M/s. Seervi Samaj Tambaram Trust, CHENNAI V. DIT, CHENNAI

ITA 2144/CHNY/2012

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 1146 (ITAT-CHENNAI)
• Duration Of Justice: 3 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-03-2013
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 20-03-2013
• Assessment Year: misc
• Appeal Filed On: 26-11-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: NAGE NDRA PRASAD
• Assessee Lawyers: K BALASUBR AMANIAN
• Section: 12AA; 63

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL BENCH C CHENNAI BEFORE SHRI ABRAHAM P. GEORGE, ACCOUNTANT MEMBER AN D SHRI CHALLA NAGENDRA PRASAD, JUDICIAL MEMBER I.T.A. NO. 2144/MDS/2012 M/S. SEERVI SAMAJ TAMBARAM TRUST, NO.33, BRINDAVAN AVENUE, TAMBARAM WEST, CHENNAI-600045 PAN : AAKTS6975L. (APPELLANT) V. THE DIRECTOR OF INCOME TAX (EXEMPTIONS), CHENNAI. (RESPONDENT) APPELLANT BY : MR. K. BALASUBRAMANIAN, AD VOCATE RESPONDENT BY : MR. NAGENDRA PRASAD, CIT (D.R ) DATE OF HEARING : 20 MAR 2013 DATE OF PRONOUNCEMENT : 20 MAR 2013 O R D E R PER CHALLA NAGENDRA PRASAD, JUDICIAL MEMBER : THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST T HE ORDER OF DIRECTOR OF INCOME TAX (EXEMPTIONS) DATED 19.10. 2012, PASSED UNDER SEC.12AA OF THE I.T. ACT, REFUSING TO GRANT R EGISTRATION ON TWO GROUNDS, NAMELY, THE ASSESSEE TRUST IS FORMED FOR D OING BOTH CHARITABLE AND RELIGIOUS ACTIVITIES. THE OBJECTS OF ASSESSEE TRUST ITA NO.2144/MDS/2012 2 SHOWS THAT THE ASSESSEE TRUST IS FORMED TO CARRY OU T CHARITABLE AND RELIGIOUS ACTIVITIES. THEREFORE, NOT QUALIFIED FOR REGISTRATION. THE DIT(E) ALSO HELD THAT THE ASSESSEE TRUST THOUGH CA ME INTO EXISTENCE ON 13.8.2010, NO ACTIVITY HAS BEEN STARTED. THEREF ORE, NOT ENTITLED FOR REGISTRATION UNDER SEC.12AA OF THE ACT. 2. THE COUNSEL FOR THE ASSESSEE SUBMITS THAT THE HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT V. ARU LMIGU SRI KAMATCHI AMMAN TRUST [2012] 206 TAXMAN 69 HAD CONSIDERED SI MILAR SITUATION AND HELD THAT THERE IS NO BAR IN GRANTING REGISTRATION FOR THE TRUST HAVING OBJECTS OF BOTH CHARITABLE AS WELL AS RELIGIOUS . THE COUNSEL FOR THE ASSESSEE FURTHER SUBMITS THAT THE H ON'BLE GUJARAT HIGH COURT IN THE CASE OF CIT V. KUTCHI DASA OSWAL MOTO PARIWAR AMBAMA TRUST (29 TAXMAN 228) HELD THAT NON-COMMENCI NG OF ANY ACTIVITY IS NOT A GROUND FOR REJECTION OF APPLICATI ON FOR REGISTRATION UNDER SEC.12AA OF THE ACT. THE COUNSEL FOR THE ASSESSEE SUBMITS THAT IN VIEW OF THESE DECISIONS, THE DIT(E) IS NOT JUSTIFIED IN REJECTING THE REGISTRATION OF THE ASSESSEE TRUST. ITA NO.2144/MDS/2012 3 3. THE DEPARTMENTAL REPRESENTATIVE SUPPORTED THE O RDER OF DIT(E). 