M/s. Malleeswari Muthukrishnan Tribal Education Trust, CHENNAI V. DIT, CHENNAI

ITA 1159/CHNY/2011

• Counselvise Citation: 115921714 RSA 2011
• Duration Of Justice: 6 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-01-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 21-12-2011
• Assessment Year: misc
• Appeal Filed On: 20-06-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R B NAIK
• Assessee Lawyers: ANAND DEVKUMAR
• Keywords: Gift
• Section: 80G; 12A; 12AA

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, CHENNAI BEFORE SHRI HARI OM MARATHA, JUDICIAL MEMBER AND SHRI ABRAHAM P. GEORGE, ACCOUNTANT MEMBER I.T.A. NO. 1159/MDS/2011 M/S MALLEESWARI MUTHUKRISHNAN TRIBAL EDUCATION TRUST, OLD NO.9, NEW NO.17, FLAT NO.10, 3 RD FLOOR, TOUCHLINE APARTMENTS, MANDAVALI STREET, MADAVELI, CHENNAI 600 028. PAN : AACTM4933A (APPELLANT) V. THE INCOME TAX OFFICER (EXEMPTIONS), CHENNAI 600 034. (RESPONDENT) APPELLANT BY : SHRI ANAND DEVKUMAR, CA RESPONDENT BY : SHRI R.B . NAIK, CIT-DR DATE OF HEARING : 21.12.11 DATE OF PRONOUNCEMENT : 06.01.12 O R D E R PER ABRAHAM P. GEORGE, ACCOUNTANT MEMBER : IN THIS APPEAL FILED BY THE ASSESSEE, IT ASSAILS THE DENIAL OF REGISTRATION UNDER SECTION 12AA OF INCOME-TAX ACT, 1961 (IN SHORT THE ACT). I.T.A. NO. 1159/MDS/11 2 2. SHORT FACTS APROPOS ARE THAT ASSESSEE HAD APPLIE D FOR REGISTRATION UNDER SECTION 12AA OF THE ACT ON 30.12 .2009. LD. DIT(E), PURSUANT TO SUCH APPLICATION, REQUIRED THE ASSESSEE TO FILE CERTAIN CLARIFICATIONS AND SUCH DETAILS WERE FILED BY THE ASSESSEE. LD. DIT(E) DID NOT FIND THE APPLICATION SATISFACTORY EN OUGH FOR GRANTING REGISTRATION UNDER SECTION 12AA OF THE ACT FOR TWO REASONS. FIRST WAS THAT ONE OF THE OBJECT CLAUSE OF THE ASSESSEE MENTI ONED ENCOURAGING RELIGIOUS DISCOURSES. THIS, AS PER LD. DIT(E), MAD E THE OBJECTS OF THE TRUST WHOLLY OR SUBSTANTIALLY WHOLLY OF A RELIGIOUS NATURE. LD. DIT(E) ALSO NOTED THAT CLAUSE 20 OF THE ASSESSEE-TRUST ENA BLED THE TRUST TO LEVY FEES ON THE APPRENTICES OR OTHERS BENEFITING F ROM THE INSTITUTIONS OR ESTABLISHMENTS RUN BY THE TRUST. ACCORDING TO H IM, THIS WAS A COMMERCIAL ACTIVITY. HE, THEREFORE, DENIED REGISTR ATION UNDER SECTION 12AA OF THE ACT. BY THE SAME ORDER, HE ALSO DENIED THE ASSESSEE APPROVAL UNDER SECTION 80G OF THE ACT. NEVERTHELES S, IN THE APPEAL NOW BEFORE US, ASSESSEE ASSAILS THE ORDER IN SO FAR AS IT RELATES TO