Smt. Shanti Devi Educational Trust, Rewari v. CIT, Rohtak

ITA 4439/DEL/2010 | misc
Pronouncement Date: 29-02-2012 | Result: Allowed

Appeal Details

RSA Number 443920114 RSA 2010
Bench Delhi
Appeal Number ITA 4439/DEL/2010
Duration Of Justice 1 year(s) 4 month(s) 24 day(s)
Appellant Smt. Shanti Devi Educational Trust, Rewari
Respondent CIT, Rohtak
Appeal Type Income Tax Appeal
Pronouncement Date 29-02-2012
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted G
Tribunal Order Date 29-02-2012
Date Of Final Hearing 23-02-2012
Next Hearing Date 23-02-2012
Assessment Year misc
Appeal Filed On 05-10-2010
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH :G : NEW DELHI BEFORE SHRI I.P. BANSAL JUDICIAL MEMBER AND SHRI B.C. MEENA ACCOUNTANT MEMBER ITA NO.4439/DEL/2010 ASSESSMENT YEAR : - SHANTI DEVI EDUCATIONAL TRUST 315-L MODEL TOWN REWARI. VS. CIT AAYAKAR BHAWAN OPP. MANSAROVER PARK ROHTAK. (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI VED JAIN CA MS RANO JAIN CA & SHRI V. MOHAN CA REVENUE BY : SHRI D.K. MISHRA CIT DR ORDER PER I.P. BANSAL JUDICIAL MEMBER THIS IS AN APPEAL FILED BY THE ASSESSEE. IT IS DIRECTED AGAINST THE ORDER PASSED BY THE CIT ROHTAK UNDER THE PROVISIONS O F SECTION 12AA (1) (B) (II) OF THE INCOME TAX ACT 1961 (THE ACT). THE GROUNDS OF APPEAL READ AS UNDER:- 1. THAT IN THE FACTS AND CIRCUMSTANCES OF THE CASE THE L EARNED CIT ERRED IN NOT APPRECIATING THE GENUINENESS OF THE OB JECTS AND ACTIVITIES OF THE APPELLANT TRUST AND REFUSING REGISTRATION U/S 12AA (1)(B)(II). 2. THAT THE APPELLANT CRAVES LEAVE TO ADD OR AMEND THE G ROUNDS OF APPEAL. 2. AN APPLICATION FOR REGISTRATION U/S 12A(1)(AA) WAS FILED IN FORM NO.10 ON 1 ST FEBRUARY 2010 WHICH WAS ACCOMPANIED BY TRUST DEED DATED 2 ND JUNE 2006 AS AMENDED BY SUPPLEMENTARY DEED DATED 2 ND JANUARY 2010 COPY OF MINUTES OF MEETING COPY OF P AN AND TAN ITA NO.4439/DEL/2010 2 INCOME AND EXPENDITURE RECEIPT AND PAYMENT ACCOUNT AND THE BALANCE SHEET OF THE TRUST ALONG WITH THE AUDIT REPOR T IN FORM NO.10B FOR FINANCIAL YEAR 2007-08 2008-09 AND THE COPIES O F INCOME-TAX RETURN OF FINANCIAL YEAR 2007-08 AND 2008-09. THE NOTICES WERE ISSUED TO THE ASSESSEE SEEKING CERTAIN DETAILS AND THESE NOTICES W ERE COMPLIED WITH. THE GRANT OF REGISTRATION HAS BEEN RE FUSED BY LEARNED CIT (A) ON THE FOLLOWING GROUNDS:- I) ALL THE TRUSTEES OF THE TRUST BELONGED TO THE SAME FAMILY THEREBY CLOSELY RELATED TO EACH OTHER; II) EVEN AFTER AMENDMENT IN THE TRUST DEED ALL THE PROPERTIES OF THE TRUST AS WELL AS ABSOLUTE FINANCIAL CONTROL REMAINED IN THE HANDS OF THE FIVE TRUSTEES AND ALSO THE CRUCIAL POWER TO TRANSFER THE ASSETS OF THE TRU ST TO ANY OR MANY MEMBERS OF THE BOARD OF TRUSTEES WHICH PERMITS THE TRUSTEES TO GET THE PROPERTY OF THE TRUST I N QUESTION TRANSFERRED IN THEIR NAME; III) IN CASE OF TRANSFER OF ANY OF THE LEASED ASSET BACK TO ITS OWNER IT IS NOT CLEAR THAT