vs. Ahmedabad Urban Development Authority Ors in Civil Appeal No.21762 of 2017 dated 19.10.2022 wherein the Hon ble Apex Court in respect of appeal in the case of Institute of Chartered Accountants of India (ICAI) had held as under:- 194. The Institute is a creature of the Institute of Chartered Accountants Act, 1949. By Section 4 of this Act, every person who qualifies in the examination conducted by the Institute ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Having regard to the previous discussion on the nature of charities and what constitutes activities in the nature of trade, business or commerce , the functions of the Institute ipso facto does not fall within the description of such prohibited activities . The fees charged by the Institute and the manner of its utilisation are entirely controlled by law. Furthermore, the material on record shows that the amounts received by it are not towards providing any commercial service or business but are essential for the providing of service to the society and the general public. 196. Similarly, there are several other regulatory bodies that discharge functions which are otherwise within the domain of the State. A singular characteristic of ICAI and other statutory bodies which can be said to regulate specific functions and professions (including the profession of Cost and Work Accountants, and Company Secretary, etc.) is the powers conferred upon them by the statutes to prescribe standards and enforce them through disciplinary sanctions. Therefore, it is held that bodies which regulate professions and are created by or under statutes which are enjoined to prescribe compulsory cou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... isions of the Maharashtra Private Security Guards (Regulation of Employment and Welfare) Act, 1981 that the said legislation is intended to regulate the employment of private security guards employed in factories and establishments in the State of Maharashtra for making better provisions in the terms and conditions of their employment and welfare through the establishment of the Boards. The applicant Board before us is with regard to the Nashik District in Maharashtra. The Maharashtra Private Security Guards (Regulation of Employment and Welfare) Act, 1981 further prescribes that the State Government by means of a scheme provide for the registration of the employers and security guards. The said statue also provides for deciding the rate of services, payment, overtime payment, leave with wages, gratuity, etc.. The statute also provides for deciding the time within which should be registered principal employer are to remit the wages payable to the registered security guards. The statute also provides for constitution of any fund or funds including, Provident Fund for the security guards. The statute also provides for the scheme by which the cost of operating the scheme is to be defr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reinabove in the previous year. The decision rendered by us hereinabove shall apply mutatis mutandis to this appeal also. In any case, the registration u/s 12AA of the Act granted to the assessee for AY 2018-19 shall be applicable for AY 2021-22 also. Accordingly, the grounds raised by the assessee in ITA No.761/Del/2021 are allowed. 17. In the result, the appeal of the assessee in ITA No.761/Del/2021 is allowed. ITA No.762/Del/2021 for AY 2020-21 (ICLEI South Asia Group Gratuity Trust) 18. The facts and discussions made by us in ITA No.761/Del/2021 for AY 2021-22 in the case of ICRW Group Gratuity Trust (supra) are exactly identical with the facts of this appeal also, save that, this assessee trust has been created for the purpose of managing the statutory obligations in the form of gratuity payable to the employees of ICLEI instead of ICRW. Hence, the decision rendered by us hereinabove for ICRW Group Gratuity Trust in ITA No.761/Del/2021 shall apply mutatis mutandis to this appeal also. Accordingly, the grounds raised by the assessee in ITA No.762/Del/2021 are allowed. 19. In the result, the appeal of the assessee in ITA No.762/Del/2021 is allowed. 20. To sum ..... X X X X Extracts X X X X X X X X Extracts X X X X
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