TaxTMI 
TaxTMI 
2012 (12) TMI 283
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....ct makes it clear that if any trustee renounces the Hindu religion or transfers of any portion of trust property in violation of the conditions herein before recited, then "he or she shall for the purpose of this deed be considered to be dead and the person next after him or her entitled to succeed as Trustee, shall succeed". The learned CIT-I, Amritsar also observed in the order dated 26-8-2008 that before rejecting the trust's application, its reply along with a paper written on 20-12-1993 but signed on 1-8-2008 stated to be corrigendum to the trust deed were duly considered and the same are an afterthought and self-serving document, which has no legal binding. 2.1 The assessee challenged the order dated 26-8-2008 before the Tribunal, who vide its order dated 19-12-2008 passed in I.T.A. No. 512(ASR)/2008 remitted back the issue to the Commissioner of Income-tax-I, Amritsar to decide afresh in accordance with law after taking into consideration the corrigendum filed by the assessee and the effect thereof on the objects of the Trust for the purpose of renewal of approval under section 80G(5) of the Act. 2.2 In compliance of the same, the learned CIT-I, Amritsar issued notice ....
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....e Act retrospectively. The learned CIT-I, Amritsar also supported his view by the decision of the Hon'ble Allahabad High Court in the case of Shervani Charitable Trust v. CIT [1968] 69 ITR 750 wherein it is held that the trustees do not have any power to override the Trust Deed through a resolution by virtue of which the non-charitable portion of the income could also be applied to charitable purposes. 2.5 Keeping in view the aforesaid finding, the learned CIT-I, Amritsar finally rejected the application filed by the assessee by passing the impugned order in the month of July, 2009. 3. Aggrieved by the same, the assessee has filed the present appeal. 4. The learned counsel for the assessee stated that the learned CIT-I, Amritsar has passed an illegal order, which is bad in law and liable to be cancelled because the learned CIT-I, Amritsar has wrongly treated the corrigendum to the original Trust Deed is nothing but an afterthought and not treating in letter and spirit the judgment of ITAT, Amritsar Bench dated 19-12-2008 passed in the case of the assessee while challenging the order dated 27-8-2008 passed by the same CIT-I, Amritsar in which he has rejected the assessee's ....
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....er section 80G of the Act to the assessee trust on the unamended deed of the Trust and lastly granted the same exemption on 14-9-2005 w.e.f. 1-4-2005 to 31-3-2008 but he has wrongly rejected the exemption under section 80G of the Act to the assessee without any valid reason. He further stated that when the ITAT at page 5, para 9 of the order dated 19-12-2008 has already held that there is nothing preventing the assessee from filing such corrigendum and thereby amending its objects. He further stated that the Bench also held that the learned CIT-I, Amritsar erroneously rejected such corrigendum as merely an afterthought and not having any binding force and this cannot be sustained in the absence of any provision of law prohibiting the assessee from amending the original Trust Deed by way of corrigendum. The learned counsel for the assessee stated that the learned CIT-I, Amritsar has not followed the order of the jurisdictional I.T.A.T., which is violation of judicial discipline, therefore, the impugned order deserves to be cancelled and the direction may be issued to the learned CIT-I, Amritsar to grant exemption under section 80G of the Act as requested by the assessee-trust. 5.....
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....een felt that the object stated in the trust deed dated 20-12-1993 is not possible to continue in future and it has been decided to change the objects accordingly a resolution was passed and recorded in the minute book on 1-8-2008 and also corrigendum was written on 1-8-2008 w.e.f. 1-8-2008 wherein it has been decided to involve this trust in the acts of service to the society which includes- (i) Construction of Dharamshalas, Community Halls. (ii) Setting up and running of charitable hospital. (iii) Helping the deserving parents to solemnize the marriage of their daughters. (iv) Advancement of any other objectives of general public utility, not involving the carrying of any activity for profits, as the law may regard as public charitable purposes. That the clause No.4 of the original Trust deed dated 20th December, 1993 stands deleted right from beginning as if it was never been the part of the trust deed. This supplementary deed is executed on 20-4-2010 w.e.f. from 1-8-2008 is signed by the trustees in the presence of the following witnesses. Self drat CB Acharya. 1. Witnesses Trustees Sd/- &....
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.... of the Income tax Act." 8. In compliance of the order dated 19-12-2008, the learned CIT-I, Amritsar has passed the impugned order, which is also exactly the same, which he has already passed on 27-8-2008. The relevant portion of the impugned order dated 27-8-2008 and the impugned order under appeal are as under:- "Impugned Order dated 27-8-2008. Keeping in view this strong emphasis on a particular religion the representative of the Trust, Sh. Anil Aggarwal during he hearing before me on 10-7-2008 was asked to explain how the trust can be treated to have been established for charitable purposes in view of conditions laid down in section 80G[5](iii) read with Explanation 3 which makes it quite clear that the institution or fund has not to be expressly established for the benefit of any religion, community or caste. The Explanation 3 has put a further strong rider against granting registration to any trust or institution or fond for any purpose which does not include any purpose for wholly or substantially to whole of which is religious nature. Sh. Anil Aggarwal's attention was also invited to Hon'ble Supreme Court's decision in the case of Upper Ganges Sugar Mills Ltd. and ....
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....the assessee are silent as to the nature of the expenditure incurred for any charitable purposes. (ii) The corrigendum has been submitted by it only when it has been questioned about the trust being overwhelmingly by religious in nature, thus not entitled to benefits of section 80G. The so called corrigendum was an afterthought. (iii) In view of the decision of Hon'ble Allahabad High Court in the case of Shervani Charitable Trust v. CIT [1968] reported as 69 ITR 750 (All.), the trustees cannot convert a partial trust into a wholly charitable trust. The trustees do not have any power to override the trust deed through a resolution by virtue of which the non charitable portion of the income could also be applied to charitable purposes. It is a trust distinct from a wholly charitable trust on the basis of provisions of original trust deed dated 20th December, 1993. In view of the above discussed factual and legal position of the case, and section 5(iii) r/w Explanation 3 of section 80G of the I.T. Act, it is declared that the trust is not entitled to be registered for the purpose of section 80G and no approval is accordingly given and the application filed for the said ....
