TaxTMI 
TaxTMI 
2015 (9) TMI 1240
X X X X Extracts X X X X
X X X X Extracts X X X X
.... order of the learned DIT(Exemption) u/s 12AA(1)(b) refusing to register the Trust is purely based on suspicion, surmises and conjectures without there being any evidence or material in support thereof. 4. That the order of the learned DIT(Exemption) is devoid of any reasonable basis and is sought to be sustained on account of non-fulfillment of assumed requirements (Execution of Trust deed and its Registration) for which there is no compulsion in Law, in the face of the position emerging from the well sustained contentions of the appellant Trust. 5. That the findings arrived at by the learned DIT(Exemption) about the appellant Trust's activities being not genuine are contrary to the facts of the appellant Trust's case and material placed by it on record before him. 6. That the finding of the learned DIT(Exemption) about the benefit of the appellant Trust's (charitable) activities not being available to all communities and people and its being a private religious body is grossly erroneous and devoid of any material basis. 7. That the learned DIT(Exemption) has erred on facts and in law in rejecting the appellant Trust's application seeking regist....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... and, at that time, there was no law for execution of a trust deed and the trust relates to the period before coming into force the Indian Trust Act or the Income Tax Act, 1922 or 1961. He submitted that the assessee has filed a duly sworn declaration of trust dated 29th March, 2011 by His Holiness Shri Ogyene Trinley Dorjee, the 17th Gyalwang Karmapa, the present head of the Karma Kagyu lineage residing in exile in Dharamshala (Himachal Pradesh) along with two other office holders of the trust, wherein it was unequivocally declared that the trustees stand possessed of the 'trust fund' comprised of both movable and immovable properties which are duly accounted for in the books of account of Tsurphu Labrang and all the income arising there from upon trust shall be applied for the aims and objects of the trust. He submitted that the aims and objects and purposes of the trust have been detailed in the said declaration of the trust, copy filed before the Revenue authorities and as well in the compilation filed before the Tribunal. The various terms and conditions for the smooth running of the affairs of the trust and also regarding appointment of additional trustees etc. have been deta....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ty and performing charitable activities for the purpose are entitled to the exemption from tax and registration u/s 12AA of the Act. He relied on the decision of Hon'ble Supreme Court in Ahmedabad Rana Caste Association Vs. CIT, Gujarat - [1971] 82 ITR 704 (SC), and of Hon'ble Allahabad High Court in CIT Vs. Pt. Ram Shanker Misra Trust - [1996] 222 ITR 252 (Allahabad) and CIT Vs. Surji Devi Kunji Lal Jaipuria Charitable Trust (No.1) - [1990] 186 ITR 728 (Allahabad) in support of his arguments. 4. The learned counsel for the assessee submitted that the DIT(Exemptions) while making enquiries during the course of proceedings u/s 12AA/12A of the Act for grant of registration could make enquiry only regarding the genuineness or otherwise of the objects of the trust but not regarding the application of income of the trust for charitable or religious purpose, which is a subject matter of the assessment, to be considered by the Assessing Officer at the time of assessment. For this proposition, the learned counsel for the assessee relied on the following decisions:- (i) Malik Hasmullah Islamic Educational and Welfare Society Vs. CIT, Faizabad - [2012] 138 ITD 519 (Lucknow). (ii....
X X X X Extracts X X X X
X X X X Extracts X X X X
....lar in the provision of Section 12AA, the Department is to satisfy itself not only with regard to genuineness of the trust but also with regard to genuineness of the activities of the trust. He submitted that in this case, the assessee could not file any evidence to prove that the trust was created in the year 1159 AD and was doing charitable activities. He submitted that the onus was on the assessee to file evidence that the objects exist in the year 1159 AD and amendments to the objects of the trust were made by the trust with the resolution passed from time to time and credible evidence has to be filed by the assessee trust to prove the same. He submitted that a plain reading of the objects of the trust as detailed in the declaration of the trust dated 29th March, 2011 makes it clear that these could not be the aims and objects of the trust in the year 1159 AD. He referred to the aim & object No.(l) wherein it is mentioned that the assessee trust "to undertake to establish, aid, manage and or run any institution or project of general public utility which is a charitable purpose within the contemplation of clause (15) of section 2 of the Income-tax Act, 1961 which is not in derog....
