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TMI Blog2025 (3) TMI 351X X X X Extracts X X X X X X X X Extracts X X X X ..... . That the Ld. CIT Exemption has grossly erred in law in denying the registration without appreciating that the objects of the trust are charitable u/s 2(15) of the Income Tax Act, 1961. 4. That the Ld. CIT Exemption erred in law in holding that trust has no "dissolution clause" in trust deed although trustees had powers to dissolve the trust in the trust deed which meets such requirement. 5. That the Ld. CIT Exemption failed to appreciate that charity (i.e. Medical Relief and Education) to the families and children of ex-employees also amounts to charity to public. 6. That the appellant craves leave to add, amend, alter, change vary or substitute any of the aforesaid grounds or raise an additional ground if it becomes necessary to do so in the interest of justice. 7. That each ground of appeal is independent and without prejudice to other grounds of appeal raised herein." 3. Brief facts of the case are that, the Appellant filed an application in Form No. 10AB on 29/09/2022 seeking registration under Sub Clause (iii) of Clause (ac) of Sub Section (1) of Section 12A of the Income Tax Act, 1961 ('Act' for short), which has been rejected vide order dated 29/03/2023. Aggrieved ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... own employees, ex-employees and their family members, which shows that it is not a public charitable trust. (2) There is no dissolution clause in the trust deed, the net asset of the trust in case of dissolution can be transferred to any other entity. 7. For the purpose of adjudicating above controversy, the objects of the trust deed are to be verified. The Clause 4 of the trust deed deals with the object of the trust which reads as under: "4. The principal objective of Radisson India Charitable Foundation a. The Principal objective of Radisson India Charitable Foundation shall be Follows: b. promoting education directly or indirectly, including special education and employment enhancing vocation skills, promoting education directly or indirectly, including special education and employment enhancing vocation skills especially among children, women, elderly and the differently abled; C promoting livelihood enhancement projects, d. eradicating hunger, poverty, and malnutrition including by providing financial assistance by way of school fee, scholarships to needy children and providing financial help in obtaining healthcare facilities and medical facilities; e. promoting ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e point. It was, however, observed that the section of the community sought to be benefitted must be sufficiently defined and identifiable by some common quality of a public or impersonal nature. Where there was no common quality uniting the potential beneficiaries into a class the trust might not be regarded as valid. In the various orders the clause relating to the beneficiaries has not been clearly and accurately set out. In the petition of appeal dated October 7, 1968 the provisions of the constitution of the assessee are set out and with reference to The community it is stated, "Rana community means natives of Ahmedabad only and the other community brothers accepted by the community as per old rules of the community staying in Ahmedabad". It is common ground that the word " old rules" do not represent the correct translation of the original word in Gujarati which is Riwaj meaning custom. The learned judges of the High Court also, who are conversant with that language, have proceeded on the basis that the correct rendering of the aforesaid word is custom or usage. That is why according to the High Court the definition comprises two classes of members of Rana caste residing in A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d. The common quality, therefore, uniting the potential beneficiaries into the class consists of being members of the Rana caste or community of Ahmedabad whether as natives or as being admitted to that caste or community under custom or usage. The mere fact that a person of the Rana community who is not an original native of Ahmedabad has to prove his credentials according to the custom and usage of that community to get admitted into that community cannot introduce a personal element. In Oppenheim v. Tobacco Securities Trust Co. Ltd. & Others(1) the trustees were directed to apply certain income in providing for the education of children of employees or "former employees" of a British limited company or any of its subsidiary or allied companies. It was held by the House of Lords by a majority that though the group of persons indicated was numerous, the nexus between them was employment by particular employers and accordingly the trust did not satisfy the test of public (1) [1945] Ch. 123. (3) [1951] A.C. 297. (2) 27 T.C. 431. 75O benefit requisite to establish it as charitable. This is what Lord Simonds observed - "A group of persons relationship which takes a group nex ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of deceased employees. Even otherwise, the ratio laid down by the Hon'ble Supreme Court in the case of Ahmedabad Rana Caste Association (supra) and Harilal Bhagwati Vs. CIT(2000) 246 ITR 188 are applicable to the case in hand. Thus, in our opinion, the Ld. CIT(E) committed error in holding that 'the activities of the appellant are restricted only to family members of the ex- employees, thus, the Assessee is not a 'public charitable Trust'. 11. Another reason for rejecting the registration is that there is no dissolution clause in the trust deed of the Assessee. We have gone through the trust deed, wherein in the Clause of 'power of trustees', it is mentioned as under: - "1. The Trustees shall have the following powers: (a) To start, abolish, discontinue, and restart any charity/charitable organization or institution for the benefit of the general public and impose conditions to its subscription or donations made therein. (h) To transfer and hand over the Trust to any other trust/society/association/institution on such terms and conditions as the Trustees shall in their absolute discretion think fit and proper." 12. From the plain reading of the above Clauses, though the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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