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....ail to understand why the learned CIT-I, Amritsar has refused to grant the exemption to the assessee when the assessee has amended the original trust deed by involving the trust into the act of services to the general society by way of constructing the Dharamshalas, Community Halls, setting up and running of charitable hospital, helping the deserving parents to solemnize the marriage of their daughters and others which are purely charitable in nature for the general public and not for a particular religion or caste. 10. Keeping in view the aforesaid discussion, we are of the considered opinion that the impugned order passed by the learned CIT-I, Amritsar is contrary to the law and facts on the file, therefore, deserves to be cancelled and we cancel the same with direction to the CIT-I, Amritsar to grant approval of renewal of exemption under section 80G(5) of the Act for three years w.e.f. 1-4-2008 to 31-3-2011, as he has already given the exemption under section 80G of the Act upto 31-3-2008. 11. In the result, the appeal filed by the assessee is allowed. Mehar Singh, Accountant Member - The proposed appellate order, authored by my esteemed Ld. Brother, Sh. H.S. Sidhu, th....
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.... in pursuance of Tribunal's order passed order dated 30th July, 2009, under section 80G(5), read with section 254 of the Act, whereby after detailed discussions on the issue in question and considering the corrigendum made by the assessee trust, as also after placing reliance, on the decision of the Hon'ble Allahabad High Court, in the case of Shervani Charitable Trust (supra), gave clear finding that the Trust is not entitled to be registered for the purpose of section 80G of the Act. Hence, no approval for renewal, was granted and the application filed by the assessee trust, was rejected, by the CIT, vide said order. 3.1 The main finding of the Ld. CIT-1, in the impugned order under appeal, on consideration of corrigendum, in question, specifically highlighted that the settlers cannot override the aims and objects, as contained in the original Trust Deed, executed by the settlers in terms of which the Trust was expressed to be for the benefit of a particular religious community, and, hence, contravenes the provisions of section 80G(5)(iii) of the Act, read with Explanation-3 of section 80G of the Act. Aggrieved by such finding and rejection of the application of the assessee t....
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....es relied on for the "objects of general public utility" . (i) [2008] 307 ITR 226 (Raj.) (ii) Radha Soami Satsung v. CIT [1992] 193 ITR 321 (iii) Smt. Ganesha Devi Rami Devi Charity Trust v. CIT [1969] 71 ITR 696 (Cal) (iv) CIT v. Andhra Chamber of Commerce [1965] 55 ITR 722 (SC) (v) Sole Trustee, Loka Shikshana Trust v. CIT [1975] 101 ITR 234 (SC) (vi) CIT v. Bar Council of Maharashtra [1981] 130 ITR 28 (SC)." 4.1 Further, the assessee annexed to the paper book 'Notes on Public Charitable Trust' for formation of a Trust and its instrument. The assessee has also referred to section 2(15) of the Act. The assessee filed a copy of the decision of the ITAT, Amritsar Bench, in the case Maj. Gen. (Retd.) Kanwarjit Singh Gill (supra). The paper book contains following decisions, on which the assessee placed reliance: (i) CIT v. Andhra Chamber of Commerce [1965] 55 ITR 722 (SC) (ii) Sole Trustee, Loka Shikshana Trust v. CIT [1975] 101 ITR 234 (SC). (iii) CIT v. Bar Council of Maharashtra [1981] 130 ITR 28/6 Taxman 1 (SC). 4.2 He, further, referred to certain decisions supporting the doctrine of binding judicial prec....
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.... the lower authorities. 6.3 Now, coming to the applicability of the decisions cited by the Assessee, on the issue of binding nature of judicial precedent, it is submitted, as discussed, in detail, in this order that the settlers deleted clause No.4 of the original Trust Deed and added certain new objects to the said Trust Deed. This amendment has been effected by the settlers of the said Trust Deed, without any power or jurisdiction conferred on them, in the said original Trust Deed. Consequently, judicial precedents of the Supreme Court, on this issue, are binding in nature and to be respectfully followed in preference to the decision of any lower appellate authority. The Hon'ble Supreme Court, in the following cases, clearly held that original Trust Deed cannot be amended . (i) Sri Agasthyar Trust v. CIT [1999] 236 ITR 23/103 Taxman 363 (SC) (ii) CIT v. Palghat Shadi Mahal Trust [2002] 254 ITR 212/120 Taxman 889 (SC) (iii) CIT v. Kamla Town Trust [1996] 217 ITR 699/84 Taxman 248 (SC) 6.4 The trust deed cannot be amended in view of the non-availability of such power or jurisdiction in the said trust deed itself. These cases rendered by the Hon'ble ....
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.... Radhasoami Satsang v. CIT [1992] 193 ITR 321/60 Taxman 248, wherein as quoted by the assessee-trust itself, it has been held that for practical purposes written instrument becomes necessary under following cases. "When the trust is created by a will irrespective of whether the trust is public or private or it relates to movable or immovable property. This is because as per Indian Succession Act, a will has to be in writing. When the trust is created in relation to an immovable property of the value of Rs.100 and upwards, in case of a private trust deed is not mandatory, even in respect of immovable property, but is optional. Where the trust/association is being formed as a society or company, the instrument of trust; i.e. the memorandum of association, and Rules and Regulations has to be in writing." 6.9 It is added that the text of the decision quoted by the assessee trust speaks about the impugned modalities of a trust, which is not under dispute, in the present appeal. Consequently, in the light of the text quoted by the assessee trust, the same is not applicable to the fact-situation of the present case, as the present case, is to be considered in the light of p....
