TaxTMI 
TaxTMI 
2015 (11) TMI 115
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.... however the cruxes of the issues are that:- 1. The Ld. CIT (A) has erred in upholding the action of the ld. Assessing Officer by denying exemption U/s.11 & U/s.12 of the Act for the following reasons. i) That the induction of a minor Ms.Thara Bhaskaran as a Trustee has rendered the trust void ab-inito. ii) That the Trustees reside outside India. iii) That the Trust is a private Trust. iv) That the absence of saving clauses in Trust Deed. 2. The Ld. CIT (A) has erred in confirming the order of the Ld. Assessing Officer for levying interest U/s.234B of the Act. On this issue we have on several occasions held that, levy of interest U/s. 234B of the Act is consequential and therefore it is disposed off accordingly. 3. T....
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.... as one of the trustees. In this context, we wish to humbly submit that there are four essential elements of a valid charitable trust - Charitable or Religious object: The object or purpose of the trust must be a valid charitable purpose according to law. Capacity to create Trust: The founder or settlor should be capable of creating a trust and dedicating his property to that trust. Certainty of object and dedication thereto : The settlor should indicate precisely the object of the trust and the property in respect of which it is made. The property should be dedicated to the trust and the owner must divest himself of the ownership of that property. Concurrence with the law: The trust or its objects must n....
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....l only be from the family of Mr.Sethu Kumaran and Thara Bhaskaran (son and minor daughter of Settlor Mr.Sethu Bhaskaran). Having held the trust to be legally invalid the Ld. Assessing Officer denied the benefit of Section.11 & 12 of the Act and assessed the income of the assessee trust as AOP at maximum marginal rate. 4. On appeal, the Ld. CIT(A) endorsed the view of the ld. Assessing Officer with the following observations:- "Decision 4. The only issue involved in the appeal is whether the trust is a valid one entitled for registration U/s I2A(a) of the Act and in consequence entitled for exemption u/s 11 of the Act or not ? The AO held that the assessee trust is not entitled for exemption u/s 11 of the Act as one a....
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....he Act. This was not done in this case. 4.1 Sub-section(2) of section 1 of the I.T. Act, 1961 says that the Act extents to the whole of India, In this case, one of the trustees resides abroad and the arguments of the assessee are silent on the status of that trustee i.e. whether she is subject to Indian Income-tax Act or not ? Expediency requires that a trustee should be a person within the reach of the arm of Indian Courts. The trust deed does not contain specific proviso regarding any amendment and approval if any to be obtained from the CIT/DIT(Exernptions) as the case may be. Perusal of the records reveals that Mr. Sethu Bhaskaran, Founder Trustee, Mrs. Kamala Bhaskaran and Mrs Tharkeswari, trustees at No.104. Prinsep St. 5.02,....
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....d, Ld. D.R argued in support of the orders of the Revenue and pleaded that their orders may be confirmed. 5. We have heard both the parties and carefully perused the materials available on record. It is apparent from the orders of the Revenue that the Ld. DIT(E) at the time of granting registration U/s.12AA of the Act has recognized the assessee Trust as a valid charitable trust. When the case came up for assessment, the facts with respect to the creation of the trust, appointment of trustees and its existence has not changed. However, the Ld. Assessing Officer as well as the Ld. CIT (A) opined that the trust is invalid because one of the trustees is a minor and another trustee is residing abroad and therefore it has to be assessed as an....
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....f February, 1989 in India. These facts are not disputed. Further, the Author of the Trust Mr.Sethu Baskaran has appointed himself along with Mr.Sethu Kumanan aged 26 years, Mr.L.Sowmiya Murthy, aged 40 Mrs.Kamala Bhaskaran aged 52, and Ms.Thara Bhaskaran aged 16 years as the Trustees of the Trust. As per Section-10 of the Indian Trusts Act, 1882 any person capable of holding property may be a trustee but where the trust involves the exercise of discretion, he cannot execute unless he is competent to contract. Further, no one is bound to accept a trust. A Trust is accepted by any words or acts of the trustees indicating it reasonable certainty of such acceptance. A trustee may also disclaim to be a trustee and shall prevent the trust propert....