M/s. Alpha Educational Trust, CHENNAI V. ADIT, CHENNAI

ITA 2157/CHNY/2012

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 0708 (ITAT-CHENNAI)
• Duration Of Justice: 2 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-02-2013
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: misc
• Appeal Filed On: 29-11-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: R VIJAYARAGHAVAN
• Keywords: Charitable institution; Reasonable cause; Condonation of delay
• Section: 12A; 12AA

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, CHENNAI BEFORE SHRI ABRAHAM P.GEORGE , ACCOUNTANT MEMBER AND SHRI VIKAS AWASTHY, JUDICIAL MEMBER ITA NO.2157/MDS/2012 M/S. ALPHA EDUCATIONAL TRUST, M/S.SUBBARAYA AIYAR PADMANABHAN & RAMAMANI ADVOCATES 75A, DR.RADHAKRISHNAN SALAI, MYLAPORE, CHENNAI-600 004. PAN: AACTA9230A VS. THE ASSISTANT DIRECTOR OF INCOME TAX (EXEMPTIONS-II), CHENNAI-600 034. (APPELLANT) (RESPONDENT) APPELLANT BY : MR. R.VIJAYARAGHAVAN, ADVOCATE RESPONDENT BY : MR .SHAJI P.JACOB, ADDL. CIT DATE OF HEARING : 19 TH FEBRUARY, 2013 DATE OF PRONOUNCEMENT : 28 TH FEBRUARY, 2013 O R D E R PER VIKAS AWASTHY, JM: THE APPEAL HAS BEEN FILED BY THE ASSESSEE IMPUGNING THE ORDER OF THE DIRECTOR OF INCOME TAX (EXEMPTIONS ), CHENNAI DATED 28.9.2012 REJECTING THE APPLICATION O F THE ASSESSEE FOR REGISTRATION UNDER SECTION 12AA OF THE INCOME TAX ACT, 1961. 2. THE ASSESSEE HAS FILED THE APPEAL WITH THE DELAY OF TWO DAYS. AN AFFIDAVIT IN SUPPORT OF APPLICATION FOR CO NDONATION OF ITA NO.2157/MDS/2012 2 DELAY HAS BEEN FILED. WE HAVE PERUSED THE REASON FO R DELAY IN FILING OF THE APPEAL AND ARE SATISFIED THAT THERE I S A REASONABLE CAUSE FOR DELAY IN FILING OF THE APPEAL. IN THE IN TEREST OF JUSTICE, WE CONDONE THE DELAY OF 2 DAYS IN FILING O F THE APPEAL. THE APPLICATION FOR CONDONATION OF DELAY IS ALLOWED AND THE APPEAL IS ADMITTED TO BE HEARD ON MERITS. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E TRUST WAS CONSTITUTED WAY BACK ON 1.11.1985. INITIALLY T HE ASSESSEE HAD APPLIED FOR REGISTRATION UNDER SECTION 12AA OF THE ACT ON 23.3.2011. THE SAID APPLICATION OF THE A SSESSEE WAS REJECTED BY THE DIRECTOR OF INCOME TAX (EXEMPTI ONS) VIDE ORDER DATED 30.9.2011 FOR THE REASON THAT PAGE CONT AINING THE OBJECT CLAUSE WAS NOT FILED ALONG WITH THE APPLICA TION. THEREFORE, THE OBJECTS FOR WHICH THE TRUST WAS FORM ED COULD NOT BE ASCERTAINED. THE ASSESSEE AGAIN FILED AN APP LICATION FOR REGISTRATION UNDER SECTION 12AA OF THE ACT IN T HE PRESCRIBED FORM ON 9.3.2012. THE DIRECTOR OF INCOME TAX (EXEMPTIONS) SOUGHT CERTAIN CLARIFICATIONS