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....aritable purpose." 7. A careful perusal and consideration of the decisions cited by the assessee clearly reveals that the same deal with the concept of charity and general public utility, as contained under section 2(15) of the Act. As the subject matter of the present case clearly focuses on approval for renewal, as contemplated under section 80G(5) of the Act, the case laws relied upon by the assessee are not appli6able to the express provisions of section 80G(5) and its sub clause (iii), which reads as: "the institution or fund is not expressed to be for the benefit of any particular religious community or caste;" 7.1 The Ld. CIT, has rejected the application of the assessee for renewal under section 80G(5)(iii), on the plea that the Trust is expressed to be for the benefit of a particular religious community. Hence, the same violates the provisions of section 80G(5)(iii) r.w. Explanation -3 to section 80G(5C) of the Act. The case laws cited by the assessee-trust are not, on the subject, contained under section 80G(5) (iii) of the Act. Hence, the same are not applicable to the fact-situation of the present case. Moreover, the decisions of the Hon'ble Supreme Court, in t....
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....ustee, Loka Shikshana Trust (supra) (v) Bar Council of Maharashtra (supra) (vi) Umaid Charitable Trust v. Union of India [2008] 307 ITR 226/171 Taxman 94 (Raj.) 7.4 The above case laws cited by the assessee, define the concept of charitable purpose, as contained under section 2(15), which includes the advancement of any other object of general public utility and do not lay down any ruling on the express provisions of section 80G(5)(iii) of the Act, which is made the foundation, for rejection of the assessee's application, by the CIT, in the order before the Bench. Provisions of section 80G(5)(iii) of the Act, are clear, where the CIT is satisfied that all the conditions laid down in clauses (i) to (v) of section 80G(5) of the Act are not fulfilled, he shall reject the application for approval after recording reasons for such rejection. In view of this, the CIT, rejected the application of the said Trust, on non-satisfaction of the conditions of section 80G(5)(iii) r.w. Explanation 3 to section 80G(5C) of the Act, as clearly recorded in the impugned order. In view of this, the case laws cited by the assessee are not applicable to the fact-situation of the present case....
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....covered by the decisions of the Hon'ble Supreme Court (supra) and Jurisdictional High Court, in the case of Guryani Brij Balabh Kaur Trust (supra). In view of this, the case relied upon by the assessee is not applicable to the facts of the present case. 7.8 The preamble of the said trust deed is key to open the lock to reveal the true nature of the trust. Thus, worshiping and adoration of the said deity and maintenance of repair of the Laxminarayan Temple cannot be construed as secular object or non-religious object of this trust. Needless to state that each religion such as Hinduism, Jainism, Sikhism, Islam and Christianity is clearly discernible, from its distinct place of worship such as temple, Gurudwara and mosque and its religious scriptures such Geeta, Upnishad, Veda, Sri Guru Granth Sahib and Bible etc.. Similar is the position in respect of various rituals and mode of prayer and worship, distinct and distinguishable from each religion. In view of this, particular religious community can be identified, in the light of such religious indicators. The present trust does not specify the metaphysical concept of religion as enunciated by Shankaracharya, but the wholly worldly ....
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.... or addition to the Original Trust Deed, dated 20th Dec, 1993, even in the absence of no such provisions enshrined by the settlers therein. It is the undisputed fact floating on the surface of the relevant record that the said Trust Deed does not provide for any amendment, deletion or addition or alteration, to the original object clause, as enshrined therein. 7.11 The assessee filed additional evidence, vide letter dated 23.04.2010, in the shape of supplementary deed, to the impugned original Trust Deed. The supplementary Trust Deed goes to the root of the issue being legal in nature and to consider the same is essential for the disposal of this case. Hence, such additional evidence deserves to be admitted. A perusal of the text of the supplementary deed clearly reveals that it was made on 21st day of 2010 by the same persons, who were the settlers of the original Trust, created vide Trust Deed dated 20th Dec, 1993. In this context, it is evident that the opening sentence of the said supplementary deed does not mention the month of 2010 year, in which it was executed. However, the same was registered with Sub-Rgistrar-1, Amritsar, on 22.04.2010, after a gap of one year and eigh....
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....d. CIT, further, found that the trustees did not have any power to over-ride the trust deed through resolution by virtue of which non-charitable portion of the income could also be applied to the charitable purpose. The Ld. CIT, placed reliance on the decision of Hon'ble Allahabad High Court, in the case of Shervani Charitable Trust (supra), wherein it was held that the trust has no power to override the trust deed through resolution. Consequently, the Ld. CIT, held that the trust is not entitled for renewal under section 80G of the Act. The relevant part of the impugned order of the CIT is reproduced hereunder: "4. As is evident from above, through corrigendum dated 01.08.2008 an attempt has been made to delete the clause-4 of the original trust deed. It is an attempt to undone the work already done. Needless to mention, the original trust deed contained provision for spending the income or assets of the trust for purposes other than charitable. Further, the trust was expressly established for the benefit of a particular religious community. These are prohibited by the conditions laid down in clause (iii) and (iv) of Section 80G(5) of the I.T. Act, 1961. The corrigendum aforesa....
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....nd section 5(iii) r/w Explanation 3 of section 80G of the Act, it is declared that the trust is not entitled to be registered for the purpose of section 80-G and no approval is accordingly given and the application filed for the said purpose is hereby rejected." 7.15 A bare perusal of the factual matrix of the case and the text of the original Trust Deed, dated 20th Dec, 1993, clearly reveals that in this case, the Trustees or the Settlers are incompetent to delete clause 4 of the original Trust Deed, dated 20th Dec, 1993 and add certain new objects, to the original trust deed, by way of mere resolution, without following prescribed procedure for such amendment, through the competent Civil Court, under section 92 of Civil Procedure Code, 1908 or under section 26 of the Specific Relief Act, 1963, as the original trust deed, ingestion does not provide for any power or jurisdiction, for any amendment or alteration or deletion or addition. 7.16 It is legally settled proposition that once a Trust is created with certain specified objects, no one has the power to delete any of the original objects. This is founded on the very concept of Trust and its creation. A 'Trust' is an oblig....
