KPT EMPLOYEES WELFARE TRUST Vs. COMMISSIONER OF INCOME TAX
HIGH COURT OF GUJARAT
Kpt Employees Welfare Trust
COMMISSIONER OF INCOME TAX
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K.S. Jhaveri, J. -
(1.) BY way of this petition, the petitioner -Trust has challenged the order passed by the Office of Commissioner of Income -tax, Rajkot -1, Rajkot, whereby, the application of the petitioner -Trust for registration under section 10(23AAA) of the Income -tax Act, has been rejected. Learned advocate Mr. Hemani for the petitioner trust has submitted that while considering the application for the registration under section 10(23AAA) read with Rule 16C(5), the Commissioner has committed grave error in interpreting the provisions of Act and Rules. The petitioner has pointed out that the Trust, the Trust -deed, which is produced at Annexure -C, is constituted for the benefit of the employees of the Kandla Port Trust (for short TCPT'). The words "contribution" and "Beneficiar(y/ies)" are interpreted as under:
'"Contribution" means the amount contributed by the members periodically and shall include any amount allocated and contributed by KPT.
"Beneficiar(y/ies)" means member(s) of the Trust who are the serving and retired employee(s) of Kandla Port Trust and members of the family/dependents (as defined by Government of India in their rules for their employees) of serving/retired/deceased.'
(2.) THE learned advocate for the petitioner has submitted that clause 10, 11 and 46 of the trust deed of the Trust which are objected by the Commissioner of Income -tax. Contribution by employer is main ground to reject in addition to the following clauses, which read as under
"10. To aid and promote educational and vocational learning facilities/activities for the serving employees and their children.
11. To advance as a loan or stipend or grants to the Beneficiaries for the purpose of education at approved institutions as per criteria laid down by the Board of Trustees.
46. The Trust is irrevocable. However, under the orders of Government of India, if the Trust is revoked, all property, funds and assets remaining after the payment of all debts and liabilities of Trust, shall be transferred to Kandla Port Trust."
Learned advocate for the petitioner has submitted that the provisions of section 23(AAA) and Rule 16(C) read as under:
"Sec. 23(AAA) any income received by any person on behalf of a fund established, for such purposes as may be notified by the Board in the Official Gazette, for the welfare of employees or their dependents and of which fund such employees are members if such fund fulfils the following conditions, namely: -
(a) the fund -
(i) applies its income or accumulates it for application, wholly and exclusively to the objects for which it is established; and
(ii) invests its funds and contributions and other sums received by it in the forms or modes specified in sub -section (5) of section 11;
(b) the fund is approved by the [Principal Commissioner or] Commissioner in accordance with the rules made in this behalf.
Provided that any such approval shall at any one time have effect for such assessment year or years not exceeding three assessment years as may be specified in the order of approval;]
Rule 16(C). (1) The fund shall be formed under a trust and it shall be evidenced by a trust deed.
(2) The contributions to the fund are to be made by the employees by way of periodical subscription.
(3) The application for approval of any fund under clause (23 AAA) of section 10 shall be made in Form No. 9 to the Commissioner having jurisdiction over the area or territory in which the accounts are kept and such application shall be accompanied by the documents mentioned therein.
(4) Where the Commissioner is satisfied that all the conditions laid down in clause (23AAA) of section 10 are fulfilled in the case of the fund, he shall record such satisfaction in writing and grant approval to the fund specifying the assessment year or years for which the approval is valid so however that such approval shall, at one time, have effect for such assessment year or years not exceeding three assessment years.
(5) Where the Commissioner is satisfied that one or more of the conditions laid down in clause (23AAA) of section 10 are not fulfilled, he shall reject the application for approval after recording the reasons for such rejection in writing."
(3.) IT is very clear that word "contribution" is mandatory for contribution to be made by the employees. The interpretation put forward by the Commissioner that employer can't make any payment for corpus, is misconceived. Mr. Hemani learned advocate for the petitioner has relied upon the meaning of word "contribution". The meaning of word "contribution" in Black's Law Dictionary, reads as under:
"Contribution. (14c) 1. The right that gives one of several persons who are liable on a common debt the ability to recover proportionately from each of the others when that one person discharges the debt for the benefit of all; the right to demand that another who is jointly responsible for a third party's injury supply part of what is required to compensate the third party. - Also termed right of contribution. [Cases: Contribution]. 2. One tortfeasor's right to collect from joint tortfeasors when - and to the extent that - the tortfeasor has paid more than his or her proportionate share to the injured party, the shares being determined as percentages of casual fault. [Cases: Contribution]. 3. The actual payment by a joint tortfeasor of a proportionate share of what is due. Cf. INDEMNITY. 4. Maritme law. A share of the loss resulting from a ship's sacrifice of cargo, payable by each party whose property was spared to the party whose property was sacrificed. 5 Whar contribution.";
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