By TIOL News Service

AHMEDABAD, FEB 26, 2018: THE issue before the Bench is - Whether details of the assessee trust contained in the order of Wakf Board are sufficient to establish its existence as a trust, for the purpose of registration u/s 12AA. And the HC verdict is YES.

Facts of the case

The Assessee-trust, a Wakf duly registered with the Gujarat State Wakf Board, had applied for registration u/s 12AA of the Act. Along with the application for registration, certain documents were produced which included an order passed by Gujarat State Wakf Board recognising various Daudi Vohra Shiya trusts as registered under the said Board. It also included an annexure which gives the details of data and number of registration, name of the trust, names of Mutawalli and managers of the trust, objects of the trust and the manner of appointment of Mutawallis.

However, the PCIT rejected the application on the ground that the assessee did not had a registered trust deed. On Assessee's appeal, the Tribunal remanded the proceedings for fresh consideration by the authority by giving further opportunity. However, once again, the application was rejected on the ground that the Assessee instead of submitting the copy of the trust deed had merely submitted a copy of the order passed by the Gujarat State Wakf Board which could not be substituted for a trust deed. Thereafter, the matter once again reached the Tribunal and the appeal was allowed.

After hearing the parties, the High Court held that,

++ from the materials on record, it can be seen that the Tribunal had gone through the registration details of the assessee trust contained in the order of Wakf Board and was satisfied that full details of the functions of the trust were available which would establish the existence of the trust, its registration by the Gujarat State Wakf Board which also contained details of objects of the trust, manner of appointment of Mutawalli etc;

++ clause (a) of rule 17A of the Income Tax Rules requires that the application of registration under section 12A of a charitable or religious trust or institution would be accompanied by the following documents namely, where the trust is created or the institution is established, under an instrument, the instrument in original and where the trust is created or the institution is established, otherwise than under an instrument, the document evidencing the creation of the trust or the establishment of the institution. Thus rule 17A nowhere envisages the existence of a trust deed or its registration. The factum of existence of trust can also be established by producing documents evidencing the creation of the trust. This is precisely what has been done in the present case. The order passed by Wakf board dated 20.11.1999 recognises various Daudi Vora trust and in case of present assessee also enlisted the objects of the trust, who would be the managers of the trust and how such managers would be appointed or removed;

++ the Madhya Pradesh High Court in case of Laxminarayan Maharaj, noted that the assessee was a public religious trust which was created more than 100 years back but not under any instrument or document. The assessee had filed application for registration under section 12A of the Act along with which it had produced revenue records relating to the lands held by the trust and orders relating to assessment of property tax and affidavits and declaration of citizens in support of the existence of the trust. The High Court overruled the decision of the commissioner rejecting the application holding that the trust is created can be established by producing constructive and evidencial documents. If the trust is created under an instrument, rules require production of documents. However, when the trust is not created, it is impossible to produce any such documents. Hence the rule requires production of evidential documents.

(See 2018-TIOL-346-HC-AHM-IT)