Sri Dashmesh Academy Trust Vs CIT (Exemptions) (ITAT Chandigarh)
Identical contentions as were raised by the representatives of the Trust before the lower authorities that the Trust is controlled and managed by the Government or that its funds and properties otherwise belong to the Government, have been raised by the counsel for the assessee Trust before us also and further that even otherwise, dissolution clause has been added vide the amended resolution. This, in our view, is a clear and visible attempt on behalf of the trust to mislead this Bench of the Tribunal by way of concealing the real and true facts that the Members of the Trust have, by not extending the term of Board of Governors, conveniently entrusted unto themselves the control and management of the Trust. Had the case of the Trust been not carefully examined, these important and relevant facts would have remained wrapped under the carpet, and the Trust could have managed to get the relief of exemption from taxation by presenting wrong and false facts. This is a clear case of an attempt to play fraud not only with the lower Income Tax authorities, but also upon this Tribunal, which is deemed to be a Civil Court for the purpose of discharging its functions and the proceedings before this Appellee Tribunal are deemed to be judicial proceedings within the meaning of sections 193 & 228 for the purpose of section 196 of Indian Penal Code. In view of this, any attempt to play fraud on the Court by way of conveying wrong and false facts and pleadings is required to be strictly dealt with. Hence, the appeal of the assessee is hereby dismissed with exemplary costs of Rs. 1,00,000/- to be recoverable as arrears of tax Revenue by the Department.
FULL TEXT OF THE ITAT JUDGMENT
The present appeal has been preferred by the appellant-assessee namely ‘Sri Dashmesh Academy Trust’ against the denial of exemption u/s 12A of the Income-tax Act, 1961 (in short ‘the Act’) by the Commissioner of Income Tax (Exemptions), Chandigarh [hereinafter referred to as CIT(E)] vide his order dated 30.06.2017.
2. The aims and objects of the assessee society are to set up and carry on the administration and management of an academic institution at Anandpur sahib to be known as ‘Sri Dashmesh Academy’ for imparting education of high standard in general and training for administrative service and armed forces in particular to the children of persons domiciled in Punjab. It has been submitted that the assessee is an ongoing entity and has been in operation for nearly 40 years. The appellant-society filed application before the CIT (E) for registration u/s 12A of the Act so as to be able to claim exemption u/s 11 of the Income-tax Act, 1961 (in short ‘the Act’). It has been further submitted by the Ld. Counsel for the assessee that the Ld. CIT(E) rejected the application of the appellant-assessee mainly for the reason that there was no dissolution clause in the Memorandum of Association (‘MOA’) / Trust Deed of the appellant-assessee. The Ld. CIT(E) observed that in case of trust / society established for charitable or religious purposes, the income or any property of such trust or institution should be applied for such purposes only and that no part of income or any property of trust or the society should be used or applied directly or indirectly for the benefit of any person referred to in sub section (3) of section 13 i.e. the author of the trust or founder of the institution, any family member of such author or founder, any trustee of the trust or manager of the institution, any relative of such author or founder person or member trustee or manager and even any concern in which any of such person has a substantial interest including a person who has made substantial contribution to the trust of the society.
3. The Ld. CIT(A) (E) observed that in the absence of dissolution clause, there was a reasonable presumption that the assets and liability of the society will be distributed amongst the members of the society in case the society stops its operation or dissolved. He, therefore, observed that the provisions of section 13(1)(c) of the Act were clearly attracted in this case. He further observed that earlier the society was denied registration in the year 1981 by the then Commissioner of Income Tax(E), Patiala stating that the applicant was an educational institution covered u/s 10(22) of the Income-tax Act, 1961 and that the provisions of sections 11 & 12 of the Act were not applicable in this case. Thereafter, the assessee society did not file any application for 36 years. The society thereafter has been claiming deduction u/s 10(23C) (iiiab) of the Act as the entire capital cost of the school / academy has been met by the Ministry of Defence and Government of Punjab. That the society receive the grants regularly from the Government for all specific needs to meet the capital and Revenue expenditure. That there was no explanation on the part of the society as to how the case of the appellant was still not covered u/s 10(23C)(iiiab) of the Act. Finally, the Ld. CIT (E) because of the absence of the dissolution clause in the Trust deed and finding the explanation from the assessee society to the queries raised, as not plausible, dismissed the application of the appellant for registration u/s 12 of the Act.
4. Before us, the Ld. Counsel for the assessee has submitted that the objection relating to non-incorporation of dissolution clause has been addressed now and a dissolution clause has been added in the ‘MOA’, hence, the assessee Trust be granted registration u/s 12A of the Act. He in this respect has produced a letter dated 5.2.2018 along with amended Memorandum of Association and has pleaded that the society, during the meeting of its members held on 17.7.2017 under the Chairmanship of Sardar Parkash Singh Badal, has amended the Memorandum of Association wherein a dissolution clause (xvi) has been added. The contents of the said letter dated 05.02.2018 are reproduced as under:-
“2740893
0172-2740303
‘SRI DASMESH ACADEMY TRUST
No. SDA/Trust
H.No. 60, Sector -5,
Chandigarh
————————————————————————————————————–
No. SDA.MOA/2018 05
Feb 2018
To
The Registrar,
Registrar of Firms& Societies Punjab,
Sectro 17, Chandigarh
Sub:- ADDITON/ AMENDMENT TO “MEMORANDUM OF ASSOCATION” SRI DASMESH ACADEMY TRUST
1. Reference discussion held in your office in Jan 2018 on the subject
2. Following Registers containing Minutes of Board of Governess Meeting held since 1978 onwards are sent herewith addition desire:-
3. (a) Registrar containing Board of Governors Meeting from Ser No. 01 to 06.
(b)Register containing Board of Governors Meeting from Ser No.07 to 19.
2. Last Meeting of Board of Governors was held on 15 May 2007 (MS-3)
3. Term of ”Board of Governors was NOT extended further by the Members of the Dasmesh Trust.
4. During the meeting of Member of Sri Dasmesh Academy Trust held on 17 July 2017, under the Chairmanship of Sardar Parkash Singh Badal, it was decided to Add the amendment to Memorandum of Association vide Sub Hed (Item No. III) of the Minutes, Copy of Minutes are enclosed.
