M.K.M.Welfare Trust, CHENNAI V. CIT, CHENNAI

ITA 1434/CHNY/2015

• Counselvise Citation: 143421714 RSA 2015
• Duration Of Justice: 3 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-10-2015
• Appeal Filed By: Assessee
• Bench Allotted: A
• Assessment Year: 2014-2015
• Appeal Filed On: 12-06-2015
• Court: TRIBUNAL
• Department Lawyers: JOE SEBASTIAN
• Assessee Lawyers: S VIDYA
• Keywords: Charitable institution
• Section: 12AA; 11

Judgement Text

, , IN THE INCOME - TAX APPELLATE TRIBUNAL A BENCH, CHENNAI . , . , BEFORE SHRI A. MOHAN ALANKAMONY , ACCOUNTANT MEMBER & SHRI DUVVURU R L REDDY , JUDICIAL MEMBER ./ I.T.A.NO. 1 43 4 /MDS/2015 / ASSESSMENT YEAR :20 14 - 1 5 M/S. M.K.M. WELFARE TRUST, C/O M/S. AKBER RIFA & CO., C.A., FLAT NO. 1A, KERNITE KIP APTS, DOOR NO.1, V - BLOCK, 6 TH MAIN ROAD, ANNA NAGAR, CHENNAI 600 040 . [PAN: A A DTM7850M ] VS. THE COMMISSIONER OF INCOME TAX (EXEMPTIONS) , CHENNAI. ( / APPELLANT ) ( / RESPONDENT ) / APPELLANT BY : MS. S. VIDYA, FCA / RESPONDENT BY : SHRI JOE SEBASTIAN, CIT / DATE OF HEARING : 29 . 0 9 .201 5 / DATE OF P RONOUNCEMENT : 09 . 1 0 .201 5 / O R D E R PER DUVVURU RL REDDY , JUDICIAL MEMBER : TH IS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE LD. COMMIS SIONER OF INCOME TAX ( EXEMPTIONS ) , CHENNAI , DATED 2 0 . 0 4 .20 1 5 PASSED UNDER SECTION 12AA OF THE INCOME TAX ACT ( ACT IN SHORT). 2. THE ASSESSEE TRUST HAS BEEN CONSTITUTED BY A TRUST DEED DATED 21.05.2014 AND FILED AN APPLICATION IN FORM 10A FOR REGISTRAT ION UNDER I.T.A. NO . 1434 /M/ 15 2 SECTION 12AA OF THE ACT. THE ASSESSEE HAS ALSO FILED REGISTERED TRUST DEED, WHEREIN THE MAIN OBJECTS OF THE TRUST READ AS UNDER: (A) TO OPEN, ESTABLISH AND MANAGE MADRASAS, NURSERY & PRIMARY SCHOOLS, AND COMMUNITY CENTRES TO THE PUBLIC IN GENER AL AND TO MUSLIMS IN PARTICULAR. (K) THE TRUST SHALL BE IRREVOCABLE AND IT SHALL BE OPEN TO ALL THE MUSLIMS AND OTHER MINORITIES IRRESPECTIVE OF CASTE AND CREED . 3. THOUGH THE ASSESSEE TRUST HAS FILED ITS APPLICATION FOR REGISTRATION ON 21.05.2014, TH E ASSESSEE S APPLICATION SHOULD HAVE BEEN DISPOSED OF BY 28.02.2015 I.E. BEFORE EXPIRY OF SIX MONTHS FROM THE END OF THE MONTH IN WHICH THE APPLICATION WAS RECEIVED AS PROVIDED UNDER SECTION 12AA(2) OF THE ACT. BY FOLLOWING VARIOUS JUDICIAL PRONOUNCEMENT S INCLUDING THE RATIO LAID DOWN BY THE HON BLE ALLAHABAD HIGH COURT IN THE CASE OF CIT V. MUZAFAR NAGAR DEVELOPMENT AUTHORITY (2013) 38 TAXMAN.COM 21 (ALLAHABAD) , THE LD. DIT (EXEMPTIONS), PASSED THE ABOVE ORDER UNDER SECTION 12AA OF THE ACT. 4. ON MERITS , THE LD. DIT(E) HAS OBSERVED THAT THE BENEFITS OF EXEMPTION UNDER SECTION 11 OF THE ACT CANNOT BE EXTENDED TO AN INSTITUTION CLAIMING TO BE A CHARITABLE INSTITUTION, IF ITS BENEFITS ARE LIMITED