DENIAL OF REGISTRATION UNDER SECTION 12AA OF THE AC T. THEREFORE, IN THIS APPEAL, WE ARE ONLY CONCERNED WITH THE CITED I SSUE. 3. NOW BEFORE US, LEARNED A.R., ASSAILING THE ORDER OF LD. DIT(E), SUBMITTED THAT ASSESSEE HAD GIVEN A DETAILED REPLY TO THE LETTER DATED I.T.A. NO. 1159/MDS/11 3 12.5.2010 RECEIVED FROM LD. DIT(E). RELYING ON PAP ER-BOOK PAGES 45 TO 50, LEARNED A.R. SUBMITTED THAT CLAUSE 1(T) WHIC H WAS ENCOURAGEMENT OF MUSIC CULTURAL PROGRAMMES, RELIGIO US DISCOURSES AND ENCOURAGEMENT OF CULTURAL MUSICIANS WERE NOT AT ALL RELIGIOUS ACTIVITIES. ACCORDING TO HIM, THE SAID CLAUSE DID NOT SPECIFY ANY RELIGION. UNLESS A CLAUSE SUPPORTS A PARTICULAR RE LIGION, IT CANNOT BE CONSIDERED AS INTENDED FOR PROMOTION OF ANY RELIGIO N. IN SO FAR AS THE ISSUE RAISED BY LD. DIT(E) THAT ASSESSEE COULD COLL ECT FEES FROM APPRENTICES, LEARNED A.R. SUBMITTED THAT SUCH A COL LECTION OF FEES COULD BE DONE ONLY WITHIN THE PARAMETERS LAID DOWN IN THE OBJECT CLAUSE AND THEREFORE, COULD NOT BE CONSIDERED AS A REASON FOR CONCLUDING THAT ASSESSEE-TRUST WAS A COMMERCIAL ONE . 4. PER CONTRA, LEARNED D.R. SUPPORTED THE ORDER OF LD. DIT(E) AND SUBMITTED THAT ASSESSEE WAS A RELIGIOUS TRUST AND H ENCE, WAS NOT ELIGIBLE FOR REGISTRATION UNDER SECTION 12AA OF THE ACT. FURTHER, ACCORDING TO HIM, COLLECTION OF FEES FROM APPRENTIC ES CONVERTED THE ASSESSEE INTO A COMMERCIAL VENTURE. 5. WE HAVE PERUSED THE ORDER OF LD. DIT(E) AND HEAR D LEARNED COUNSEL FROM BOTH SIDES. THE OBJECT CLAUSES OF THE ASSESSEE-TRUST I.T.A. NO. 1159/MDS/11 4 AS APPEARING IN PAPER-BOOK PAGES 27 TO 33 ARE REPRO DUCED HEREUNDER:- (A) TO CARRY ON ACTIVITIES FOR THE UPLIFTMENT AND DEVEL OPMENT OF TRIBAL EDUCATION, STANDARD OF LIVING, HEALTHCARE , HOUSING AND AVAILABILITY OF NUTRITIONAL FOOD IN THE SOCIETY . (B) TO SUPPORT THE ARTISTIC AND CULTURAL DEVELOPMENT IN THE SOCIETY. (C) TO ENSURE BETTER FACILITIES FOR THE NEW BORN CHILDR EN AND THE MOTHER. (D) TO PROTECT THE SPECIES LIKE RARE BIRDS, INSECTS. (E) TO PROTECT THE COWS. (F) TO DEVELOP NEW ARCHITECTURAL DESIGN TO CONSTRUCT TH E BUILDINGS BASED ON SACRED RULES (CODES) AND SACRED GEOMETRY. (G) TO PROVIDE BOOKS/INSTRUMENTS ETC TO DESERVING STUDE NTS DOING TECHNICAL EDUCATION. (H) TO ESTABLISH COMMITTEES FOR THE FULFILLMENT OF ABOV E OBJECTS. (I) TO DO SUCH ACTS AND DEEDS AS MAY BE NECESSARY FOR T HE PURPOSE OF THE ABOVE OBJECTS. (J) TO ESTABLISH