X X X X Extracts X X X X
X X X X Extracts X X X X
....egistration from assessment year 2011-12 onwards and has applied for registration u/s 12AA/12A on 31st March, 2011 and, therefore, to say that there is a delay in applying for registration u/s 12AA/12A of the Act, is not relevant. He submitted that the assessee was in the process of acquiring premises in Delhi at the time of filing of application for registration u/s 12AA/12A of the Act and, therefore, for compliance purposes, has given the address of his counsel having office at Tis Hazari Court, Delhi. He submitted that this issue was not raised by the learned DIT (Exemptions) and, therefore, could not be allowed to be raised in the appellate stage before the Tribunal. He submitted that the 17th Karmapa, the head of the assessee trust, has not taken a single penny as salary and has already renounced the world and merely taking food and clothes could not be said to be a violation of the provision of Section 13 of the Income-tax Act. He submitted that the assessee has filed a copy of the declaration of trust by His Holiness 17th Karmapa running in 18 pages before the Revenue authorities as well as the Tribunal and has also filed the copies of 29 other eminent persons well versed wi....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... the main seat of the Karma Kagyu lineage, a sect of Buddhism practiced all over the world. At present, the 17th Karmapa is the supreme spiritual head of Karma Kagyu lineage and, like his predecessors right from the 1st Karmapa, the present Karmapa 17th in line has already renounced the material world to preach the Dharma and does not accept or own any kind of properties personally and, by tradition, have been diverting all such offerings at source to the charitable purposes of general public utility and for propagation of Dharma and Gyan. In the year 1959, His Holiness the 16th Gyalwang Karmapa, followed by Lamas, Sangha and lay communities carrying with them religious ritual articles, murals and lama dance costumes etc. fled Tibet and came into exile in the erstwhile Himalayan Kingdom of Sikkim, now a part of India. Later on, the seat of His Holiness the 17th Karmapa moved from Sikkim to Dharamshala in Himachal Pradesh in January, 2000 and the national headquarters of Tsurphu Labrang were located in Delhi. On 29th day of March, 2011, the present Supreme Head of the sect the 17th Karmapa made a 'declaration of trust' by way of duly sworn affidavit wherein the relevant facts with r....
X X X X Extracts X X X X
X X X X Extracts X X X X
....mendment to the objects of the trust were made with the resolution passed from time to time and credible evidence has to be filed by the assessee trust to prove the same. The learned CIT-DR has pointed out certain aims and objects detailed in the declaration of the trust dated 29th March, 2011 which could possibly not exist in the year 1159 AD. The Revenue has also objected to the belated application of the assessee trust for registration u/s 12AA/12A filed on 31st March, 2011 as there was no valid reason for such inordinate delay. The department was not satisfied that the assessee has undertaken activities of charitable nature or with regard to the genuineness of the activities. The Department has concluded that the assessee trust exists for a particular caste or community and not public at large and has objected to violation of foreign exchange laws by the assessee trust. The department has also objection to the personal expenses of the head of the trust, the 17th Karmapa, from the funds of the assessee trust. 11. We find that the various issues as culled out from the pleadings of the parties could be summarized as under:- (I) Whether, for registration under the provisions ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....clause (aa) of sub-section (1) of section 12A for registration of a charitable or religious trust or institution shall be made in duplicate in Form No.10A and shall be accompanied by the following documents, namely :- (a) where the trust is created, or the institution is established, under an instrument, the instrument in original, together with one copy thereof; and where the trust is created, or the institution is established, otherwise than under the instrument, the document evidencing the creation of the trust or the establishment of the institution, together with one copy thereof : Provided that if the instrument or document in original cannot conveniently be produced, it shall be open to the Commissioner to accept a certified copy in lieu of the original; (b) where the trust or institution has been in existence during any year or years, prior to the financial year in which the application for registration is made, two copies of the accounts of the trust or institution relating to such prior year or years (not being more than three years immediately preceding the year in which the said application is made) for which such accounts have been made up." ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... Rules. Accordingly, any evidence to establish the creation of the trust or the establishment of the institution could be filed by the assessee in support of its case. The argument of the learned CIT-DR that the assessee has not filed the names and addresses of the donors, we find that the donation can be anonymous also and the taxability thereof can be decided at the time of assessment to be framed by the Department. The plea of the learned CIT-DR, that the trustees took refuge in Sikkim which is part of India since 1975 for 35 years, no return of income was filed by the assessee nor any application for registration u/s 12A was submitted and that the returns for the assessment year 2005-06 to 2010-11 do not contain the stamp affixed by the Department showing the date of receipt thereof, has no relevance as the assessee has sought the benefit of registration u/s 12AA/12A from assessment year 2011-12 onwards only and not the earlier years. The plea of the learned CIT-DR regarding the involvement of the name of the 17th Karmapa in a case u/s 120B (Criminal conspiracy) of Indian Penal Code, which was later on quashed by the Lower Court against the Karmapa and the order of the Lower Co....
