TaxTMI 
TaxTMI 
1995 (12) TMI 89
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.... was granted would not make the Trust a charitable trust. 4. The donations/gifts received by the assessee-Trust were not income in the hands of the assessee-Trust. 2. Briefly the facts : The assessee-trust was created by a Deed of Trust executed by an between The Concast (India) Pvt. Ltd., Settlor and Shri N.K. Nayar, R.M. Prabhu and Shri S. Kalyanpur, trustees. This Deed of Trust was sworn, scaled and executed on 25th day of March, 1977. The Trust is irrevocable, it was registered with the Charity Commissioner under his No. E-9087 on 23-11-1982. It was registered with the Commissioner of Income-tax, Bombay City-IV, Bombay under his No. IMS/15694 dated 22-3-1983. Certificate under section 80G was issued to the trust on 19-7-1983. It was valid up to 31-3-1985. Again the validity was extended up to 18-3-1989. This trust was created for providing financial assistance to the dependent children of the employees of the Settlor or its associated companies and deserving students from the territory of Maharashtra. 3. Schedule A of the Trust Deed contained the name of initial beneficiaries. Clause 5 of the Trust Deed reads as under : "The Trustees shall hold the Trust Fund upo....
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....sp; 1,950 (iv) Master Nihar Kalyanpur 699 (v) Miss Roshna Kalyanpur 744 5. Similar expenses were incurred in earlier years also on these persons. Assessing Officer examined the following under section 131 of the Income-tax Act, 1961. (i) Shri Sarosh Nayar, son of Shri Narinder Nayar (ii) Miss Shireen Nayar--daughter of Shri Narinder Nayar (iii) Shri V.K. Kotian--son of Shri K.B. Kotian, trustee Shri Narinder Nayar was also a director of Concast (I) Pvt. Ltd., Conin Engg. Ltd. and IRD Mehanalysis (India) Ltd. In his statement Shri Sarosh Nayar stated that he was studying in USA and that he got scholarship from Tenner Trust. It was stated that he got assistance from Concast (India) Educational Trust, but he was not aware of the mode of payment, amount of payment and the manner in which he received the assistance. 6. Miss Shireen Nayar stated that she received about 500 pounds per quarter from Concast (India) Educational Trust. She could not tell that the amount with exactitude received from the trust. Following beneficiaries were found to be relatives of the ....
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.... children of the donor companies, the amounts donated by debiting welfare expenses account which is contrary to the provisions of section 40A(9) to (ii) allocating the amounts of the trust except the relationship of the beneficaries to the important directors of the companies in whose case it is obvious that if such perquisites had been added they would have paid substantially higher taxes. (c) that the assessee-trust has clearly violated the provisions of sections 13(1)(c)(ii), 13(2)(g) & 13(3)(cc)(a) & (e) by giving the benefits to the interested persons of the trustees. (d) Further, it is seen that the assessee-trust is not filing the audit report as required under section 12A of the Income-tax Act, 1961 in Form No. 10B. The assessee-trust was asked to file Audit Report vide this office letter of even number dated 23-11-1989 which was served on them on 24-1-1989 giving a days time to comply. Again summon under section 131 was issued and duly served on the assessee on 3-2-1989 fixing attendance on 10-2-1989, inter alia, to file Form No. 10B. The assessee again avoided to attend by sending a letter dated 9-2-1989 in tapal." 8. The Commissioner of Income-tax (Appeals) foun....
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....ed from property held under trust wholly for charitable or religious purposes and the provisions of that section and section 13 shall apply accordingly." It was contented that prescription of the aforesaid sections cannot be applied in the case of the assessee-trust as it was held to be not really charitable trust vide para 10 of the assessment order. 11. It was further submitted that the trust cannot be treated as a charitable trust for giving tax treatment just because registration as contemplated under section 12A was given or that Charity Commissioner conferred the status of charitable trust and the continuance of section 80G benefit was extended to the assessee-trust. The language of section 2(24)(iia) is abundantly clear. There is no ambiguity of section 12. These sections are not relevant in the present case because the trust was found not to be a public charitable trust. 12. In order to buttress the argument put forward, Id. counsel, relied on the following : 1. Mercantile Bank of India (Agency) Ltd. In re [1942] 10 ITR 512 (Cal.) 2. J.K. Hosiery Factory v. CIT [1971] 81 ITR 557 (All.) 3. Trustees of Gordhandas Govindram Family Charity Trust v. CIT [1973] ....
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....the availability of benefit under section 11 may be denied. Conditions contained under section 13 purport to restrict the benefit. The status and character do not get altered. 16. In order to get registration assessee is required to make application under section 12A(a) of the Act. On the basis of such application, registration is granted. Once the registration is granted, it is a sufficient proof of the fact that the trust is created or established for charitable or religious purposes. In such a case, Assessing Officer is not empowered to come to a different finding. Assessing Officer is entitled only to forfeit the exemption available to the trust for non-fulfilment of any statutory requirement and/or contravention of any other provisions of the law. 17. The definition of income in section 2(24) of the Income-tax Act, provide that voluntary contribution received by charitable or religious trust regardless of whether such trust or institution has been created or established wholly or partly for the charitable or religious purposes will be regarded as income for the purposes of Income-tax Act. The income from voluntary contributions may or may not enjoy the exemption. Conditi....