AND ADDI TIONAL INFORMATION VIDE LETTER DATED 3.8.2012. THE ASSESSE E ALLEGEDLY FURNISHED THE INFORMATION AND REPLY TO TH E QUERIES ITA NO.2157/MDS/2012 3 VIDE LETTER DATED 27.8.2012. THE DIRECTOR OF INCOME TAX (EXEMPTIONS) VIDE IMPUGNED ORDER DATED 28.9.2012 RE JECTED THE APPLICATION OF THE ASSESSEE ON THE GROUND THAT ALTHOUGH THE TRUST HAS BEEN RUNNING EDUCATIONAL INSTITUTION SINCE 1985, WITH GROSS RECEIPTS EXCEEDING ` 1 CRORE, NO RETURN OF INCOME HAS BEEN FILED UNDER THE PROVISIONS OF THE ACT. TH E DIRECTOR OF INCOME TAX (EXEMPTIONS) FURTHER OBSERVED THAT OBJEC TS OF THE RUNNING TRUST HAVE BEEN AMENDED, PARTICULARLY WITH THE INCLUSION OF OBJECT CLAUSE 4(B) IN THE AMENDMENT D EED VIZ MEDICAL , WHICH IS NOT IN CONSONANCE WITH THE ORI GINAL OBJECTS VIZ. EDUCATION THE TRUST DOES NOT QUALIFY FOR REGISTRATION UNDER SECTION 12AA. 4. THE A.R. APPEARING ON BEHALF OF THE ASSESSEE SUBMITTED THAT THE COMPLETE TRUST DEED DATED 1.11.1 985 WAS PLACED BEFORE THE DIRECTOR OF INCOME TAX (EXEMPTION S). THE OBJECTS OF THE TRUST AS PER THE ORIGINAL TRUST DEED MENTIONS RUNNING OF EDUCATIONAL INSTITUTION FOR THE BENEFIT OF PUBLIC. EDUCATION PER SE IS A CHARITABLE ACTIVITY. THE OBJECTS OF THE TRUST WERE AMENDED TO INCLUDE : MAINTAIN AND MANAGE HOSPITAL, CLINIC, LABORATORIES AND MEDICAL RESEARCH CENTRES AND ITA NO.2157/MDS/2012 4 TO PROVIDE THE POOR WITH MEDICAL AID AND TO ENLARGE SCOPE OF WORKING OF THE TRUST FOR THE BENEFIT OF THE POOR. T HE COUNSEL FOR THE ASSESSEE SUBMITTED THAT FOR GRANTING REGISTRAT ION UNDER SECTION 12AA WHAT IS TO BE SEEN IS THE OBJECTS OF THE TRUST AND ACTIVITIES BEING CARRIED OUT BY THE TRUST. IF THE OBJECTS OF THE TRUST ARE CHARITABLE IN NATURE AND THE ACTIVITI ES ARE GENUINE, THE TRUST IS ENTITLED FOR REGISTRATION UND ER SECTION 12AA. IN ORDER TO SUPPORT HIS CONTENTIONS, THE COUN SEL FOR THE ASSESSEE RELIED ON THE JUDGEMENT OF THE HONBLE ALL AHABAD HIGH COURT - LUCKNOW BENCH IN THE CASE OF CIT VS. L UCKNOW EDUCATIONAL AND SOCIAL WELFARE SOCIETY REPORTED AS 340 ITR 86(ALL). THE COUNSEL FOR THE ASSESSEE IN ORDER TO FURTHER SUPPORT HIS SUBMISSIONS, ALSO RELIED ON THE ORDER O F THE CO- ORDINATE BENCH OF THE TRIBUNAL IN THE CASE OF ANJUM AN-E- KHYRKHAH-E-AAAM VS. DIRECTOR OF INCOME TAX (EXEMPTI ONS) REPORTED AS 49 SOT 242(CHENNAI) AND THE ORDER OF TH E TRIBUNAL IN THE CASE OF SRI ELUMALAYAN EDUCATIONAL TRUST VS. CIT REPORTED AS 5 ITR (TRIB) 127(CHENNAI). THE A.R. FURTHER SUBMITTED THAT AMENDMENT IN OBJECT CLAUSE CANNOT BE A REASON FOR DENIAL OF REGISTRATION UNDER SECTION 12A A AS THE ITA NO.2157/MDS/2012 5 ASSESSEE