X X X X Extracts X X X X
X X X X Extracts X X X X
....asis of inferring creation of the trust and all such documents can be described to be 'document evidencing the creation of the trust' within the meaning of rule 17A( a). A document directly evidencing the creation of the trust is normally the constitutive document which cannot be produced when the trust is not created by an instrument and if the words 'document evidencing the creation of the trust' are construed as limited to documents directly evidencing the creation of the trust, it will be nearly impossible to have a trust registered which was not created under an instrument. This could never have been the intention of the framers of the rule. In our opinion, these words embrace all evidential documents, i.e., all documents which afford a logical basis of inferring creation of the trust. The revenue papers produced by the petitioners consisted of Jamabandis of 1910-11, 1929-30, patta issued in 1931 and Jamabandi of 1954-55. In all these documents, the petitioner-trust is entered as tenant or bhumiswami and the name of the Sarbarahkar is also mentioned. The assessment orders relating to the property tax for 1967-68 to 1974-75 were filed. All these documents, thoug....
X X X X Extracts X X X X
X X X X Extracts X X X X
....nce costumes fled Tibet and came into exile in the erstwhile Himalayan Kingdom of Sikkim, now a part of India. Later on the seat of His Holiness the 17th Karmapa moved to Dharamshala in Himachal Pradesh in January, 2000 and the National Headquarters of Tsurphu Labrang were located in Delhi. It was declared in the declaration of the Trust that the trustees stand possessed of the "Trust Fund" comprised of the moneys and other properties, both movable and immovable, which are duly accounted for in the books of accounts of Tsurphu Labrang and is carried forward every year on its balance sheet and the income arising there from is applied to the administration or execution of the aims and objects of the Trust. We hold that in accordance with the provisions of the Income-tax Act, 1961 and rules made there under, the execution of a formal deed of trust was not necessary for grant of registration u/s 12AA/12A of the Act. 18. With regard to the second issue that whether the aims and objects and purposes of the assessee trust were charitable in nature, qualifying for registration u/s 12AA/12A of the Act, the aims & objects and purposes of the Trust have been detailed in the said declaratio....
X X X X Extracts X X X X
X X X X Extracts X X X X
....unt of origin, colour, religion, cast, creed or gender; and k) To render assistance, including financial help, to the deserving students and scholars, especially from the weaker sections, of the society at large without any discrimination on account of origin, colour, religion, cast, creed or gender; and l) To undertake to establish, aid, manage and or run any institution or project of general public utility which is a charitable purpose within the contemplation of clause (15) of section 2 of the Income-tax Act, 1961 [43 of 1961] which is not in derogation of the tenets of the Dharma preached and propagated by it; and m) To aid printing, publishing and distribution of books, literature and other communication materials for disseminating and promoting dharma and gyan; and n) To aid restoration and renovation of old monasteries and other cultural establishments for the preservation of culture and tradition in the Himalaya region; and o) To undertake and or aid programmes and projects for the preservation and protection of environment with active engagement of monasteries, communities and other related development organizations; and ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....f the assessee-trust which could be called not charitable in nature. The assessee has filed various other evidences in support of its case that the assessee trust existed centuries ago and exists till date. The assessee has filed duly sworn affidavits from 29 eminent persons well versed with the assessee trust, deposing on oath that the assessee trust existed from the year 1159 AD for the aims and objects as specified in the declaration of Trust dated 29.03.2011. The copy of the Revenue record and the copy of registration certificate issued by the Human Resource Development Department, Govt. of Sikkim dated 31.08.2009 granting registration to the school run by assessee-trust, copy of recognition letter dated 28.02.1984 issued by Govt. of Sikkim of Nalanda Institute for Higher Buddhist Studies run by the assesseetrust and various documentary evidence in support of the case of the assessee that it performed various charitable activities including educational, environment protection, medical relief to the poor for the public at large without any discrimination on account of religion or caste, have been filed in the compilation before the Tribunal. The Revenue could not file any eviden....