TO A PARTICULAR COMMUNITY OR CASTE. THAT IS THE MANDATE OF SE CTION 13(1) OF THE ACT. THE LD. DIT(E) HAS FURTHER HELD THAT THE BENEFIT OF SECTION 11 CANNOT BE GRANTED TO AN INSTITUTION WHICH ATTRACT THE PROVISION OF SECTION 13(1)(B) OF THE ACT. A SIMILAR ISSUE HAD COME UP FOR CONSIDERATION BEFORE THE HON BLE SUPREME COURT IN THE CASE OF CIT V. PALGHAT SHADI MAHAL TRUST (2002) 254 ITR 212 . RELYING ON THE I.T.A. NO . 1434 /M/ 15 3 PROVISIONS OF SECTION 13(1) (B), THE HON BLE SUPREME COURT AGREED WITH THE REVENUE S CONTENTION THAT THE BENEFIT OF SECTION 11 CANNOT BE EXTENDED TO AN INSTITUTION HIT BY THE PROVISIONS OF SECTION 13(1)(B) . SINCE THE PRIMARY REASON FOR SEEKING REGISTRATION UNDER SECTION 12A/12AA OF THE ACT IS ONLY TO SEEK EXEMPTION UNDER SECTION 11 OF THE ACT, THE PRESENT TRUST, WHOSE BENEFICIARIES ARE ONLY MUSLIM AND OTHER MINORITIES, T HE LD. DIT(E) REJECTED THE APPLICATION FILED BY THE ASSESSEE TRUST. 5. AGGRIEVED, THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL. THE LD. COUNSEL FOR THE ASSESSEE, BY FILING COPY OF THE REGISTERED SUPPLEMENTARY DEED, SUBMITTED THAT AS PER CLAUSE ( A ) AND CLAUSE (K) OF THE SUPPLEMENTARY DEED, THE BENEFITS OF THE TRUST IS NOT GIVEN TO ANY PARTICULAR COMMUNITY AND IT IS TO PUBLIC IN GENERAL IRRESPECTIVE OF CASTE, CREED, SEX, RELIGION, ETC. THEREFORE, SHE PRAYED FOR GRANT OF REGISTRATION ON THE GROUND THAT THE BENEFITS ARE NOT LIMITED TO A PARTICULAR COMMUNITY OR CASTE. 6. ON THE OTHER HAND, THE LD. DR HAS STRONGLY SUPPORTED THE ORDER PASSED BY THE LD. DIT(E) AND ALSO SUBMITTED THAT AFTER REJECTION OF APPLICATION FOR GRANT OF REGISTRATION UNDER SECTION 12AA OF THE ACT, THE ASSESSEE TRUST HAS EXECUTED THE SUPPLEMENTARY DEED ON 16.09.2015 I.E., MUCH AFTER THE DATE OF FILING OF APPEAL BEFORE THE TRIBUNAL. I.T.A. NO . 1434 /M/ 15 4 7. WE HAVE HEARD BOTH SIDES, PERUSED THE MATERIALS ON RECORD AND GONE THROUGH THE ORDER OF THE AUTHORITY BELOW. SO FAR AS LIMITATION IS CONCERNED, THE LD. DIT(E) HAS PASSED THE ORDER AFTER EXPIRY OF SIX MONTHS FROM THE END OF THE MONTH IN WHICH THE APPLICATION WAS RECEIVED . BY FOLLOWING VARIOUS JUDICIAL PRONOUNCEMENTS INCLUDING THE RATIO LAID DOWN BY THE HON BLE ALLAHABAD HIGH COURT IN THE CASE OF CIT V. MUZAFAR NAGAR DEVELOPMENT AUTHORITY (SUPRA), THE LD. DIT (EXEMPTIONS), PASSED THE ABOVE ORDER UNDER SECTION 12AA OF THE ACT. BEFORE US, THE LD. COUNSEL FOR THE ASSESSEE COULD NOT ABLE TO CONTROVERT THE RATIO L AY DOWN BY THE HON BLE ALLAHABAD HIGH COURT OR FILED ANY HIGHER COURT DECISION TO TAKE A DIFFERENT VIEW. THEREFORE, WE FIND NO INFIRMITY IN THE ORDER PASSED BY THE LD. DIT(E) WITH REGARD TO LIMITATION ISSUE. 