TaxTMI 
TaxTMI 
2013 (9) TMI 438
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.... there is a certificate in favour of Rattan Kaur Memorial Educational and Charitable Trust, Faridabad dated 23- 10-1981. Please produce certificate in original alongwith MOA and Rules and Regulations. Also produce certificate in original for registration of institution u/s 12A with Income Tax Department. Please explain, once it is registered as Trust vide order dated 06-03-1978 and secondly it was registered under Societies Act vide certificate dated 23-10-1981. Further, it is noticed that the documents incorporating this organization is ambiguous and give rise to lot of confusion as to whether the institution/organization is a trust or society. This makes several clauses of the constitution redundant e.g. point 8 on Page 11, clause XXI, XXII, XXIII these clauses refer to 'Board of Trustees' - but Board of trustees does not exist. Please explain." 3. On 23.12.2009, the assessee filed a reply, which is as follows:- "1. On 6th March 1978, Rattan Kaur Memorial (RKM) Educational and Charitable Trust was registered with the Income Tax Department vide order No. 227/(24-R) 77-78/E. Original Certificate is being produce for verification. 2. The above trust is also registe....
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....e original MOA/Rules and regulation which were produced before the Registrar of Societies while obtaining registration certificate dated 23- 10- 1 981 . 2. On perusal of reply dated 23-12-2009 it is noticed that still there is an ambiguity because no trust is registered as society, only society is regd. a society under the Society Act. There is no board of trustees, present entity is not a trust. 3. Furnish/produce copy of resolution to disband the trust which will give its all assets and liabilities; which society/trust was entrusted those assets and liabilities. 5. The assessee filed reply dated 11.01.2010, which is as under:- "1.1) "Whether you are in possession of original trust deed. Please produce the Memorandum of Association, Rules and Regulations, which were produced before the registrar of Societies, Chandigarh while obtaining registration dated 23 Oct. 1981. 1.2) On perusal of reply dated 23-12-2009, it is noticed that still there is an ambiguity because no trust is registered as society. Only a Society is registered as society under the Act. There is no Board of Trustees; Present entity is not a trust. 1.3) Please furnish/produce copy of resolution to ....
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....st as an irrevocable public charitable trust". 4.2)(a)The aforementioned trust deed was submitted to the C.I.T, Rohtak on 22/07/1977 Along with the application under section 12A of the IT Act, 1961 and the said application was entered by the said C.I.T on 06/03/1978 at serial no 24-R in the Register of application under section 12A(a) maintained in his office and intimation in this regard was sent to the secretary of R.K.M. Educational & Charitable Trust and to the secretary of R.K.M. Educational & Charitable Trust and to the ITO Company ward, Rohtak and lAC Rohtak Range, Rohtak Copy of the Trust deed and statement of accounts from 14/04/1976 to 31/03/1977 of the trust were forwarded by the CIT Rohtak, to the I.T.O, Company ward Rohtak. (b) As per the law then standing, there was no requirement of passing an order granting registration to the Trust, Section 12M stipulating that an order be passed granting registration came on the statute book with effect from 01/04/1997 vide Finance (no. 2) Act, 1996. The entering of the application at the Sr. no 24-R in the register of applications amounted to registration of the Trust by the C.I.T. 5) Exemption U/S 80G of the IT Act, 196....
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....11 to 21 members elected by general Body ....." 7.6) Clause V(b) spells out the functions of the Board of Trustees, Clause (VII)(b) lays down the terms of the Board of Trustees. Clause XI prescribes "Office bearers of the Board of Trustees" & Clause XIX talks of "Trust Corpus" 8) The aforesaid documents, namely, the Memorandum of Association & Rules & Regulations were submitted to the Registrar of Firms and Societies, Haryana Chandigarh for registration, who granted registration to the assessee Trust in the following name "Rattan Kaur Memorial Educational and Charitable Trust, Faridabad. A copy of certificate of the Registrar dated 23/10/1981 has already been placed on record. 9.1) As the order granting exemption in respect of section 80G vide order dated 04/07/1981 was valid up to 31/03/1982 only the assessee applied for further extension of the said benefit, which was granted by the Ld. C.I.T. Rohtak, vide his order dated 23/04/1982. This order was to remain in vogue for a period of three years i.e. from 01/04/1982 to 01/03/1985. The assessee's application seeking the benefit of section 80G and documents filed along with it are presently not traceable in assessee's recor....
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....e Income Tax Department from time to time." 11) As regard the assessments of income of the assessee, benefit of Section 11 has all along been given to the assessee right from the very beginning on the basis of the communication of C.I.T., Rohtak in terms of Section 12A of the Income Tax Act, 1961 (Kindly See Para 4.2(a) supra) dated 06/03/1978. 12) In the background of the aforesaid facts and events, spanning over a period of 31 years, the issue raised by your Honor that a trust cannot be registered as a Society was to be decided by the Registrar of Societies, who was the competent authority and that authority duly registered the RKM Trust under the Societies Registration Act. This issue should not be raised by the Income Tax Department at this stage especially when for the purposes of assessment of Income Tax, this mere technicality whether The RKM Trust is to be assessed as a Trust or a Registered Society has no real significance as this does not jeopardize the tax revenues in any manner and the spirit of the law governing the grant of Exemption Certificate to the RKM Trust is not diluted compromised or violated in any manner. Its name is "RKM Educational & Charitable Trust....