X X X X Extracts X X X X
X X X X Extracts X X X X
....he second issue is also decided in favour of the assessee and it is held that the aims and objects and purposes of the assessee trust were charitable in nature, qualifying the trust for registration u/s 12AA/12A of the Act. 21. With regard to the third and fourth issues that whether the DIT(Exemptions) could go into the issues relating to income and expenditure account of the assessee, which were the subject matter of assessment and whether they were relevant for the purpose of granting or otherwise of registration u/s 12AA/12A of the Act, we find that while making enquiry during the course of proceedings of granting registration u/s 12AA/12A of the Act, the DIT(E)/CIT(E) is to examine the aims and objects of the trust and that whether they are charitable in nature. The stage for application of income shall arrive when such trust or institution files its return of income with the Assessing Officer. In a case where the DIT(E)/CIT(E) is satisfied after examining the aims and objects of the institution/trust that they were genuine and were charitable in nature and the institution/trust has fulfilled other statutory conditions for grant of registration u/s 12AA/12A of the Act, the D....
X X X X Extracts X X X X
X X X X Extracts X X X X
....bjects for the benefit and betterment of a particular community would be eligible for registration u/s 12AA/12A of the Act. The law does not compel a charitable institution/trust to do charity for the whole planet. In case an institution/trust exists for charitable purposes for the benefit of an indeterminate group of people, the same shall be eligible for registration u/s 12AA/12A of the Act. It is now well-settled that an object beneficial to a section of the public is an object of general public utility. The intention of the institution/trust should be impersonal in nature and for a sufficiently defined and identifiable section of the public. 27. In Ahmedabad Rana Caste Association Vs. CIT, Gujarat - [1971] 82 ITR 704 (SC), the facts were that the assessee, an association of persons, held properties for various purposes including management of the movable and immovable properties of the Rana caste or community of the city of Ahmedabad and doing acts of improving the education of the community, giving medical help to the community etc. Hon'ble Apex Court held that it is well-settled that an object beneficial to a section of the public is an object of general public utility. To....
X X X X Extracts X X X X
X X X X Extracts X X X X
....charitable object. 30. In CIT Vs. Surji Devi Kunji Lal Jaipuria Charitable Trust (No.1) - [1990] 186 ITR 728 (Allahabad), it was held by the Hon'ble High Court that in order to make a purpose charitable, it is not necessary that it should be beneficial to the poor only and what is required is benefit to a section of the public as distinguished from specified individual. 31. In All India Spinners' Association Vs. CIT, Bombay - [1944] 12 ITR 482 (PC), the test of 'general public utility' was examined and it was held that they are very wide words and would exclude the object of private gain, such as an undertaking for commercial profit though all the same it would subserve general public utility. In this case, the All India Spinners' Association was formed for development of handspinning and hand-weaving for relief of poverty and income was derived by sale of cloth. The issue was decided in favour of the assessee and the assessee's appeal was allowed by Hon'ble Privy Council. 32. In Malik Hasmullah Islamic Educational and Welfare Society Vs. CIT, Faizabad - [2012] 138 ITD 519 (Lucknow), the assessee society was having principal object to establish schools and educational inst....
X X X X Extracts X X X X
X X X X Extracts X X X X
....his view of the matter, the issue is decided in favour of the assessee and it is held that the supreme head of the trust taking food and clothes and similar basic needs from the funds of the trust were not violative of the provisions of Section 13 of the Act. 34. In this view of the matter, we hold that the execution of a formal deed of trust was not necessary for grant of registration u/s 12AA/12A of the Act and that the aims and objects and purposes of the assessee trust were charitable in nature and the issues relating to the income and expenditure account of the assessee were the subject-matter of assessment and were not relevant for the purpose of grant or otherwise of registration u/s 12AA/12A of the Act, and the activities of the trust for the benefit of a particular community would not debar the institution/trust from exemption from tax and registration u/s 12AA/12A of the Act and, that the learned DIT(Exemptions)/CIT(E) could make enquiries during the course of proceedings for registration u/s 12AA/12A with regard to the genuineness or otherwise of the aims and objects of the trust and not regarding the application of income of the trust for charitable or religious purp....