AND RUN SCHOOL WITH THE INTENTION OF P ROVIDING QUALITY EDUCATION AT AFFORDABLE COST FOR THE POOR. (K) TO HELP POOR AND INTELLIGENT STUDENTS WHO HAVE SCOR ED GOOD MARKS BY GIVING INTEREST FREE LOAN FOR HIGHER STUDI ES. (L) TO AWARD SCHOLARSHIPS, PRIZES ETC. FOR THE POOR AND DESERVING STUDENTS. (M) TO ESTABLISH, MAINTAIN, RUN, IMPROVE, AND DEVELOP, LIBRARIES AND OTHER FACILITIES FOR THE BENEFIT OF THE STUDENT S. (N) TO ACCEPT DONATIONS, GIFTS, PRESENTS, AIDS, GRANTS IN CASH OR IN KIND AND MOVABLE AND IMMOVABLE PROPERTIES FROM T HE PUBLIC, STATE OR CENTRAL GOVERNMENT WITH EITHER AS CORPUS OR AS CASH ACCORDING TO THE DIRECTIONS OF THE DONOR S FOR THE PURPOSE OF CARRYING OUT THE OBJECTS OF THE TRUS T. I.T.A. NO. 1159/MDS/11 5 (O) TO DO ALL SUCH LAWFUL ACTS AS MAY BE NECESSARY OR I NCIDENTAL AND CONDUCIVE TO THE ATTAINMENT OF THE ABOVE OBJECT S OR ANY ONE OF THEM. (P) TO UNDERTAKE SUCH OTHER ACTIVITIES AS MAY BE NECESS ARY FOR THE PROMOTION OF THE OBJECTS OF THE TRUST. (Q) TO BUILD UP CENTRES, AFFORD FREE EDUCATION AND TRAI NING IN ARTS, CRAFTS AND TECHNICAL OBJECTS TO THE ECONOMICA LLY POOR AND BACKWARD PEOPLE TO PREPARE THEM FOR EARNING THE IR OWN LIVELIHOOD. (R) TO GIVE FUNDS, SPONSORSHIP AND DISTRIBUTION OF AWAR DS AND PH.D RESEARCH AND DEVELOPMENT. (S) TO GIVE AWARDS TO MUSICIANS. (T) TO ENCOURAGE MUSIC CULTURAL PROGRAMMES, RELIGIOUS DISCOURSES AND ENCOURAGING CULTURAL MUSICIANS TO GE T THE BEST OUT OF THEM. (U) TO ENTERTAIN BOTH CLASSICAL AND WESTERN MUSIC SYSTE MS. 6. LD. DIT(E) FOUND CLAUSE (T) TO BE RELIGIOUS IN N ATURE. THE SAID CLAUSE, IS A PART OF A NUMBER OF OBJECTS AND IT MEN TIONS ENCOURAGEMENT OF MUSIC AND RELIGIOUS DISCOURSES AND ALSO ENCOURAGEMENT OF CULTURAL MUSICIANS SO AS TO GET TH E BEST OUT OF THEM. AMONG DIFFERENT OBJECT CLAUSES NUMBERING 21, THIS PARTICULAR CLAUSE (T), A PART OF WHICH MENTIONED ENCOURAGEME NT OF RELIGIOUS DISCOURSES COULD NEVER, IN OUR OPINION, BE CONSIDER ED AS SOMETHING THAT IS WHOLLY OR SUBSTANTIALLY WHOLLY OF A RELIGIO US NATURE. IN FIRST PLACE, ENCOURAGING RELIGIOUS DISCOURSES WITHOUT MEN TIONING ANY RELIGION CANNOT PER SE BE CONSIDERED AS BENEFITING ANY PARTICULAR RELIGIOUS COMMUNITY. IN THE SECOND PLACE, EVEN IF IT IS CONSIDERED TO I.T.A. NO. 1159/MDS/11 6 BE RELIGIOUS IN NATURE, IT IS ONLY A PART OF MANY N UMBER OF OBJECT CLAUSES, ALL OF WHICH ARE CHARITABLE AND HENCE CANN OT BE CONSIDERED AS OF A NATURE WHICH IS WHOLLY OR SUBSTANTIALLY WHO LLY RELIGIOUS. 