TaxTMI 
TaxTMI 
2017 (8) TMI 1315
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....on 13.12.2010:- (i) Whether granting registration to a private trust u/s. 12A was legal and proper especially when Sections 2(15),11, 12 & Section 13 specifically restricts use and application of voluntarily contribution/income for the benefit of private person u/s.13(3)? (ii) Whether applications of Rajasthan Public Trust Act, 1959 can be applied to the private trust especially when they are covered by the Indian Trust Act, 1882?" D.B. Income Tax Appeal No.273/2016 admitted on 17.01.2017:- "(i) Whether on the facts and circumstances of the case and in law, the Hon'ble ITAT was justified in allowing Gujara Bhatta as application of income of the trust by following earlier order in spite of the fact that is as not fixed by the State Government as per Section 65 of the Rajasthan Public Trust Act, 1959 r.w. Rule 38 of the Rajasthan Public Trust Rules, 1962?" (iii) Whether the provisions of Rajasthan Public Trust Act are applicable to the Trust when the Trust is specifically governed by the Indian Trust Act 1882?" D.B. Income Tax Appeal No.274/2016 admitted on 7.12.2016:- "Whether on the facts and circumstances of the case and in law, the Hon'ble ITA....
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....sappropriation and criminal breach of trust. As expressed by the late Hon'ble Justice Chagle C.J. of Bombay, in his judgment that "The whole attempt and the whole object is to see that the properties settled on public and charitable trusts are properly managed and are properly administered, that the trustees keep proper accounts that the trustees render those accounts, answer questions put to them arising out of those accounts and every single provision contained in the Act is incorporated from that point of view. Ratilal Pannachand Gandhi Vs. State of Bombay, 55 Bom. LR 86= AIT 1953 Bom. 242= ILR 1953 Bom. 1187. The utility of this Act is being realised by the members of the public and the Bombay High Court had made a survey of this Act in a case reported as C.C. vs. Municipality of Taloda, 65 Bom.LR 27. The Gujarat High Court also had made a survey of this Act in cases reported as Kuberbhai vs. Purshottamdas, (1961) 2 GLR 564; Lallubhai G. Parikh vs. Acharya Shri Vrijbhushanlal Balkrishanlalji, (1967) 8 GLR 42. As the law stands, the trustees of the charity, however small, has to perform onerous duties involving a certain amount of expenses, Gross abuses of public trusts....
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....aside of income for the descendants of the donor constitutes a trust for general public utility. The beneficiaries are to be members of the donor's own family. The utility is not of a public, but clearly of a private nature. For these reasons we would answer the first question in the negative. The second question calls for no discussion. The position is that the muthavalli has in his hands income belonging to a private trust. Income of a private trust is not exempt from taxation and the muthavalli is assessable in respect of it, because he holds it. It follows that the answer to the second question is in the affirmative." 7. He therefore contended that the view taken by the tribunal is required to be reversed. 8. Mr. Jain has also taken us to the observations made by the tribunal in para 6 which reads as under:- 6. We have heard and considered the arguments advanced by the parties in view of orders of the ld.CIT, material available on record and the decision relied upon. The ld.CIT has raised two issues. Firstly as to whether the assessee is a private trust since it is run by the representative of three families and secondly as to whether it is for their benef....
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....rust for the purposed of the Indian Income-tax Act. All that is required is that the fund is spent or accumulated for religious and charitable purposes. The Jodhpur Bench of ITAT in case of Smt. Mansukhi Devi Bihani Jan Hitkari Trust Vs. CIT 277 ITR 140 (AT) (Jodh.) after discussing the facts of the case observed that in the case before them, it is not in dispute that application for registration has been made in the prescribed form i.e. Form No. 10A. It is also not the case of the Department that the property held by the trust and income therefrom had not been utilized for the purposes of charity/public utility. The only reason for not granting registration was that there is a clause in the trust deed that "in the event of a vacancy arising in the board of trustees for whatever reasons, the remaining trustees shall co-opt another major male or female person out of the family members of that person to fill up the vacancy". Only on that basis, the learned Commissioner of Income-tax considered that the trust was a family affair/settlement. However, he has not brought any material on record that by co-opting a person from the family of the previous trustee, how the object of the trust....
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.... at the stage of consideration of the issue of registration under section 12AA, it is not a sine qua non to examine the aspect of the application of income. When the Commissioner has not doubted the aims and objects of the society, he cannot throw away the application of registration on this pretext. In case of Dream Land Educational Trust Vs. CIT 109 TTJ (Asr.) 850, it was held that for grant of registration under section 12AA, only relevant consideration is satisfaction of Commissioner regarding objects of trust and genuineness of its activities; in absence of any dissatisfaction of Commissioner with regard to either objects or genuineness of activities of trust, if registration is refused to trust, it would be violation of provisions of section 12AA. In case of Asstt. DIT Vs. Rajasthani Shiksha Samiti 23 SOT 124 (Hyd) it was held that when registration to a trust is granted by the Commissioner u/s 12A, then it is for the AO to examine every year whether income has been applied by assessee for charitable purpose or not and if income is not so apply, it wold be duty of AO to tax such income but he cannot further held that trust is not established for charitable purpose. The Hon'bl....