WHETHER ANY COMPENSATION OR CONSIDERATION WILL BE OBTAINED BY THE TRUST FROM ITS OWNER. IV) THE DONATED LAND TRANSFERRED BY THE TRUSTEE HAS BE EN ENTERED INTO THE BOOKS OF ACCOUNT OF THE TRUST AT A WHOPPING VALUE OF ` 1 CRORE AND IF THE TRUST BUILD S BUILDING UPON THAT LAND THE SAME WILL BE TRANSFERRED TO THE TRUST LATER ON WITHOUT ABSOLUTE BEFITTING CONSIDERATION AS WELL AS COMPENSATION WHICH CAN CAUSE UNDUE BENEFIT TO THE TRUSTEES AND WILL DEFEAT THE VER Y BASIS OF THE CHARITABLE NATURE OF THE TRUST WHICH ARE ENUMERATED IN THE TRUST DEED AT LENGTH. ITA NO.4439/DEL/2010 3 V) THE PERCENTAGE OF PROFIT OF ANNUAL RECEIPT FOR T HE ASSESSMENT YEAR 2009-10 IS 23%. VI) THE CORPUS OF THE TRUST IN QUESTION HAS INCREASED FR OM 1.15 CRORE IN FINANCIAL YEAR 2006-07 TO 2.24 CRORE IN FINANCIAL YEAR 2008-09 AND THE SOURCE OF DONATION IS FROM AGRICULTURISTS THE GENUINENESS OF WHICH IS IN SERIOUS DOUBT. 3. TAKING INTO CONSIDERATION THE AFOREMENTIONED FACT S LD. CIT HAS DENIED THE GRANT OF REGISTRATION AGAINST WHICH THE ASSE SSEE IS AGGRIEVED HENCE IN APPEAL. THE LEARNED AR AFTER NARRATING THE FACTS CARRIED US THROUGH THE PROVISIONS OF THE TRUST DEED TH E ENGLISH TRANSLATION OF WHICH IS PLACED AT PAGES 7-12 OF THE PA PER BOOK. HE SUBMITTED THAT THE TRUST DEED ORIGINALLY WAS EXECUTED ON 2 ND JUNE 2006 BY SMT. SHAKUNTALA YADAV W/O SHRI AJAY SINGH YADAV BY THE DONATION OF ` 5 100/- AND THE FOLLOWING TRUSTEES WERE APPOINTE D BY THE TRUST DEED:- 1. SMT. SHANTI DEVI W/O RAO ABHAY SINGH 315-L MODEL TOWN REWARI. CHIEF PATRON 2. SMT. SHAKUNTALA YADAV 315-L MODEL TOWN REWARI. AUTHOR OF THE TRUST AND CHAIRPERSON 3. SH. BALWANT SINGH YADAV S/O SH. CHUNI LAL V. GOKUL GARH THE. & DISTT. REWARI VICE PRESIDENT 4. CHIRANJEEV RAO S/O CAPT. AJAY SINGH YADAV 315-L MODEL TOWN REWARI. SECRETARY 5. LATIKA YADAV D/O CAPTAIN AJAY SINGH YADAV 315-L MODEL TOWN REWARI. TREASURER 4. REFERRING TO THE OBJECTS WHICH ARE LISTED 1 TO 22 HE SUBMITTED THAT NONE OF THE OBJECTS OF THE TRUST HAS BEEN SHOWN TO BE NON- ITA NO.4439/DEL/2010 4 CHARITABLE IN NATURE. HE PARTICULARLY MENTIONED CL AUSE 22 OF THE OBJECTS OF THE TRUST WHICH READ AS UNDER:- 22. THIS TRUST IS DECLARED WHOLLY PUBLIC CHARITABLE. THE TRUST AND TRUSTEES WILL BE SUBJECT TO SECTIONS 2 (15) 11 12 12A 13 80(G) AND OTHER PROVISIONS OF THE INCOME TAX ACT 1961 AS WELL AS ANY OTHER STATUTORY MODIFICATION. THE CHAIRPERSON/PR ESIDENT AND THE BOARD OF THE TRUSTEES ARE ENTITLED TO JOIN IN ANY WORK RELATING TO OBJECTS OF PUBLIC CHARITY AND PUBLIC WELFAR E. 5. REFERRING TO THE ABOVE CLAUSE IT WAS SUBMITTED BY HIM THAT ONCE IT HAS BEEN DECLARED IN THE TRUST DEED THAT THE TRUST AND TRUSTEES WILL BE SUBJECT TO SECTIONS 2 (15) 11 12 12A 13 80(G) THEN THERE IS NO SCOPE FOR THE TRUST TO INDULGE IN ANY NON-CHARITABLE ACTIVITY AND IN CASE THE TRUST INVOLVE IN ACTIVITY OTHER THAN CHARITABLE THERE ARE PROVISIONS IN THE INCOME-TAX ACT ITSELF TO TAKE CARE OF THAT SIT UATION. HE SUBMITTED THAT AT THE TIME OF REGISTRATION WHAT HAS TO BE SEEN I S THAT WHETHER THE OBJECTS MENTIONED IN THE TRUST DEED ARE CHARITABLE OR NOT AND THE ACTIVITIES OF THE TRUST ARE GENUINE OR NOT. HE SUBMIT TED THAT ALL THE FACTORS UPON WHICH LD. CIT HAS DENIED THE GRANT OF RE GISTRATION ARE IRRELEVANT AND THE REGISTRATION HAS WRONGLY BEEN REFU SED TO THE TRUST. 