7. SECOND REASON CITED BY THE LD. DIT(E) THAT LEVYI NG OF FEES FROM APPRENTICES WOULD CONVERT THE ASSESSEE-TRUST INTO C OMMERCIAL VENTURE. WE ARE UNABLE TO APPRECIATE THIS REASONIN G ALSO. THE CITED CLAUSE WAS NOT A PART OF THE OBJECT CLAUSE OF THE A SSESSEE-TRUST. THE ACTIVITIES THAT COULD BE CARRIED ON BY THE TRUSTEES WERE CIRCUMSCRIBED BY THE POWERS VESTED ON THE TRUSTEES BY VIRTUE OF T HE OBJECT CLAUSE. THEY COULD DO ONLY SUCH ACTIVITIES WHICH WERE CONDU CIVE AND INCIDENTAL TO THE ATTAINMENT OF THE OBJECTS OF THE TRUST. COLLECTION OF FEES FROM APPRENTICES WHO WERE STUDYING IN THE INST ITUTION OR ESTABLISHMENT BY THE TRUST COULD NOT BE PER SE BE A COMMERCIAL ACTIVITY. ONLY WHEN SUCH ACTIVITY RESULTED IN SUBS TANTIAL SURPLUS, WHICH WOULD QUESTION THE VERY NATURE OF THE CHARITA BLE EXISTENCE OF THE ASSESSEE-TRUST, COULD IT BE CONSIDERED AS A REA SON FOR VIEWING ITS CHARITABLE VOWS WITH SUSPICION. BUT THAT IN ANY CA SE IS SOMETHING WHICH HAS TO BE SEEN IN FUTURE AS AND WHEN SUCH A C ONTINGENCY HAPPENED IF IT ALL IT HAPPENED. IN OUR OPINION, LD . DIT(E) READ INTO THE CLAUSE A FUTURE CONTINGENT HAPPENING WHICH WAS BEST LEFT FOR THE I.T.A. NO. 1159/MDS/11 7 ASSESSING OFFICER TO CONSIDER WHEN HE TOOK UP THE A SSESSMENT PROCEEDINGS IN THE ORDINARY COURSE OF EVENTS. ACT PROVIDES FOR REVOCATION OF THE 12A REGISTRATION IN SUCH CONTINGE NCIES. WE CANNOT SAY THAT POSSIBILITY OF A FUTURE CONTINGENCY WITH A REMOTE PROBABILITY WILL MAKE THE TRUST ITSELF A COMMERCIAL VENTURE. R ELEVANT CLAUSE 20 OF THE TRUST DEED, ENABLING THE TRUSTEES TO LEVY FE ES FROM APPRENTICES, IN OUR OPINION, WILL NOT CONVERT THE ASSESSEE-TRUST TO A COMMERCIAL ESTABLISHMENT. 8. WE ARE THUS OF THE OPINION THAT BOTH THE REASONS CITED BY LD. DIT(E) FOR DENYING REGISTRATION TO THE ASSESSEE UND ER SECTION 12AA OF THE ACT WERE UNJUSTIFIED AND NOT IN ACCORDANCE W ITH LAW. WE, THEREFORE, QUASH THE ORDER OF LD. DIT(E) AND DIRECT HIM TO GRANT THE ASSESSEE-TRUST REGISTRATION UNDER SECTION 12AA OF T HE ACT. 9. IN THE RESULT, APPEAL FILED BY THE ASSESSEE STAN DS ALLOWED. THE ORDER WAS PRONOUNCED IN THE COURT ON 6 TH JANUARY, 2012. SD/- SD/- (HARI OM MARATHA) (ABRAHAM P. GEORGE) JUDICIAL MEMBER ACCOUNTANT MEMBER CHENNAI, DATED THE 6 TH JANUARY, 2012. KRI. COPY TO: APPELLANT/RESPONDENT/DIT(E), CHENNAI/D.R. / GUARD FILE