4. WE HAVE HEARD BOTH SIDES. PERUSED THE MATERIAL S ON RECORD AND THE ORDER OF DIT(E). THE HON'BLE JURIS DICTIONAL HIGH COURT IN THE CASE OF CIT V. ARULMIGU SRI KAMATCHI A MMAN TRUST (SUPRA) HELD AS UNDER :- 2. THE RESPONDENT / ASSESSEE , VIZ. , ARULMIGU SRI KAMATCHI AMMAN TRUST, APPLIED UNDER SECTION 12AA OF THE INCO ME TAX ACT TO THE COMMISSIONER OF INCOME TAX, FOR THE GRANT OF REGISTRATION OF THE TRUST ON THE GROUND THAT THE OB JECT OF THE TRUST WAS RELIGIOUS . THE COMMISSIONER OF INCOME TAX CONSIDERED THE SAID APPLICATION AND REJECTED THE SAME BY ITS ORDER DATED 11 . 11 . 2010 ON THE GROUND THAT THE TRUST WAS SPENDING MONEY IN RECEIPTS TOWARDS RELIGIOUS AND AD MINISTRATIVE PURPOSES . ACCORDING TO THE COMMISSIONER OF INCOME TAX , THE ACTIVITIES CLAIMED TO HAVE BEEN CARRIED OUT BY THE APPLICANT TRUST ARE ADMIXTURE OF BOTH RELIGIOUS AND CHARITABLE . 3. THE TRUST TOOK THE SAID ORDER TO THE INCOME TAX APP ELLATE TRIBUNAL , WHICH , BY ITS ORDER DATED 13 . 62011 ALLOWED THE SAID APPEAL ON THE GROUND THAT THERE IS NO LONGER A PROV ISION HAVING ADMIXTURE OF BOTH RELIGIOUS AND CHARITABLE OBJECTS. FOR THE SAID PURPOSE , THE TRIBUNAL HAD RELIED UPON THE JUDGMENTS REPORTED IN U PPER GANGES SUGAR MILLS LTD . V . C LT [1997] 227 ITR 578/ 93 TAXMAN 645 (SC) AND STATE OF KERALA V . MP . SHANTIVERMA JAIN [1998] 231 ITR 787 (SC) . ITA NO.2144/MDS/2012 4 4. HEARD MR . T . RAVIKUMAR , LEARNED COUNSEL APPEARING FOR THE APPELLANT L REVENUE AND PERUSED THE MATERIALS PLACED ON RECORD . THE LEARNED COUNSEL WOULD CONTEND THAT THE ORDER PA SSED BY THE TRIBUNAL IS WITHOUT ANY BASIS AND JUSTIFICATION AND THAT THE TRIBUNAL FAILED TO APPRECIATE THE ACTIVITIES CLAIME D TO HAVE BEEN CARRIED OUT BY THE ASSESSEE ARE ADMIXTURE OF BOTH R ELIGIOUS AND CHARITABLE IN NATURE . IT IS ALSO FURTHER CONTENDED THAT THE COMMISSIONER OF INCOME TAX MADE AN ENQUIRY AS CONT EMPLATED UNDER SECTION L2AA(L)(B)(II) OF THE ACT AND PASSED AN ORDER AND THE SAME IS IN ACCORDANCE WITH LAW . IT IS ALSO CONTENDED THAT THE ASSESSEE IS NOT ENTITLED TO CLAIM EXEMPTION UNDER S ECTION 11 OF THE ACT SINCE THE OBJECTS OF THE TRUST ARE BOTH CHA RITABLE AND RELIGIOUS IN NATURE . THEREFORE , THE LEARNED COUNSEL SEEKS TO SET ASIDE THE ORDER OF THE TRIBUNAL . 5. WE HAVE CAREFULLY CONSIDERED THE ABOVE SUBMISSIO N. FOR THE PURPOSE OF MAKING AN APPLICATION UNDER SECTION 12AA , THE APPLICANT MUST APPLY IN FORM 10. THE SAID FORM PRES CRIBES THE FORMAT OF THE NOTICE OF ACCUMULATION OF INCOME TO B E GIVEN BY CHARITABLE AND RELIGIOUS TRUSTS UNDER SECTION 11 ( 2) OF THE ACT . FOR THE PURPOSE OF AVAILING THE BENEFIT OF SECTION 11 , REGISTRATION IS REQUIRED. SECTION 11(1)(A) READS AS UNDER : - '11 (1) . SUBJECT TO THE PROVISIONS OF SECTIONS 60 TO 63 , THE FOLLOWING INCOME SHALL NOT BE INCLUDED IN THE TOTAL INCOME OF THE PREVIOUS YEAR OF THE PERSON IN RECEIPT OF THE I NCOME (A) INCOME DERIVED FROM