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....e year under consideration; that the ld. CIT has erred in observing that there has been a change in the legal status of the assessee from that of a Trust to that of a society; that it was under the authority granted by the Trust Deed dated 14.04.1976 that the constitution of the assessee Trust was amended and a detailed Memorandum of Association, Rules and Regulations were drafted in September-October, 1981; that these were submitted to the Registrar of Firms and Society, Haryana, Chandigarh; that the Registrar of Firms and Societies, Haryana, Chandigarh, registered the same on 23.10.1981, in the name of "Rattan Kaur Memorial Educational and Charitable Trust, Faridabad"; that a certificate in this regard was issued by the Registrar on 23.10.81; that a copy of the certificate was duly placed on record before the ld. CIT; that the benefit of Section 11 of the Act has all along been given to the assessee Trust, right from the very beginning, on the basis of the communication dated 06.03.1978 of the CIT, Rohtak, in terms of Section 12A of the Act; that the issue as to whether a Trust cannot be registered as a society lies within the exclusive purview of the Registrar of Societies and n....
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.... mistake cannot bestow validity on that mistake and, as such, the assessee's contention of continued grant of exemption u/s 80G does not validate the same for the year under consideration also; that u/s 11 of the Act, only income from property held under a legal obligation is exempt; that the assets and funds of one entity cannot be subjected to two different sets of mandatory legal conditions, one operative for a Trust and the other for a registered Society; that it would amount to a criminal breach of trust to conduct the affairs of a Trust in accordance with the provisions of the Societies Registration Act, 1860; likewise, conducting the affairs of a Society in a manner applicable to a Trust would be violative of the provisions of the Societies Registration Act, 1860; that in these facts, the ld. CIT is perfectly justified in rejecting the application filed by the assessee; and that there is no merit whatsoever in the appeal filed by the assessee and the same be rejected outright. 9. We have heard the parties and have perused the material on record. The ld. CIT rejected the application filed by the assessee u/s 80G of the Act, observing as follows:- "8. I have carefully co....
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....nts of law for these two types of Institutions are entirely different. One cannot imagine a Trust being managed by an elected body on the pattern of a society, and the objects of the trust being amended by voting and intimation to Registrar of Societies like those of a Society. Regarding the counsel's contention that the Registrar of Societies had not objected to the Trust being registered as Society, it is observed that it is only the counsel who contends that the trust has been registered as society. Otherwise, the facts clearly bear out that the new society was registered not on the strength of half available trust deed dated 14-04-1976, but on the basis of newly prepared MOA and Rules & Regulations. As such, the apparent conclusion is that the legal status of the applicant is not clear. As the counsel contends that the trust was registered as society, so the applicant's legal status as trust ended on 22-10-1981 and instead of a trust, a new society came into existence on 23-10- 1981. 10. This society was never registered u/s 12A, so where is the question of any claim u/s 80G? In the present proceedings, the issue is whether or not the applicant institution's claim of exempti....
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.... procedure for registration. Section 12AA (1) (relevant portion) reads as follows:- "12AA. (1) The Commissioner, on receipt of an application for registration of a trust or institution made under clause (a) or clause (aa) of sub-section (1) of section 12A, shall-- (a) call for such documents or information from the trust or institution as he thinks necessary in order to satisfy himself about the genuineness of activities of the trust or institution and may also make such inquiries as he may deem necessary in this behalf; and (b) after satisfying himself about the objects of the trust or institution and the genuineness of its activities, he-- (i) shall pass an order in writing registering the trust or institution; (ii) shall, if he is not so satisfied, pass an order in writing refusing to register the trust or institution, and a copy of such order shall be sent to the applicant : ............" 12. Registration u/s 12AA of the Act is a prerequisite for grant of deduction u/s 80G. Section 80G of the Act talks about deduction in respect of donations to certain funds, charitable institutions, etc. Section 80G (5) provides that the deduction u/s 80G of the Act will appl....
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....pproval u/s 12A of the Act was granted to the Trust and not to the Society, the Society is not eligible for grant of certificate u/s 80G (5) of the Act. Undeniably, the Trust is an irrevocable Trust. Change over to the status of Society makes no difference in this position and implementation of the objects of the Trust is still a legal obligation to be discharged. 16. Still further, ever since the date of its coming into existence, the Society has remained a mere paper entity. As per the sequence of events (APB II, page 131), no return of the Society has ever been filed, no PAN was applied for, nor was any ever allotted to the assessee. The exemption u/s 80G of the Act was granted to the Trust, for the first time, for the period from 1.4.1977 to 31.3.1978 on 19.10.78. A copy of the certificate dated 19.10.78, in this regard, is at APB I, page 63. Then onwards, the exemption u/s 80G was regularly granted to the Trust. The latest order granting such exemption was that passed on 29.01.2004, for the period from 1.4.2004 to 31.03.2009 (copy at APB I, page 56). This position has not been denied by the ld. CIT. Rather, his case is that grant of further exemption would amount to perp....