6. REFERRING TO THE FIRST OBJECTION OF LD. CIT THAT CONTROL OF THE TRUST IS VESTED IN ONE FAMILY HE SUBMITTED THAT IT IS THE USU AL FEATURE OF A TRUST. WHEN ANY CHARITABLE TRUST IS CREATED IT WILL BE THE DESIRE OF THAT PERSON TO KEEP CONTROL OF THE TRUST. HAVING CONTROL OVER THE TRUST CANNOT BE VIEWED OTHERWISE IN THE ABSENCE OF ANY MATE RIAL TO SHOW THAT THE ACTIVITIES ARE NOT PERFORMED IN ACCORDANCE WITH THE OBJECTS. HE FURTHER SUBMITTED THAT FOR EFFICIENT RUNNING OF T HE CHARITABLE ACTIVITIES GENERAL POWERS ARE GIVEN TO THE TRUSTEES FOR THE PROMOTION OF THE CHARITABLE ACTIVITIES TO ATTAIN THE OBJECTS. THA T FACT ALSO CANNOT BE VIEWED AGAINST THE TRUST AS IN THE ABSENCE OF THOSE CLAU SES IT WILL BE DIFFICULT TO MEET THE SITUATION THAT MAY ARISE IN THE FUTURE. HE FURTHER REFERRED THAT SO FAR AS IT RELATES TO THE ALLEGATION O F LD. CIT REGARDING ITA NO.4439/DEL/2010 5 WHOPPING VALUE OF LAND AT ` 1 CRORE THE SAME IS BASED ON CIRCLE RATE AND WHAT THE ASSESSEE TRUST HAS PAID IS ONLY THE REGISTRATI ON FEES AND NOT THE AMOUNT OF ` 1 CRORE FOR WHICH THE STAMP VALU E HAS BEEN DETERMINED OF THE LAND GIVEN BY THE DONOR FOR THE P URPOSE OF UTILIZATION BY THE TRUST FOR ITS CHARITABLE ACTIVITIES. HE SUBMITT ED THAT EXECUTION OF TRUST DEED AND EXECUTION OF GIFT DEED SHOULD BE CONSID ERED TWO SEPARATE EVENTS WHICH CANNOT BE LINKED WITH THE TRUST TO ITS DISADVANTAGE. HE SUBMITTED THAT IF TRUST IS GETTING SO ME LAND FOR CARRYING ON ITS CHARITABLE ACTIVITIES THAT WILL BE D ONE ON THE TERMS OF THE DONOR. HE SUBMITTED THAT THE ALLEGATION OF THE L D. CIT REGARDING COMPENSATION OF CONSIDERATION TO BE OBTAINED IN RESPEC T OF SUCH ASSET BACK TO ITS OWNER CLAUSE 15 OF THE TRUST DEED TAKES CA RE WHICH READ AS UNDER:- 15. THAT FOR PURPOSES OF THE TRUST IF ANY CONSTRUCTION HAS BEEN MADE OR A NEW BUILDING ERECTED OR THE FORM CHANG ED OF ANY LAND MOVABLE OR IMMOVABLE PROPERTY TAKEN ON RENT OR LEASE FOR A LIMITED PERIOD AS AFORESAID THEN ON COMPLETION O F TIME LIMIT IT WILL BE RETURNED TO ITS OWNER WITH RIGHT OF POSSESSION AFTER TAKING SUITABLE COMPENSATION [INSERTED] AND FOR THAT [THE WORD NO DELETED] COMPENSATION WILL BE TAKEN. 