PROPERTY HELD UNDER TRUST WHOLL Y FOR CHARITABLE OR RELI GIO U S PURPOSES , TO THE EXTENT TO WHICH SUCH INCOME IS APPLIED TO SUCH PURPOSES IN INDIA ; AND , WHERE AN Y SUCH INCOME IS ACCUMULATED OR SET APART FOR APPLICATION TO SUCH PURPOSES IN INDIA, TO THE EXTENT TO WHICH THE INCOME SO ACCUMULATED OR SET APART IS NOT IN EXCESS OF FIFTEEN PER CENT OF THE INCOME FROM SUCH PROPERTY ; ' 6. FROM A READING OF THE ABOVE , IT IS CLEAR THAT THE INCOME DERIVED FROM THE PROPERTY HELD UNDER TRUST WHOLLY F OR CHARITABLE OR RELIGIOUS PURPOSES , SHALL NOT BE INCLUDED IN THE TOTAL INCOME OF THE TRUST . THEREFORE , THE SAID PROVISION WOULD BE APPLICABLE TO BOTH THE TRUSTS ESTABLISHED WITH THE OBJECT OF CHAR ITABLE AS WELL AS R ELIGIOUS PURPOSES THEREFORE , SECT I ON 12AA OF THE ACT DOES NOT MAKE ANY DIFFERENCE BETWEEN THE TRUSTS CREATED WITH THE OBJECT OF CHARITABLE AND RELIGIOUS PURPOSES AND, EVEN IF THE TRUST IS NOT CREATED WITH BOTH THE OBJECTS , LAW DOES NOT MAKE ANY DISQUALIFICATION FOR THE TRUST TO MAKE AN APPLICATION FOR ITA NO.2144/MDS/2012 5 REGISTRATION . THEREFORE , THE TRIBUNAL HAS CORRECTLY APPLIED THE PRO V ISION OF LAW AND ALLOWED THE APPEAL , WHICH FINDING IS BASED ON V ALID MATERIAL EVIDENCE . THE FINDING OF THE TRIBUNAL IS NOT PER V ERSE AND IT IS A QUESTION OF FACT . THEREFORE , WE FIND NO GROUND TO CAUSE OUR INTERFERENCE INTO THE ORDER PAS SED B Y THE TRIBUNAL . ACCORDINGLY , THE ORDER PASSED BY THE TRIBUNAL IS CONFIRMED AND BOTH THE SUBSTANTIAL QUESTIONS OF LAW RAISED HEREIN ARE ANSWERED AGAINST THE REVENUE . 7. IN THE RESULT , THE APPEAL IS DEVOID OF MERITS AND HENCE THE SAME IS DISMISSED . IN VIEW OF THE DECISION OF THE HON'BLE JURISDICTION AL HIGH COURT, WHEREIN IT WAS HELD THAT REGISTRATION UNDER SEC.12 AA OF THE ACT CANNOT BE REFUSED ON THE GROUND THAT TRUST WAS CREA TED FOR THE OBJECTS OF CHARITABLE AND RELIGIOUS PURPOSES. THE DIT(E)S ORDER IS NOT CORRECT IN REFUSING REGISTRATION. WE ALSO FIND THAT HON'BLE GUJARAT HIGH COURT IN THE CASE OF CIT V. KUTCHI DASA OSWAL MOTO PARIWAR AMBAMA TRUST (SUPRA) HELD THAT REGISTRATION UNDER SEC.12AA OF THE ACT SHOULD NOT BE REFUSED ON THE GROUND THAT THE AC TIVITIES OF THE TRUST HAVE NOT COMMENCED. IN VIEW OF THE ABOVE, WE DIRECT THE DIT(E) TO GRANT REGISTRATION UNDER SEC.12AA OF THE ACT TO THE ASSESSEE TRUST. THE GROUNDS RAISED BY THE ASSESSEE ARE ALLOWED. ITA NO.2144/MDS/2012 6 5. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS AL LOWED. 6. ORDER PRONOUNCED ON WEDNESDAY, THE 20 TH DAY OF MARCH 2012, AT CHENNAI. SD/- SD/- ( ABRAHAM P. GEORGE) (CHALLA NAGENDRA PRASAD) ACCOUNTAT MEMBER JUDICIAL MEMBER CHENNAI, DATED : 20 TH MARCH 2013 JLS. COPY TO: (1) APPELLANT (2) RESPONDENT (3) CIT(A)-II, COIMBATORE (4) CIT-III, COIMBATORE (5) D.R. (6) GUARD FILE.