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....this document. Although it was mentioned that the trust was created by the partners of the firm K. Rajagopal and Company, and that under the terms of the partnership deed it was setting apart 80 per cent of the profits for charitable and religious purposes, the only trust deed which was referred to was the one dated July 1, 1944. It was this deed which was analysed and construed and not the deed which was executed by the two founders of the trust. The judgment also did not indicate that the question relating to the validity of the deed dated July 1, 1944, was ever in issue before the Supreme Court. The decision in East India Industries' case [1967] 65 ITR 611 (SC), did not and could not preclude the appellants from contending the deed dated July 1, 1944 was illegal and of no consequence and what was to be seen was whether the assessee was a public charitable trust on the basis of the partnership deed dated November 28,1941. The deed of 1941 originally gave the power to the founders to revoke the trust but this power was taken away by a subsequent document which was executed on August 26, 1943 was thereafter, that the trust became an irrevocable trust. The powers of the trustee in r....
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....cable to the fact-situation of the present case, as the settlers of the Trust altered the object clause, without any power available with them to alter the same, in the original Trust Deed. Thus, in terms of the ratio of the Hon'ble Supreme Court, such amendment is non-est and invalid. In view of this, such conduct of the settlers in the form of the said amendment, cannot be taken to fasten any legal consequence, on the original Trust Deed. In the book Tudor on Charities (6th Edition) at page 131, it is stated as follows: "When a charity has been founded and trusts have been declared, the founder has no power to revoke, vary or add to the trusts. This is irrespective of whether the trusts have been declared by the individual, or by a body of subscribers, or by the Trustees", (extracted from page 32 of 236 ITR). It may be observed that the Supreme Court, in the case of Sri Agasthyar Trust v CIT [1999] 236 ITR 23, have expressed their full agreement with the principle stated in the above passage of the Madras High Court vide P.33 of 236 ITR. (ii) In another decision, in the case of Palghat Shadi Mahal Trust (supra), the Hon'ble Supreme Court, held as under: "Charitable Tr....
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....h it was possible to add some other charitable objects without any detriment to the original objects. Consequently, the deed of rectification dated January 11,1969, deleting the objectionable objects could not be said to be valid in law." (v) In the case of Sakhti Charities (supra), it has been held as under: "Where a trust deed contained charitable and non-charitable objects and the non-charitable objects of the trust deed were deleted subsequently with retrospective effect and a declaratory decree was obtained from the court, but the Tribunal refused exemption to the trust on the ground that the original trust deed did not empower the trustees to alter the objects clauses of the trust deed: Held, that the finding of the Tribunal was justified and that the trust was not entitled to exemption under section 11 of the Income-tax Act, 1961. The reference applications were liable to be dismissed." 7.19 The issue of changing the basic complexion or objects of the Trust as set out in the original Trust Deed, in question, is further, analysed hereinafter. It is extremely difficult to amend a trust deed since a trust by its inherent nature is irrevocable. Therefore, it is importan....
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....d no assertion on his part or the subsequent conduct of himself or his descendants contrary to such dedication would have the effect of nullifying it. If the trust has been really and validly created, any deviation by the founder of the trust or the trustees from the declared purposes would amount only to a breach of trust and would not detract from the declaration of trust. In this regard the Supreme Court, ruling in the case of Sri Agasthyar Trust (supra) is also relevant. 7.23 It should be kept in mind that the trustees inherently do not possess any power to amend the trust deed, for that matter even the settler does not have the power of any subsequent amendment. The power to amend shall be limited to the extent provided in the trust deed itself. Therefore, drafting of trust deed becomes very important and suitable clauses should be kept for future need of changes and contingencies. Further, care should be taken to ensure that the amendment clauses are not too wide or discretionary in nature which may render the trust invalid and revocable. However, it is undisputed fact that in this case, the settlers of the Trust did not provide for any amendment to the said original Trust....
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....er: "1. That the clause No.4 of the original trust deed dated 20th Dec, 1993 stands deleted right from beginning as if this was never been the part of the trust deed." 7.27 To sum up the issue, as discussed above in the light of decisions of the Hon'ble Supreme Courts, it is a legally settled proposition that where the original trust deed did not provide for any amendment, alteration, deletion or addition, in the deed itself, any amendment thereto, without following the procedure laid down in section 92 of Civil Procedure Code, 1908 and section 26 of the Specific Relief Act, 1963, no amendment can be effected to the original Trust Deed and if any amendment made, the same is invalid and, hence, the original trust deed, with its object clause, remains effective, operative and holds the field. The settlers or the trustees are not competent to alter the object clause of the Trust Deed "at will" as it denudes the valid trust from its basic ingredient of 'irrevocability'. However, the impugned Trust Deed was amended without jurisdiction. In view of this, it is important to provide amendment clause in the trust deed itself. To be precise, in the present case, no such amendment 'clau....
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.... without any legal consequences. The source of jurisdiction in this case emanates from the original Trust Deed and the same is non-existence therein. 7.29 The legal impact of such unauthorized amendment has to be considered in the light of its impact on general administration of law, particularly on the interpretation of the relevant statutory provisions of section 80G(5) of the Act. In the present case, the said amended deed constitutes breach of trust, and runs contrary to the conceptual import of the term 'Trust'. In the present case, the settlers acted against the intent of the original Trust. 8. In view of the above legal and factual discussions and having regard to the decisions of the Hon'ble Supreme Court, the amendment in the shape of deletion of clause (4) to the original trust deed and addition of certain other objects, to the original trust deed being invalid, the original object clause of the trust remains operative and intact. Thus, the impugned deletion of clause (4) to the original Trust Deed and additions of new objects are without jurisdiction and invalid and, hence, with no attendant legal consequence, on the original Trust and original Trust Deed, dated 20....