7. SIMILARLY HE SUBMITTED THAT OTHER ALLEGATIONS OF LD. CIT FOR DENYING REGISTRATION ARE ALSO IRRELEVANT IN THE ABSENC E OF ANY MATERIAL TO SHOW THAT THE ASSESSEE TRUST WAS NOT GENUINELY RUNNING THE CHARITABLE ACTIVITY. HE FURTHER RELIED UPON THE FO LLOWING DECISIONS:- I) FIFTH GENERATION EDUCATION SOCIETY VS. CIT 185 IT R 634 (ALL) TO CONTEND THAT THE SUBJECT MATTER OF INQUIRY BY CIT AT THE STAGE OF REGISTRATION IS TO EXAMINE WHETHER THE APPLICATION IS MADE IN ACCORDANCE WITH THE REQUIREMENTS OF SECTION 12A R EAD WITH RULE 17A AND WHETHER FORM 10A HAS BEEN PROPERLY FILL ED UP. HE MAY ALSO SEE WHETHER THE OBJECTS OF THE TRUST ARE ITA NO.4439/DEL/2010 6 CHARITABLE OR NOT AND AT THIS STAGE IT IS NOT PROPER T O EXAMINE THE APPLICATION OF INCOME. II) NEW LIFE IN CHRIST EVANGELISTIC ASSOCIATION (NLC) V S. CIT 246 ITR 532 (MAD) WHEREIN SIMILAR PROPOSITION HAS BEEN LAI D DOWN THAT AT THE STAGE OF GRANT OF CERTIFICATE U/S 12A TH E ONLY INQUIRY WHICH WOULD POSSIBLY BE MADE WOULD BE WHETHER THE APPLICANT SOCIETY HAS ACTUALLY MADE AN APPLICATION IN TIME AND WHETHER THE ACCOUNTS OF THE SOCIETY ARE MAINTAINED IN THE MANNER AS SUGGESTED BY THAT SECTION AND SCOPE OF INQUIR Y CANNOT GO BEYOND THAT. III) DEV DAYANAND CHARITABLE EDUCATION TRUST VS. CIT DECISION OF THE TRIBUNAL DATED 13 TH NOVEMBER 2009 IN ITA NO.3554/DEL/2008 COPY PLACED ON RECORD WHEREIN IT HAS BEEN HELD THAT THE POWER TO MAKE AMENDMENT IN THE RULES G IVEN IN THE TRUST DEED CANNOT MAKE THE TRUST A PRIVATE DISCRET IONARY TRUST AS SUCH TYPE OF APPREHENSION CAN BE JUDGED AT THE TIME OF ASSESSMENT PROCEEDINGS. IF ANY PERSON HAS MISUSED THE TRUST FUND OR ASSESSEE FAILED TO APPLY ITS INCOME AS PROVI DED IN THE ACT FOR CHARITABLE PURPOSES THEN THAT AMOUNT CAN ALWAYS BE BROUGHT TO TAX AND THESE FACTORS ARE NOT VER Y RELEVANT WHILE CONSIDERING THE ISSUE IN RESPECT OF GRA NT OF REGISTRATION. WHAT IS REQUIRED TO BE SEEN BY THE LD. CIT IS WHETHER PRIMA FACIE THE OBJECTS OF THE TRUST ARE CHAR ITABLE OR NOT AND ITS ACTIVITIES ARE GENUINE OR NOT. IV) SHRI SAIN JI DHARMARTH TRUST VS. CIT 8 SOT 446 (D EL) WHEREIN IT WAS HELD THAT WHILE GRANTING OR REFUSING A REGISTRATIO N TO A TRUST CIT IS REQUIRED TO EXAMINE WHETHER THE OBJECT OF THE TRUST WERE FOR CHARITABLE PURPOSES AND WHETHER THE ACT IVITIES OF THE TRUST WERE GENUINE. V) DIRECTOR OF INCOME TAX (EXEMPTION) VS. BHARAT KAL YAN PRATISHTHAN 257 ITR 609 (DEL). THE EXEMPTION IN THA T CASE ITA NO.4439/DEL/2010 7 WAS DENIED TO THE ASSESSEE MAINLY ON THE GROUND THAT THE ASSESSEE TRUST HAD ALLEGEDLY MADE DONATION TO AN ASSOCIATI ON WHICH WAS INVOLVED IN UNLAWFUL ACTIVITIES AND HAD BEE N DECLARED TO BE SO BY THE CENTRAL GOVERNMENT. HOWEVE R THE SAID NOTIFICATION LATER ON WAS QUASHED. THE ORDER OF THE TRIBUNAL WAS UPHELD WHEREIN IT WAS HELD THAT GRANT OF EXEMPTION COULD NOT BE DENIED U/S 11. 