TaxTMI 
TaxTMI 
2011 (11) TMI 351
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....by income or assets of the Trust at any time could be transferred or applied for any non-charitable purpose. He observed that for approval under section 80G(5)(vi) of the Income Tax Act, the Trust must fulfil the condition mentioned at section 80G(5)(i) to 80G(5)(v) of the Income Tax Act. He observed that section 80G(5)(ii) requires that no clause of the Trust Deed should contain any provision for the transfer or application at any time of the whole or any part of the income or assets of the institution or fund for any purpose other than a charitable purpose. Consequent to the aforementioned clauses, he observed that the assessee-Trust did not satisfy the condition as laid down under section 80G(5)(ii). He, therefore, rejected the assessee's application for granting registration under section 80G(5) of the Act. 3. Ld. counsel for the assessee submitted that in order to find out whether the Trust Deed is in conformity with the requirements of section 80G or not, it has to be read in full to find out the true import of the Trust Deed and not by reading some specific clauses in isolation. Ld. counsel referred to page 2 of the paper book, wherein the Trust Deed is contained and ....
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....aforementioned two clauses, ld. counsel submitted that the power given under clause 9 was subject to direction contained in clauses 3 & 13 quoted above and, therefore, the assessee-Trust could not make any investment in violation to the provision of Income Tax Act, particularly because of the provisions contained under section 11 to 13 and section 80G of the Income Tax Act. He, therefore, submitted that clause 9 cannot be read in isolation and the same alone cannot decide the true import of Trust Deed. 4. Ld. counsel further referred to page 22 of the paper book, wherein the order under section 10(23C)(vi) of the Income Tax Act dated 28.01.2011 passed by the Chief Commissioner of Income Tax is contained. Para 5 of the said order reads as under :- "5. I have carefully gone through the submissions made by the assessee-trust and the various judicial pronouncements relied upon by the assessee-trust in support of its contention. I am satisfied that the main activity of the assessee-trust is imparting education and the overall object of the assessee-trust is imparting education and not making any profit. Earlier vide order dated 28.05.2010 the claim of the assessee-trust was ....
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....d. Ld. counsel referred to the decision of the Hon'ble Punjab & Haryana High Court in the case of Sonepat Hindu Educational & Charitable Society v. CIT [2005] 278 ITR 262/147 Taxman 1, wherein it has been, inter alia, held that real purpose of establishment of trust is to be found out. Ld. counsel further referred to page 1 of the paper book, wherein the registration granted under section 12A dated 03.04.2003 is contained. He submitted that on interpretation of same Trust Deed, the assessee has been granted registration under section 12A and 10(23C)(vi) by treating the Trust established for charitable purposes and, therefore, registration under section 80G could not be denied. Ld. counsel further referred to Explanation 2 to section 80G and submitted that the said explanation has been amended with effect from 1st April, 1989 by the Direct Tax (Laws Amendment) Act, 1989 in order to ensure that deduction under section 80G is not denied merely on the ground that there was non-compliance of the provisions of sections 11, 12, 12A and 13(1)(c). 5. ld. counsel for the assessee further submitted that in any view of the matter, the assessee-Trust has now executed a supplementary deed....
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....ty prescribed under clause (v) of sub-section 5C of that section, in the manner specified in that clause, or which has been utilized for purposes other than providing relief to the victims of earthquake in Gujarat or which remains unutilized in terms of sub-section (5C) of section 80G and not transferred to the Prime Minister's National Relief Fund on or before the 31st day of March, 2004 shall be deemed to be the income of the previous year and shall accordingly be charged to tax." From bare reading of the aforementioned sub-section (3), it is evident that legislature has laid down stringent conditions in regard to the utilization of funds received in donation, which are eligible for deduction under section 80G. 7.1 All the conditions laid down under section 80G(5) are cumulative and, therefore, all conditions have to be fulfilled. Therefore, we are not in agreement with the submissions of ld. counsel for the assessee that since assessee-Trust has been granted registration under section 12A and 10(23C), therefore, it should have been granted registration under section 80G(5). Ld. counsel has relied on the decision of ITAT, Kolkata 'B' Bench in the case of Bengal ....
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....ch can be acted upon but such a provision which has become redundant on account of other superseding clauses. 9. We find considerable force in the argument of ld. counsel for the assessee that clause 9 of the Trust Deed reproduced earlier is subject to clauses 3 and 13 of the Trust Deed. Clause 3 of the Trust Deed merely restricts the application of fund for Trust purposes and objects and subject to such conditions or limitations, if any, as may, from time to time, be laid down in the Income Tax Act. This clause precedes clause 9 and will get precedence over clause 9 of the Trust deed. We find that clause 13 makes it clear that no part of the Trust property or its income could be applied for any purpose other than the purposes of the Trust and all the powers and provisions are subject to the restriction and limitation under the Income Tax Act. Thus, clause 9 cannot be acted upon in violation to clauses 3 & 13. Therefore, clause 9 could not be considered in isolation. Considering all the clauses together, it is evident that the true import of the Trust Deed was to carry out its activities subject to restrictions laid down under the Income Tax Act. Since the assessee-Trust was reg....