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....ivities; And Whereas the Trustees are absolutely seized and possessed of or otherwise well and sufficiently entitled to the immovable property comprised in first Schedule hereto and to the property comprised in second Schedule hereto and hereinafter referred to as "Trust Properties": And Whereas in pursuance of pious wish and desire and to consideration of religious service and benefits and for other good reasons and considerations, the Trustees dedicate the Trust Properties for the cost of construction of the said Temple and to secure the worship of the said deity and of making a public charitable trust of the said Trust Properties in the planner hereinafter appearing: Now This Deed Witnesses and Hereby declare as follows: 1. In pursuance or the said desire, Trustees hereby grant, set apart, and dedicate the Trust Properties to the use of the said deity as provisions for worship of the said deity and periodical festivals of the deity and maintenance and upkeep of the temple, absolute for ever in the manner hereinafter contained. 2. That for the consideration as aforesaid, the Trustees do hereby divest themselves of all ownership, contro....
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.... Ram Sharma" (B) The Minutes of the meeting held on 1.8.2008 by the Trustees are reproduced hereunder: The meeting of the Trust was held on 1st August, 2008 at its office 2068/19, Gali & Bazar Tokrian, Amritsar, and discussed the progress of construction work. Further decided unanimously to delete the clause No.4 of the Original Trust Deed of 20th Dec, 1993 and the same stands deleted. That though the Trust was originally framed with the object of construction of a Temple at Varindhavan for undertaking spiritual education for Public in General the trustees decided to change the objects and has decided to involve the Trust in addition to that itself of the acts of service to the society which includes a. Construction of Dharamshalas, Community Halls. b. Setting up and running of Charitable Hospital c. Helping the deserving parents to solemnize the marriage of their daughters. d. Advancement of any other objectives of General Public utility, not involving the carrying on of any activity for profit, as the law may regard as Public Charitable purposes. It is decided to put into 'Black and while. The meeting is chaired by....
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.... 1993 was registered with the Sub-Registrar, Chandigarh on 20.12.1993. Whereas this trust is now working with registered office at House No. 198 c/o Varinder Mahajan, Tilak Nagar, Amritsar. Whereas it has been felt that the object stated in the trust deed dated 20.12.1993 is not possible to continue in future and it has been decided to change the objects accordingly a resolution was passed and recorded in the minute book on 1.08.2008 and also corrigendum was written on 1.08.2008 w.e.f. 1.08.2008 wherein it has been decided to involve this trust in the acts of service to the society which includes: e. Construction of Dharamshalas, Community Halls. f. Setting up and running of Charitable Hospital g. Helping the deserving parents to solemnize the marriage of their daughters. h. Advancement of any other objectives of General Public Utility, not involving the carrying of any activity for profits, as the law may regard as Public Charitable purposes. It is decided to put into Black and while. The meeting is chaired by Swami C.B. Acharya. That the clause No.4 of the original Trust Deed dated 20th Dec,1993 stands deleted r....
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.... deity. The 'trust properties' as mentioned in Schedule 'A' to the Trust Deed was dedicated absolutely and for ever unto and in favour of the deity, free from all encumbrances and the possession was delivered thereof unto and in favour of the deity. It was stipulated, in clause 4 of this Trust and that if any trustee renounces the Hindu religion or transfer any portion of the Trust properties in isolation of the constitution stipulated in the deed then he or she shall for the purpose of this deed be considered to be dead. It is clearly stipulated in clause 5 of the said Trust Deed that the Trust properties shall be applied first in the maintenance and repair of the temple property. 10. The term religion is not defined under the Income-tax Act, 1961. The point for consideration, therefore, is what are the matters of religion and what are not. What are the matters of religious or non-religious nature. The Constitution of India also makes no attempt to define religion. However, there are well known religion with well known Deity, places of worship and and mode of prayers in India, like Jainism, Hinduism, Sikhism, Persian & Christianity etc. The expression 'religion' mentions that c....
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....ed 20th Dec, 1993 is wholly and both patently and latently expressed for the benefit of Hindu religious community and, hence, it contravenes the express provisions of section 80G(5)(iii) r.w. Explanation 3 to section 80G(5C) of the Act. 13. The above view is duly supported by the decisions of the Apex Court. The Hon'ble Supreme Court had to examine the eligibility for exemption of donations to a trust created with the object "to establish, maintain and to grant and/or aid to public places of worship and prayer halls". If it could be treated, as an object which is not "religious", it would qualify for exemption. If it were to be so treated as "religious" the donor does not get deduction under section 80G of the Act, in view of Explanation 3 to section 80G(5C) and section 80G(5)(iii) of the Act, which bars such deduction for charitable institutions established for religious objects. Even if any one of the objects of a public trust should be religious in nature, it stands disqualified. The Calcutta High Court, in CIT v. Upper Ganges Sugar Mills Ltd. [1985] 154 ITR 308/23 Taxman 546, had taken the view that "prayer and worship in common parlance denote religious activities". It was ....
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....r substantially the whole of the institution or fund's charitable purpose is of a religious nature. If it did, it would read differently. It requires the entertainment of whether there is one purpose, within the institution or overall charitable purpose which is wholly, or substantially wholly, a Religious nature. Held, accordingly, affirming the decision of the High Court, that clause 2(h) of the trust deed in question which permitted the trustees to support prayer halls and places of worship set out a purpose, the whole or substantially the whole of which was of a religious nature. Therefore, the trust and the donation by the assessee to it fell outside the scope of section 80G. Decision of Calcutta High Court in CIT v. Ganges Sugar Mills Ltd. [1985] 154 ITR 308 affirmed. To reiterate, Explanation 3 does not require the ascertainment of whether the whole or substantially the whole of the institution or fund's charitable purpose is of a religious nature. If it did, it would read differently. It requires the ascertainment of whether there is one purpose within the institution or fund's overall charitable purpose which is wholly or substantially wholly, of a religious natur....