8. THEREFORE IT WAS PLEADED BY THE LEARNED AR THAT LD. CIT SHOULD BE DIRECTED TO GRANT THE REGISTRATION TO THE ASSESSEE TR UST. 9. ON THE OTHER HAND IT WAS VEHEMENTLY PLEADED BY T HE LEARNED DR THAT THE REGISTRATION HAS RIGHTLY BEEN REFUSED TO THE ASSESSEE. LEARNED DR REFERRED TO VARIOUS CLAUSES OF THE TRUST DEED CONTEN DING MAINLY THAT VAST POWERS ARE GIVEN TO THE TRUSTEES OF THE TRUST. HE SUBMITTED THAT THE AFFAIRS OF THE TRUST ARE BEING MANAGED BY THE FAM ILY OF THE SETTLER AND THE TRUSTEES ARE CLOSELY RELATED TO EACH OTHER. A LL THE CONTROLS ARE IN THE HANDS OF ONE FAMILY. THERE IS NO PROVISION IN THE TRUST DEED FOR GETTING PROPER CONSIDERATION IN CASE LEASED ASSET IS TRAN SFERRED BACK TO THE OWNER. HE REFERRED TO THE LAND DONATION DEED A CCORDING TO WHICH THE ASSESSEE IS REQUIRED TO RETURN THE LAND TO THE DONOR IN CASE THE LAND CEASED TO BE USED BY THE ASSESSEE TRUST FOR ITS CHARIT ABLE ACTIVITY. HE VEHEMENTLY PLEADED THAT THE REASONS STATED BY THE L D. CIT IN HIS ORDER FOR NON-GRANT OF REGISTRATION ARE VALID REASONS AND THEREFORE REGISTRATION HAS RIGHTLY BEEN DENIED AND HIS ORDER SHOU LD BE UPHELD. 10. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIONS I N THE LIGHT OF THE MATERIAL PLACED BEFORE US. IT HAS NOT BEEN DISPUT ED BY THE REVENUE THAT THE OBJECTS MENTIONED IN THE TRUST DEED ARE NOT IN THE NATURE OF CHARITABLE OBJECTS. A COPY OF THE REPORT SUBMITTED B Y THE ASSTT. COMMISSIONER OF INCOME-TAX CIRCLE REWARI REWARI PL ACED AT PAGES ITA NO.4439/DEL/2010 8 14-16 OF THE PAPER BOOK WILL SUGGEST THAT THE REASONS G IVEN BY LD. CIT FOR REFUSAL TO GRANT REGISTRATION ARE BASED ON THE SAID REPORT. FOR THE SAKE OF CONVENIENCE THE REASONS AS STATED IN COLUMN NO.1 5 OF THE SAID REPORT ARE REPRODUCED BELOW:- 15. INFORMATION ON ANY OTHER POINTS (NOT COVERED IN PO INTS 1 TO 14 ABOVE). THE TRUST WAS CREATED ON 02.06.2006 AND RUNNING THREE EDUCATIONAL INSTITUTIONS I.E. SMT. SHANTI DEVI LAW COLLEG E SMT. SHANTI DEVI SCHOOL OF NURSING & SMT. SHANTI DEVI COLLE GE OF NURSING. THE REGISTERED ADDRESS FO THE TRUST IS H.NO.315-L MOD EL TOWN REWARI. THE TRUSTEES OF THE TRUST ARE AS FOLLOWS: - 1. SMT. SHANTI DEVI W/O RAO ABHAY SINGH H.NO.315-L MODEL TOWN REWARI. 2. SMT. SHAKUNTALA YADAV S/O SH. AJAY SINGH YADAV H.NO.315-L MODEL TOWN REWARI 3. SHRI BALWANT SINGH YADAV S/O SH. CHUNNI LAL VPO GOKALGARH. 4. MR. CHIRANJIV RAO S/O SHRI AJAY SINGH YADAV H.N O.315-L MODEL TOWN REWARI. 5. SMT. LATIKA YADAV D/O SH. AJAY SINGH YADAV H.NO.3 15-L MODEL TOWN REWARI. FROM THE ABOVE IT IS EVIDENT THAT THE TRUST HAS BEEN CREATED BY ONE FAMILY AND THE REGISTERED ADDRESS OF THE TRUST IS ALSO THEIR HOME ADDRESS. AS PER THE TRUST DEED ALL POWERS LIE IN THE HANDS OF CHAIRMAN/SECRETARY AND THESE PERSONS ARE MOTHER AND SO N. FURTHER AS PER PARA 6 OF THE TRUST DEED UNDER POWER OF TRUSTEES THE CHAIRMAN/SECRETARY CAN TRANSFER CASH MOVEABLE/IMMOVEABLE PROPERTIES OF THE TRUST TO ANY BODY AS PER THEIR WISH. IN PARA 15 UNDER THE POWERS OF THE TRUSTE ES THE TRUST CAN TRANSFER THE PROPERTIES ACQUIRED ON RENT OR LE ASE TO THE OWNER OF THE PROPERTY ALONG WITH CONSTRUCTION MADE THEREO N WITHOUT ANY COMPENSATION OR CONSIDERATION. THERE IS A POSSIBILITY THAT THE WEALTH OF THE TRUST IN FORM OF BUILDI NG AND INVESTMENT IN BANKS COULD