8. SO FAR AS MERITS OF THE CASE IS CONCERN, T HE LD. DIT(E) REJECTED THE APPLICATION FOR GRANT OF APPROVAL UNDER SECTION 12AA OF THE ACT ON THE GROUND THAT THE BENEFICIARIES ARE ONLY MUSLIM AND OTHER MINORITIES DIRECTLY HIT BY PROVISIONS OF SECTION 13(1)(B) OF THE ACT . THEREFORE, BY FOLLOWING THE DECI SION OF THE HON BLE SUPREME COURT IN THE CASE OF CIT V. PALGHAT SHADI MAHAL TRUST (SUPRA), THE LD. DIT(E) REJECTED THE APPLICATION FOR GRANT OF APPROVAL UNDER SECTION 12AA OF THE ACT. BEFORE US, THE LD. COUNSEL FOR THE ASSESSEE HAS FILED A COPY OF THE REG ISTERED SUPPLEMENTARY DEED EXECUTED ON 16.09.2015 I.E. AFTER FILING THE APPEAL BEFORE THE TRIBUNAL, WHEREIN, THE I.T.A. NO . 1434 /M/ 15 5 CLAUSE (A) AND (K) OF THE ORIGINAL TRUST DEED 21.05.2014 HA VE BEEN MODIFIED AS UNDER: OBJECT AS PER ORIGINAL DEED: CLAUSE (A) TO OPEN, ESTABLIS H AND MANAGE MADRASAS, NURSERY & PRIMARY SCHOOLS, AND COMMUNITY CENTRES TO THE PUBLIC IN GENERAL AND TO MUSLIMS IN PARTICULAR. CLAUSE (K) THE TRUST SHALL BE IRREVOCABLE AND IT SHALL BE OPEN TO ALL THE MUSLIMS AND OTHER MINORITIES IRRESPECTIVE OF CASTE A ND CREED . OBJECT AS PER SUPPLEMENTARY DEED: CLAUSE (A) TO OPEN, ESTABLISH AND MANAGE NURSERY & PRIMARY SCHOOLS, AND COMMUNITY CENTRES TO THE PUBLIC IN GENERAL IRRESPECTIVE OF CASTE, CREED, SEX, RELIGION, ETC. CLAUSE (K) THE TRUST SHALL BE IRREVOCABLE AND IT SHALL BE OPEN TO PUBLIC IN GENERAL IRRESPECTIVE OF CASTE, CREED AND RELIGION . 9. WE FIND THAT THE MAIN OBJECTS AS STATED IN THE ORIGINAL DEED AND REVISED IN THE SUPPLEMENTARY DEED ARE ENTIRELY DIFFERENT THOUGH THE SUPPLEMENTARY DEED WAS EXECUTED ON 16.09.2015 I.E., AFTER FILING THE APPEAL BEFORE THE TRIBUNAL ON 12.06.2015. AS PER THE REGISTERED ORIGINAL DEED, THE OBJECTS ARE MEANT FOR A PARTICULAR RELIGION, THE LD. DIT(E) HAS REJECTED GRANT OF APPROVAL FOR REGISTRATION UNDER SECTION 12AA OF THE AC T. HOWEVER, WE ARE OF THE OPINION THAT AS PER THE REGISTERED SUPPLEMENTARY DEED FILED BEFORE THE TRIBUNAL , THE ASSESSEE IS ELIGIBLE FOR GRANT OF APPROVAL FOR REGISTRATION UNDER SECTION 12AA OF THE ACT. THEREFORE, IN THE INTEREST OF JUSTICE, WE SET ASIDE THE I.T.A. NO . 1434 /M/ 15 6 ORDER PASSED BY THE LD. DIT(E) ON THIS ISSUE AND REMIT THE MATTER BACK TO THE LD. DIT(E) WITH A DIRECT ION TO CONSIDER THE OBJECTS AS AMENDED IN THE REGISTERED SUPPLEMENTARY DEED EXECUTED BY THE ASSESS EE AND DECIDE THE ISSUE AFRESH IN ACCORDANCE WITH LAW AFTER ALLOWING SUFFICIENT OPPORTUNITY OF HEARING TO THE ASSESSEE. 10 . IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED FOR STATISTICAL PURPOSES . ORDER PRONOUNCED ON THE 9 TH OCTOBER , 2015 AT CHENNAI. SD/ - SD/ - (A.MOHAN ALANKAMONY ) ACCOUNTANT MEMBER ( DUVVURU RL REDDY ) JUDICIAL MEMBER CHENNAI, DATED, THE 09. 10 .201 5 VM/ - / COPY TO: 1. / APPELLANT , 2. / RESPONDENT , 3. ( ) / CIT (A) , 4. / CIT , 5. / DR & 6. / GF.