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....n the case of Arsha Vijnana Trust (supra). The Hon'ble Andhra Pradesh High Court, held that the assessee trust published various books mostly Telgu and English and included the translation of Sanskrit Ramayana, Mahabharatha and Darshannas. The trust was given the benefit under section 80G of the Act, from its establishment, without interruption, till a notice was given in January, 2003 and order was subsequently passed holding the trust ineligible for renewal U/s 80G (5)(iii) of the Act. The Hon'ble High Court upheld the order of the Director and clearly held that the fact that benefit had been granted for a long, period of twenty years, by misconstruing the law, would not be a bar for the Director of Income-tax (Exemption), to pass an order, where an application for extension of grant of exemption was made before him. Relevant part of the decision is reproduced : "Donation for charitable purposes - Effect of sub-section (5)(iii) - Section 80G - Trust publishing religious books - Not entitled to approval under section 80-G - Income Tax Act, 1961. All donations made to charitable institutions are entitled to deductions in accordance with section 80G of the Act, with certain ex....
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....ined and only to the contents of the instrument constituting the trust. (ii) Though the objects of the trust as set out in the trust deed were charitable, yet the enquiry conducted by the Director of Income-tax (Exemption) had revealed that the trust was engaged mainly in the construction of a religious temple wherein no charitable activity was being carried on. It was also not disputed that the donations received by the trust by enjoying exemption under section 80G were invested by the petitioner, the income derived therefrom was utilized for a religious purpose." (iii) That, therefore, the order of the Director of Income-tax (Exemption) denying renewal of recognition under section 80G, to the petitioner trust from April 1, 1996, onwards was justified." 14.5 The assessee trust argued and contended that it was granted exemption, in terms of the objects set out, in the unamended original trust deed, dated 20th Dec, 1993, cannot be denied renewal of the same, for subsequent period. Generally, speaking the principle of res judicata is not applicable to the income tax proceedings, as held by the Hon'ble Supreme Court, in plethora of decisions. The facts of the present case als....
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....g of the original Trust Deed dated 20th Dec, 1993, as reproduced above, reveals that even in a situation of deletion of clause (4), the unauthorized Trust Deed remains a Trust, expressed to be for the benefit of a particular religious community i.e. Hindu religious community. This factum is established from a cursory reading of the Trust Deed, amended without jurisdiction. The preamble to the original Trust Deed whereby the settlers expressed desire of creating a Trust Temple for Deity by the name -'Laxmi Narayan' and construction of the said temple remains, integral part of the said amended Trust Deed. The immovable property, as comprised in the 1st Schedule to the said Trust Deed remains untouched. The income from the said Trust property is to be applied first, in the maintenance and repair of temple property, as also to be spent for the worship of the said Deity and in defraying of the usual expenses on holding festivals of the said deity, remains intact. Similarly, the construction of the temple and worship of the said Deity and adoration of the said Deity is still an integral part of unauthorisedly amended Trust Deed. Further, holding of periodical festivals of the Deity and o....
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....as held, which was a religious and not a secular purpose. The core-ratio of the decisions of Hon'ble Supreme Court, covers the fact-situation of the present case, wherein original Trust Deed, dated 20th Dec, 1993, which was unauthorisedly amended, contains a clear clause of holding Mela for the said Deity. Consequently, having regard to the unauthorisedly amended Trust Deed, with its dominant objectives as discussed above, the assessee Trust clearly contravenes the provisions of section 80G(5)(iii) read with Explanation 3 to section 80G(5C) of the Act. Consequently, in view of the above legal and factual discussions, even the unauthorisedly amended Trust Deed does not alter the position, as contained in the original Trust Deed, in view of the three decisions of the Hon'ble Supreme Court, as cited supra. In view of this, the unauthorisedly amended Trust Deed is also ineligible for renewal or exemption under section 80G of the Act. 18. Thus, having regard to the above detailed legal and factual discussions and following the decisions of the Hon'ble Supreme Court, and jurisdictional High Court, as discussed, at appropriate place, on relevant issues, the impugned order of the Ld. CI....
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....ut compliance with the statutory conditions precedent of section 80G(5)(iii) read with explanation 3 to section 80G(5C) of the Act ?" Statement under section 255 (4) of the Income-tax Act, 1961 "1. Whether, on the facts and in the circumstances of the case, the settlers or the trustees are competent to effect valid amendment or deletion or addition to the object clause, contained in the original trust-deed, when there is no such power provided under the originally constituted trust and what are the legal consequences of such amendment? 2. Whether on the facts and in the circumstances of the case, the assessee-trust is entitled for approval, in terms of original Trust Deed and the amended one, under section 80G(5) of the Act, without compliance with the statutory conditions precedent of section 80G(5)(iii) read with Explanation 3 to section 80G(5C) of the Act ?" Statement under section 255 (4) of the Income Tax Act, 1961 "(1) Whether on the facts and in the circumstances of the case and the record available, the assessee is entitled for grant of approval of renewal of exemption under section 80G(5) of the Income-tax Act, 1961? (2) Whether on the ....
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.... for grant of approval of renewal of exemption under section 80G(5) of the Income-tax Act, 1961? (2) Whether on the facts and in the circumstances of the case, the CIT can overlook the binding precedent of the order dated 19-12-2008 passed by the ITAT, Amritsar Bench in assessee's own case in ITA No.512(ASR)/2008 in para Nos. 9 and 10, page No.5, holding that the learned CIT erroneously rejected the said corrigendum as a mere afterthought and not having any binding force and in the absence of any provision of law prohibiting the assessee from amending the original Trust Deed by way of corrigendum? (3) Whether on the facts and in the circumstances of the case, the learned CIT can refuse the approval of renewal of exemption under section 80G(5) of the Income tax Act, 1961 on the ground that one of the objects No. 4 that the assessee-trust has been established for a particular religious purpose for the followers of the diety, who have to be only Hindus, inspite of the fact that he has already granted the approval of renewal of exemption in many limes under section 80G(5) of the Income tax Act, 1961?" 3. The Hon'ble President, Income Tax Appellate Tribunal, Mumbai vide o....