BE TRANSFERRED TO THE TRUSTEES A S THE LAND BELONGS TO THESE TRUSTEES AND THEIR FAMILY MEMBERS. IN VIEW OF THE ABOVE IT APPEARS THAT THE TRUST IS A FAMILY M ANAGED BODY CREATED TO RUN A BUSINESS IN THE FIELD OF EDUCATIO N AND TO CLAIM TAX BENEFITS BY REGISTERING IT UNDER SECTION 12AA OF THE INCOME TAX ACT 1961. ITA NO.4439/DEL/2010 9 FOLLOWING ARE SOME OF THE OTHER GLARING FACTS ABOUT THE TRUST:- I) WITHIN A SPAN OF THREE YEARS THE TRUST HAS CREATE D FIXED ASSETS AMOUNTING TO RS.2 17 24 790/- AND INVESTMENT IN B ANK AS FDRS OF RS.48 75 000/-. THERE ARE NO UNSECURED LO ANS AND THE SECURED LOANS ARE OF RS.21 26 327/- ONLY. II) PROFIT AS PERCENTAGE OF ANNUAL RECEIPTS FOR THE A.Y . 2009-10 IS 23%. III) CORPUS FUND HAS INCREASED FROM 1 15 05 100/- I N THE YEAR 2006-07 TO RS.2 24 77 000/- IN THE YEAR 2008-09. THE SOURCES OF ADDITIONS TO CORPUS ARE NOT CLEAR. IV) TRUST HAS RECEIVED DONATIONS AMOUNTING TO RS.8 55 1 00/- IN THE YEAR 2008-09 AND RS.2 09 000/- IN THE YEAR 2007-0 8. DETAILS OF DONATIONS RECEIVED HAVE NOT BEEN FILED. THE SOURCES OF INVESTMENT IN LAND AND BUILDING INVES TMENT IN FDRS INCREASE IN CORPUS FUND GENUINENESS OF D ONATIONS RECEIVED ETC. CANNOT BE VERIFIED AS THE ASSESSEE TRUST HAS NOT PRODUCED BOOKS OF ACCOUNTS BEFORE THE UNDERSIGNED. IN VIEW OF THE ABOVE FACTS IT IS NOT CLEAR WHETHER THE TR UST IS DOING ANY CHARITABLE ACTIVITY OR ACCUMULATING WEALTH BY RUNNING EDUCATIONAL INSTITUTIONS FOR ONE PARTICULAR FAMI LY. IN VIEW OF THE ABOVE THE TRUST DOES NOT APPEAR TO BE DESERV ING REGISTRATION U/S 12AA OF THE ACT. 11. LD. ADDL. COMMISSIONER ALSO HAS OBJECTED FOR GRANT OF REGISTRATION TO THE ASSESSEE ON THE BASIS OF THE AFOREMENTIONED REPORT . 12. IN THE REPORT IT HAS CLEARLY BEEN MENTIONED THAT THE ASSESSEE TRUST IS RUNNING THREE EDUCATIONAL INSTITUTIONS NAMELY SMT. SHANTI DEVI LAW COLLEGE SMT. SHANTI DEVI SCHOOL OF NURSING & SMT. SHANTI DEVI COLLEGE OF NURSING. THE FIRST OBJECTION OF LD. ACIT IS THAT THE TRUST IS CREATED BY ONE FAMILY AND THE REGISTERED ADDRESS OF THE TRUST IS ALSO THEIR HOME ADDRESS. IN OUR OPINION SUCH FACT CANNOT COME INTO THE WAY FOR GRANT OF REGISTRATION AS IT IS A USUAL FEATURE OF CREATION OF CHARITABLE TRUST. UNLESS IT IS SHOWN THAT ANY BENEFIT H AS BEEN OBTAINED BY ANY OF THE TRUSTEES SETTLER OR THEIR FAMILY MEMBER S THIS FACTOR HAS NO RELEVANCE FOR GRANT OF REGISTRATION TO THE ASSESSEE T RUST. ITA NO.4439/DEL/2010 10 13. THE SECOND OBJECTION RAISED BY THE ACIT IS THAT AL L POWERS OF THE TRUST LIES IN THE HANDS OF THE CHAIRMAN/SECRETARY AND THESE PERSONS ARE MOTHER AND SON. IT IS ALSO THE CASE OF ACIT THAT A S PER PARA 6 OF THE TRUST DEED UNDER THE POWERS OF THE TRUSTEE THE CHAIRMAN/SECRETARY CAN TRANSFER CASH IMMOVABLE PROPE RTY OF THE TRUST TO ANYBODY AS PER THEIR WISH. IT MAY BE MENTIONED HE RE THAT THE SAID CLAUSE HAS BEEN AMENDED ON 23 RD DECEMBER 2009 BY DELETING THE WORDS