TRUST IS CARRYING ON CHARITABLE ACTIVITIES SINCE THE TIME OF ITS INCEPTION IN THE YEAR 1985. IN ORDER TO SUPPORT HIS SUBMISSIONS, THE AR RELIED ON THE JUDEMENT OF THE H ONBLE MADRAS HIGH COURT IN THE CASE OF DIRECTOR OF INCOME TAX (EXEMPTIONS) VS. VALLAL M.D.SESHADRI TRUST REPORTED AS 79 CCH 443 CHEN HC. 5. ON THE OTHER HAND, SHRI SHAJI P.JACOB APPEARING ON BEHALF OF THE REVENUE SUBMITTED THAT AT THE TIME OF INITIAL REGISTRATION THE ASSESSEE HAS DELIBERATELY NOT FILE D THE OBJECTS OF THE TRUST, THE APPLICATION FOR REGISTRATION UNDE R SECTION 12AA WAS THEREFORE REJECTED. A PERUSAL OF THE ORDER OF THE DIRECTOR OF INCOME TAX (EXEMPTIONS) DATED 30.9.2011 SHOWS TH AT PAGE 3 CONTAINING THE OBJECT CLAUSE WAS NOT FILED A LONG WITH THE REGISTRATION DOCUMENTS IN THE YEAR 2011. AGAI N IN THE YEAR 2012 WHEN APPLICATION FOR REGISTRATION WAS FIL ED BEFORE THE DIRECTOR OF INCOME TAX (EXEMPTIONS), THE ASSESS EE TRUST HAS AMENDED ITS OBJECTS IN VIOLATION OF THE PROVISI ONS OF THE INDIAN TRUST ACT. ONCE THE TRUST HAS BEEN CREATED, ITS OBJECTS CANNOT BE AMENDED WITHOUT THE DECREE OF THE CIVIL C OURT EXCEPT WHERE THE POWER TO AMEND OBJECT CLAUSE HAS B EEN ITA NO.2157/MDS/2012 6 SPECIFICALLY PROVIDED IN THE TRUST DEED ITSELF. IN ORDER TO SUPPORT HIS CONTENTIONS, THE DR RELIED ON THE ORDER OF THE TRIBUNAL IN THE CASE OF RAMANUJAM SPIRTUAL PUBLIC CHARITABLE TR UST VS. CIT REPORTED AS 138 ITD 81. 6. WE HAVE HEARD THE SUBMISSIONS MADE BY BOTH THE PARTIES AND HAVE PERUSED THE ORDERS OF THE AUTHORIT IES BELOW. THE A.R. HAS FILED PAPER BOOK CONTAINING TRUST DEED DATED 1.11.1985 AND THE AMENDED TRUST DEED DATED 13.12.2 010. THE OBJECT CLAUSE OF TRUST DEED DATED 1.11.1985 IS REPRODUCED HEREIN BELOW:- A) TO RUN EDUCATIONAL INSTITUTION FOR THE BENEFIT OF THE PUBLIC IN PARTICULAR TO TAKE OVER AND RUN THE SCHOOL UNDER THE NAME AND STYLE OF ALPHA ENGLISH MEDIUM SCHOOL, JEEVA STREET, MONDIAMMAN NGAR, RED HILLS, MADRAS-600 052. B) TO ESTABLISH LIBRARIES, READING ROOMS WITH THE STRESS ON THE PRIMARY OBJECTS. C) TO CARRY OUT ALL OTHER CHARITABLE PURPOSES INCLUDING RELIEF OF THE POOR, EDUCATION, MEDICAL RELIEF OF THE POOR, EDUCATION, MEDICAL RELIEF AND T HE ADVANCEMENT OF ANY OTHER OBJECTS OF GENERAL PUBLIC UTILITY NOT INVOLVING THE CARRYING ON OF ANY ACTIVITY FOR PROFIT OR, FOR ANY OTHER PURPOSES AS ITA NO.2157/MDS/2012 7 DEFINED IN THE INCOME RELIEFS PROVIDED UNDER THE SAID ACT. 7. A PERUSAL OF THE OBJECT CLAUSE SHOWS THAT THE T RUST HAS BEEN FORMED TO RUN EDUCATIONAL INSTITUTION UNDER TH E NAME AND STYLE OF ALPHA ENGLISH MEDIUM SCHOOL AT RED HIL LS, MADRAS. A FURTHER PERUSAL OF CLAUSE C OF THE OBJE CTS SHOW THAT THE TRUST WAS FORMED TO CARRY OUT OTHER CHARIT ABLE PURPOSES INCLUDING RELIEF OF POOR, EDUCATION, MEDIC AL RELIEF ETC. THE OBJECTS IN THE ORIGINAL TRUST DEED CLEARLY MENT ION THAT THE TRUST IS CREATED TO CARRY OUT CHARITABLE ACTIVITIES . 