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.... the Trustees doth hereby divest themselves of all ownership, control and enjoyment of the Trust Properties and grant, convey, transfer, give, assign, assure and dedicate the same absolutely and for ever unto and in favour of the diety, so as to vest the same in the said diety free from all encumbrances, in the manner hereinafter indicated and deliver possession thereof unto and in favour of the diety AND THE SAID Trustees do hereby constitute, appoint and nominate themselves as Trustees for the aforesaid properties. 3. The Trustees shall not have the power to sell or mortgage or change or otherwise encumber the Trust properties. 4. If any Trustee, renounces the Hindu religion or transfers any portion of the Trust properties in violation of the condition hereinbefore recited, then he or she shall for the purpose of this deed be considered to be dead and the person next after him or her entitled to succeed as Trustee, shall succeed. The Trustees for the time being shall hold the Trust Properties and manage the same to the best advantage of the Trust. 5. The income to the said Trust Properties shall be applied first in the maintenance and ....
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.... been established for charitable purposes in view of the conditions laid down in section 80G(5)(iii) read with Explanation-3 of the Income Tax Act. 1961 (in short 'the Act') and the decision of the Hon'ble Supreme Court in the case of Upper Ganges Sugar Mills Ltd (supra). In response to the above query, the assessee Trust submitted that the Trust was formed with the object of constructing a temple at Brinda Van for the worship and undertaking the spiritual education to the public in general. Before the CIT, the assessee also submitted a paper written on 23.12.1993 but signed on 01.8.2008 which was claimed to be a Corrigendum to the Trust Deed. Vide this corrigendum, clause 4 of the original Trust deed had been deleted, thereby changing the objects of the Trust. 6.2 The Ld. CIT rejected the arguments advanced on behalf of the assessee stating that the corrigendum is nothing but an afterthought and self serving document not legally binding. He further observed that the said corrigendum did not in any manner change the basic character of the objects of the Trust and the Trust remained a trust for a temple with a deity which was confined only to a particular community for worship. H....
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....edless to mention, the original trust deed contained provision for spending the income or assets of the trust for purposes other than charitable. Further, the trust was expressly established for the benefit of a particular religious community. These are prohibited by the conditions laid down in clause (iii) and (iv) of Section 80G (51 of the Income Tax Act, 1961. The corrigendum aforesaid brought into existence virtually a new trust which has totally changed the complexion and objectives of the Trust. In fact a new trust should have been constituted which the assessee has not done to reap the benefits of section 80G retrospectively. In this connection it would be pertinent to refer to s. no. 4 of assessee's application in F. No. 10G for grant of approval u/sec. 80G(5)(vi) of the Income Tax Act, 1961 submitted on 20.3.2008. This clause nowhere mentions the corrigendum, if any, executed and annexed thereto. In view thereof it can well be concluded that the corrigendum submitted later on is an afterthought and a self serving document submitted especially when put to question by this office and it is just to enjoy the benefits under section 80G of the Income Tax Act, 1961 retrosp....
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.....03.2011. 8. The Ld. AM in his dissent agreed with the findings of the CIT and upheld the order of CIT. He held that the aims and objects, as contained in the original Trust Deed dated 20.12.1993, executed by the trustees in terms of which trust was expressed to be for the benefit of a particular religious community definitely contravenes the provisions of section 80G(5)(iii) of the Act read with Explanation 3 of section 80G of the Act and, hence, ineligible for renewal of exemption u/s 80G of the Act. While holding so, the Ld. AM relied on the decision of Hon'ble Supreme Court in the case of Upper Ganges Sugar Mills Ltd. (supra). He further held that on perusal of the text of the original trust deed dated 20.12.1993, it would be clear that the Trustees or the Settlors are incompetent to delete clause (4) of objects of the original Trust Deed dated 20.12.1993 and add certain new objects, to the original Trust Deed, by way of mere resolution, without following prescribed procedure for such amendment, through the competent Civil Court, under section 92 of the Civil Procedure Code, 1908 or under section 26 of the Specific Relief Act, 1963, as the original trust deed, in question di....
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.... trust deed dated 20.12.1993. The trust was granted renewal of approval up to 31.3.2008. The assessee trust applied for renewal of approval u/s 80G(5) of the Act vide its application for renewal of approval dated 26.3.2008. Shri Aggarwal submitted that keeping in view the past record, the Ld. CIT ought to have accepted the application of the assessee for renewal of approval. 10. The next contention of Shri Aggarwal, Ld. Counsel for the assessee was that the Tribunal in its order dated 19.12.2008 in ITA No. 5l2/(ASR)/2008 has categorically held that the Ld. CIT(A) erroneously rejected the said corrigendum as a mere afterthought and not having any binding force. He further submitted that there is no rule or law preventing the assessee from amending the original trust deed by way of corrigendum. According to Shri Aggarwal, Ld. Counsel for the assessee, the decision given by the Tribunal in ITA No. 512/(ASR)/2008, being order of superior authority, is binding upon the CIT. Thus, there was no justification in treating the corrigendum to the original trust deed as an after thought and a self serving document by the authority below. He, therefore, submitted that the trust is entitled t....