CHAIRMAN/SECRETARY AND INSERTING IN PLACE THE REOF THE WORDS BOARD OF TRUSTEES. THE AMENDED CLAUSE READ AS UNDER: - 6. THAT THE [THE WORDS CHAIRMAN/SECRETARY CHAIRMAN/SECRETARY CHAIRMAN/SECRETARY CHAIRMAN/SECRETARY AND DELETED] BOARD OF TRUSTEES MAY ON BEHALF OF THE TRUST KEEP ANY M ONEY MOVABLE OR IMMOVABLE PROPERTY IN THE NAME OF ONE OR M ORE PERSONS AS MAY BE DECIDED FROM TIME TO TIME BY THE [THE WORD CHAIRMAN CHAIRMAN CHAIRMAN CHAIRMAN DELETED] BOARD OF TRUSTEES. 14. THEREFORE THE SAID REASON DOES NOT EXIST NOW. THE OTHER CLAUSE ON WHICH RELIANCE HAS BEEN PLACED IS CLAUSE 15. THE SA ID CLAUSE HAS ALSO BEEN AMENDED AND THE POSITION HAS BEEN SHOWN AS UND ER:- 15. THAT FOR PURPOSES OF THE TRUST IF ANY CONSTRUCTION HAS BEEN MADE OR A NEW BUILDING ERECTED OR THE FORM CHANG ED OF ANY LAND MOVABLE OR IMMOVABLE PROPERTY TAKEN ON RENT OR LEASE FOR A LIMITED PERIOD AS AFORESAID THEN ON COMPLETION O F TIME LIMIT IT WILL BE RETURNED TO ITS OWNER WITH RIGHT OF POSSESSION AFTER AFTER AFTER AFTER TAKING SUITABLE COMPENSATION TAKING SUITABLE COMPENSATION TAKING SUITABLE COMPENSATION TAKING SUITABLE COMPENSATION [INSERTED] AND FOR THAT [ THE WORD NO NONO NO DELETED] COMPENSATION WILL BE TAKEN. 15. AS IT CAN BE SEEN FROM THE ABOVE CLAUSE IT HAS BEEN INCORPORATED THAT IN A CASE WHEN THE CONSTRUCTION HAS BEEN MADE FOR THE PURPOSE OF THE TRUST OR A NEW BUILDING HAS BEEN ERECTED ON THE L AND WHICH IS TAKEN ON RENT OR LEASE FOR A LIMITED PERIOD THEN ON COMP LETION OF TIME LIMIT IT WILL BE RETURNED TO ITS OWNER WITH THE RIGHT OF POSSESSI ON AFTER TAKING SUITABLE COMPENSATION AND FOR THAT COMPENSATION WILL B E TAKEN. THEREFORE THE SAID DEFICIENCY ALSO DOES NOT EXIST AT T HE TIME WHEN THE ISSUE REGARDING REGISTRATION WAS CONSIDERED BY LD. CIT. REFERRING TO THESE CLAUSES IT IS THE CASE OF ACIT THAT THERE IS A POSSIB ILITY THAT THE ITA NO.4439/DEL/2010 11 WEALTH OF THE TRUST IN THE FORM OF BUILDING AND INVE STMENT IN BANKS COULD BE TRANSFERRED TO THE TRUSTEES AS THE LAND BELONG TO ITS TRUSTEES AND THEIR FAMILY MEMBERS. REFERRING TO THIS CLAUSE ON LY THE VIEW WAS EXPRESSED THAT THE TRUST IS A FAMILY MANAGED BODY WHICH IS CREATED TO RUN A BUSINESS IN THE FORM OF EDUCATION AND TO CLAIM T AX BENEFIT BY REGISTERING IT U/S 12A OF THE ACT. SINCE THIS DEFICIE NCY HAS BEEN REMOVED AND THERE IS COMPLETE ABSENCE OF ANY MATERIAL PLACED ON RECORD TO SHOW THAT THESE INSTITUTIONS ARE BEING RUN BY THE TRUST AS A BUSINESS IN THE FORM OF EDUCATION THEREFORE SUCH APPR EHENSION WILL BE BASELESS AND REGISTRATION COULD NOT BE DENIED TO THE ASSE SSEE. 16. NOW THE FACTOR THAT REMAINS UPON WHICH LD. CIT HAS REFUSED TO GRANT REGISTRATION IS THAT THE PERCENTAGE OF PROFIT O F ANNUAL RECEIPT FOR ASSESSMENT YEAR 2009-10 IS 23% AND THE CORPUS OF THE TRUST IN QUESTION HAS INCREASED FROM ` 1.15 CRORE IN FINANCIAL YEAR 2006-07 TO ` 2.24 CRORE IN FINANCIAL YEAR 2008-09 AND THE