8. THE TRUST DEED HAS BEEN SUBSEQUENTLY AMENDED IN THE YEAR 2010 TO ENLARGE THE SCOPE OF CHARITABLE ACTIVI TIES BEING CARRIED OUT BY THE TRUST. ALTHOUGH IN THE ORIGINAL TRUST DEED, IT HAS BEEN MENTIONED THAT CHARITABLE PURPOSE INCLUDE MEDICAL RELIEF BY VIRTUE OF AMENDMENT IN THE OBJECT CLAUSE THE TERM MEDICAL RELIEF HAS BEEN ELABORATED. 9. THE LEARNED COUNSEL FOR THE ASSESSEE HAS RELIED ON THE JUDGEMENT OF THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF VALLAL M.D.SESHADRI TRUST (SUPRA) TO SAY THAT A MENDMENT IN TRUST WILL HAVE NO BEARING ON THE REGISTRATION O F TRUST UNDER SECTION 12AA AS LONG AS THE OBJECTS AND ACTIVITIES OF THE TRUST ITA NO.2157/MDS/2012 8 ARE CHARITABLE IN NATURE. THE HONBLE HIGH COURT I N THE SAID JUDGEMENT HAS HELD AS UNDER:- 7. AS FAR AS THE AMENDMENT MADE TO THE TRUST DEED IS CONCERNED, IT IS NOT THE CONCERN OF THE ASSESSING AUTHORITY, AND ONLY THE CIVIL COURT IS EMPOWERED TO DECIDE THE SAID ISSUE AND IN ANY EVENT THAT CANNOT BE THE REASON FOR DENYING THE CHARITABLE NATURE OF THE INSTITUTION, IF IT IS OTHERWISE CHARITABLE. 10. DE HORS THE CONTROVERSY WITH RESPECT TO AMENDM ENT OF THE TRUST DEED, WE ARE OF THE CONSIDERED OPINION T HAT THE ORIGINAL TRUST DEED SPECIFICALLY MENTIONS ABOUT CHA RITABLE ACTIVITIES BEING CARRIED OUT BY THE ASSESSEE TRUS T. THE DIRECTOR OF INCOME TAX (EXEMPTIONS) HAS ERRED IN RE JECTING THE APPLICATION OF THE ASSESSEE ON THE GROUND THAT THE ASSESSEE HAS AMENDED ITS TRUST DEED, THEREFORE, IT IS NOT ELIGIBLE FOR REGISTRATION UNDER SECTION 12AA OF THE ACT. 11. WE, THEREFORE, SET ASIDE THE IMPUGNED ORDER AND REMIT THE FILE BACK TO THE DIRECTOR OF INCOME TAX (EXEMPT IONS) TO ITA NO.2157/MDS/2012 9 DECIDE THE APPLICATION OF THE ASSESSEE FOR REGISTRA TION AFRESH BY TAKING INTO CONSIDERATION THE ORIGINAL TRUST DEE D AND ALSO THE ACTIVITIES BEING CARRIED OUT BY THE ASSESSEE FR OM THE PERIOD OF ITS INCEPTION. THE APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES IN THE AFORESAID TERMS. ORDER PRONOUNCED IN THE OPEN COURT ON THURSDAY , THE 28 TH DAY OF FEBRUARY, 2013 AT CHENNAI. SD/- SD/- (ABRAHAM P.GEORGE ) (VIKAS AWASTHY) ACCOUNTANT MEMBER JUDICIAL MEMBER CHENNAI, DATED THE FEBRUARY, 2013. SOMU COPY TO: (1) APPELLANT (4) CIT(A) (2) RESPONDENT (5) D.R. (3) CIT (6) G.F.