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....nt approval of renewal u/s 80G(5) of the Act on the basis of original Trust Deed dated 20.12.1993. On the perusal of trust deed dated 20.12.1993, it would be clear that trust was created wholly for a particular purpose and religious community i.e. Hindu and not for charitable purposes and thus, it contravenes the conditions laid down in Section 80G(5)(iii) read with Explanation 3 of the Act. Section 80G(5)(iii) read with Explanation 3 read as under:- "Deduction in respect of donations to certain funds, charitable institutions, etc. 80G (1) In computing the total income of the assessee, there shall be deducted, in accordance with and subject to the provisions of this section,- ............................... ............................... (5) This section applies to donations to any institutions or fund referred to in sub-clause (iv) of clause (a) of sub-section (2), only if it is established in India for a charitable purpose and if it fulfils the following conditions, namely - (i) ... ... ... ... (ii) ... ... ... ... (iii) the institution or fund is not expressed to be for the benefit of any particular religious community or case; Expla....
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....ritable purpose, for the purposes of the section, does not include any purpose the whole or substantially the whole of which is of a religious nature ". Explanation 3, which uses this phraseology, takes note of the fact that an institution or fund established for a charitable purpose may have a number of objects. If any one of these objects is wholly, or substantially wholly, of a religious character, the institution or fund falls outside the scope of section 80G and a donation to it does not secure the advantage of the deduction that it gives. The Hon'ble Supreme Court (at page 582) held as under:- "To reiterate, Explanation 3 does not require the ascertainment of whether the whole or substantially the whole of the institution or fund's charitable purpose is of a religious nature. If it did, it would read differently. It requires the ascertainment of whether there is one purpose within the institution or fund's overall charitable purpose which is wholly, or substantially wholly, of a religious nature. There is little doubt that clause 2(h) of the trust deed which permits the trustees to support prayer halls and places of worship sets out a purpose the whole or substantially ....
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....ssessee deserve to be rejected. 20. The next argument of Shri Anil Aggarwal, Ld. Counsel for the assessee was that the Ld. CIT(A) has not appreciated the findings of the Tribunal in correct perspective given in order dated 19.12.2008 passed in ITA No. 512 /(Asr)/2008. According to Shri Aggarwal, Ld. Counsel for the assessee, in the above order, the Tribunal has categorically held that the Ld. CIT erroneously rejected the corrigendum as a mere after thought and not having any binding force. The Tribunal further held that this action of CIT cannot be sustained in the absence of any provision of law prohibiting the assessee from amending the original trust deed by way of corrigendum. Accordingly, Shri Aggarwal, Ld. Counsel for the assessee submitted that CIT being the subordinate authority was duty bound to follow the order of the Tribunal and he, therefore, submitted that findings of the CIT are contrary to law and precedents and the CIT ought to have allowed the claim of the assessee. 21. There is no dispute that the CIT is subordinate to Tribunal in judicial hierarchy. Therefore, CIT was duty bound to follow the order of the Tribunal. In my opinion, the CIT has passed a fresh....
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....t of the trust deed. Further, the trust has decided to change the objects and has decided to involve itself in the acts of the service to the society which includes construction of dharmashalas, community halls etc. which are mentioned in para 2 of the said corrigendum. Shri Aggarwal, Ld. Counsel for the assessee also submitted that a supplementary deed was also written on 21.04.2010 incorporating the objects stated in the corrigendum written earlier and was registered with Sub-Registrar, Amritsar w.e.f. 1.08.2008. He, therefore, submitted that objects mentioned in the corrigendum and also in the supplementary deed are purely charitable in nature for the general public and not for a particular religion or caste. Accordingly, it was submitted that trust is eligible for renewal of approval. 23. On the other hand, Shri Laxman Singh, Ld. DR submitted that the C1T has correctly held that the corrigendum is nothing but an after thought and self-serving document which is not legally binding. Shri Laxman Singh, Ld. DR has already contended that corrigendum dated 1.08.2008 and so called supplementary trust deed dated 21st day of 2010 are non est and merely scrap of paper because neither ....
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....trust, a trustee appointed to manage the properties of the trust for securing its object, can under no circumstances be regarded as having such a power specially when the original deed dated November 28, 1941, does not bestow such power on him. Such a question also came up for consideration before the Madras High Court in Thanthi Trust v. ITO [1973] 91 1TR 261. Dealing with the question whether the founder of a trust had power to revoke the same, the court observed as follows (pages 284-85) : "It is well established that the subsequent acts and conduct of the founder of the trust cannot affect the trust if there has been already a complete dedication, (vide Krishnaswamy Pillai v. Kothandarama Naicken [1914] 27 MLJ 582; Sunder Singh Mallah Singh Sanathan Dharam High School Trust v. Managing Committee, Sunder Singh Mallah Singh Rajput High School [1938] 1 MU 359 ; AIR 1938 PC 73, and Gokuldoss Jamnadoss and Co. v. Lakshminarasimhalu Chetti [1940] 2 MLJ 409; AIR 1940 Mad 920). If a valid and complete dedication had taken place, there would be no power left in the founder to revoke and no assertion on his part or the subsequent conduct of himself or his descendants contrary to such ....
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.... amend or alter the original Trust Deed even then on the strength of Corrigendum and supplementary deed mentioned hereinabove, the trust is not eligible for renewal of approval u/s 80G of the Act. In this regard, the Ld. A.M has correctly observed that in a situation of deletion of clause 4 of the original Trust Deed, the Trust remains a Trust, expressed to be for the benefit of a particular community i.e Hindu religious community. In this regard, Ld. A.M. has observed that the preamble to the original Trust Deed whereby the said settlors expressed desire of creating a Trust Temple for Deity by the name - 'Laxmi Narayan' and construction of the said temple remains, integral part of the said amended Trust Deed. The Ld. A.M. has also observed that the immovable property, as comprised in the 1st Schedule to the said Trust Deed remains untouched. The income from the said Trust property is to be applied first, in the maintenance and repair of temple property, as also to be spent for the worship of the said Deity and in the defraying of the usual expenses of holding festivals of the said deity, remains intact. The Ld. A.M. has also observed that similarly, the construction of the temple ....