SOURCE OF DONATION IS FROM AGRICULTURISTS THE GENUINENESS OF WHICH IS IN SERIOUS DOUB T. AS AGAINST THESE OBJECTIONS OF LD. CIT IT IS THE CASE OF THE LEAR NED AR THAT THE ASSESSEE HAS SUBMITTED ALL THE EVIDENCES TO SUBSTANTIATE THE INCREASE IN THE CORPUS AND DONATIONS AND THE PERCENTAGE OF PRO FIT CANNOT BE A GROUND FOR REJECTION OF APPLICATION FOR GRANT OF RE GISTRATION AS THESE FACTORS CAN BE EXAMINED BY THE ASSESSING OFFICER AT THE TIME OF ASSESSMENT. IT IS ALSO THE CASE OF THE LEARNED AR THAT LD . CIT HAS NOT MENTIONED ANY PARTICULARS ABOUT THE DISCREPANCY IN AL L THESE FACTORS. WE FIND SUBSTANCE IN SUCH ARGUMENT OF THE LEARNED AR. THOUGH THESE FACTORS HAVE BEEN MENTIONED BY THE LD. CIT IN HIS ORD ER BUT HE HAS NOT POINTED OUT HOW THESE FACTORS HAVE RENDERED THE ACTIV ITY OF THE ASSESSEE TO BE NON-GENUINE ACTIVITY. THE ASSESSEE IS STATED TO BE RUNNING THREE EDUCATIONAL INSTITUTIONS AND THIS FACT H AS BEEN ACCEPTED BY LD. ACIT IN HIS REPORT THEREFORE WHAT IS RELEVAN T TO SEE IS THAT WHETHER THERE IS ANY IRREGULARITY IN THE ACCOUNTS MAI NTAINED BY THE ITA NO.4439/DEL/2010 12 ASSESSEE AND ITS ACTIVITIES. NO MATERIAL WHATSOEVER HAS BE EN BROUGHT ON RECORD TO POINT OUT ANY PARTICULAR IRREGULARITY IN THIS REGARD. IN THE ABSENCE THEREOF THE REFUSAL TO GRANT REGISTRATION WIL L BE UNJUSTIFIED. THERE EXIST NO MATERIAL ON RECORD TO SUGGEST THAT ACTI VITY OF THE ASSESSEE TRUST ARE NOT GENUINE. ITS OBJECTS ARE CHARITABL E IN NATURE. THEREFORE WE ARE OF THE OPINION THAT THE ASSESSEES REQ UEST FOR GRANT OF REGISTRATION HAS WRONGLY BEEN DENIED. WE DIRECT L D. CIT TO GRANT REGISTRATION TO THE ASSESSEE. 17. BEFORE WE PART WITH THIS ORDER IT MAY BE MENTIO NED THAT ACCORDING TO THE PROVISIONS OF SUB-SECTION (3) TO SECTI ON 12AA EVEN AFTER GRANT OF REGISTRATION IF THE COMMISSIONER IS SATI SFIED THAT THE ACTIVITIES OF SUCH TRUST OR INSTITUTION ARE NOT GENUINE OR ARE NOT BEING CARRIED OUT IN ACCORDANCE WITH THE OBJECTS OF THE TR UST OR INSTITUTION HE IS EMPOWERED TO PASS AN ORDER IN WRITING CANCELING THE REGISTRATION OF SUCH TRUST OR INSTITUTION AFTER GIVING THE ASSESSEE A REASO NABLE OPPORTUNITY OF BEING HEARD. THEREFORE EVEN AFTER T HE GRANT OF REGISTRATION OF THIS TRUST IS FOUND TO BE NOT CARRYING OUT ITS ACTIVITY IN ACCORDANCE WITH THE OBJECTS OF THE TRUST AND MAKING VIOLATION OF ANY OF THE PROVISIONS OF TRUST DEED OR ACT THEN LD. CIT CA N USE HIS POWERS GIVEN TO HIM U/S 12AA (3) IN ACCORDANCE WITH LAW. W ITH THESE OBSERVATIONS WE ALLOW THE APPEAL FILED BY THE ASSESSEE I N THE MANNER AFORESAID. 18. IN THE RESULT THE APPEAL IS ALLOWED. THE ORDER PRONOUNCED IN THE OPEN COURT ON 29.02.20 12. SD/- SD/- [B.C. MEENA] [I.P. BANSAL] ACCOUNTANT MEMBER JUDICIAL MEMBER DATED 29.02.2012. DK ITA NO.4439/DEL/2010 13 COPY FORWARDED TO: - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR ITAT TRUE COPY BY ORDER DEPUTY REGISTRAR ITAT DELHI BENCHES