North Malabar Province OCD, Kottayam V. CIT, Kannur

ITA 267/COCH/2010

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 52296 (ITAT-COCHIN)
• Duration Of Justice: 1 year(s) 7 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-11-2011
• Appeal Filed By: Assessee
• Bench Allotted: DB
• Assessment Year: misc
• Appeal Filed On: 22-04-2010
• Court: TRIBUNAL
• Department Lawyers: S R SENAPTI
• Assessee Lawyers: T K MATHEW FCAAR
• Keywords: Charitable institution; Competent authority
• Section: 12A; 12AA

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL COCHIN BENCH, COCHIN BEFORE S/SHRI N.R.S.GANESAN, JM AND SANJAY AROR A, AM I.T.A NO. 267/COCH/2010 ASSESSMENT YEAR: NOT APPLICABLE NORTH MALABAR PROVINCE OF THE ORDER OF THE DISCALCED CARMELITES, MOUNT CARMEL ASHRAM, PERAVOOR (P.O.), KANNUR - 670 673. [PAN :AABTN 2378R] VS. THE COMMISSIONER OF INCOME-TAX, KANNUR. (ASSESSEE-APPELLANT) (REVENUE- RESPONDENT) ASSESSEE BY SHRI T.K.MATHEW, FCA-AR REVENUE BY SHRI S.R.SENAPTI, SR.DR DATE OF HEARING 28/09/2011 DATE OF PRONOUNCEMENT 25 /11/2011 O R D E R PER SANJAY ARORA, AM: THIS APPEAL BY THE ASSESSEE ARISES OUT OF THE ORDE R U/S. 12AA OF THE INCOME-TAX ACT, 1961 ('THE ACT', HEREINAFTER) DATED 24.03.2010 BY THE COMMISSIONER OF INCOME-TAX, KANNUR (CIT FOR SHORT). 2. THE FACTS IN BRIEF ARE THAT THE ASSESSEE IS A TR UST CONSTITUTED VIDE TRUST DEED DATED 07.8.2009 BY THE NORTH MALABAR PROVINCE OF THE ORDE R OF THE DISCALCED CARMELITES, A RELIGIOUS AND CHARITABLE INSTITUTION, ACTING THROUG H ITS PRESENT PROVINCIAL SUPERIOR, FATHER THOMAS PATRICK MOOTHERIL OCD, COVENANTING HIM AS TH E SOLE TRUSTEE OF THE ASSESSEE-TRUST, DULY REGISTERED WITH THE SUB-REGISTRAR, PERAVOOR, K ANNUR. IT FILED AN APPLICATION U/S. 12AA OF THE ACT FOR REGISTRATION U/S. 12A THEREOF O N 10.9.2009. THE SAME STOOD REJECTED I.T.A. NO.267 /COCH/2010 NORTH MALABAR PROVINCE OF OCD V. CIT, KANNUR 2 BY THE LD. CIT ON THE GROUND THAT ITS OBJECTS ARE M IXED, I.E., FOR BOTH RELIGIOUS AND CHARITABLE PURPOSES. THE RELIGIOUS PURPOSE/S RELATE D ONLY TO THE CHRISTIAN RELIGION AND DID NOT EXTEND TO ANY OTHER COMMUNITY OR CASTE. SECTION 13(1)(B) OF THE ACT EXCLUDES A CHARITABLE INSTITUTION/TRUST FOR REGISTRATION IF IT IS FOR THE BENEFIT OF A PARTICULAR RELIGIOUS COMMUNITY OR CASTE (EXCEPT WHERE THE SAME IS A SCHE DULED CASTE, BACKWARD CASTE, SCHEDULED TRIBE, WOMEN OR CHILDREN). SECTION 11(1A) FURTHER PROVIDES THAT THE PROPERTY HELD UNDER TRUST, INCOME FROM WHICH IS SUBJECT TO E XEMPTION U/S. 11(1), SHOULD BE SO WHOLLY EITHER FOR CHARITABLE OR RELIGIOUS PURPOSES . THOUGH THE TRUST COULD SPEND THE CONTRIBUTIONS RECEIVED BY IT FOR CHARITABLE PURPOSE S, I.E., FOR THE BENEFIT OF THE GENERAL PUBLIC, WITH REGARD TO THE RELIGIOUS PURPOSES, IT C OULD DO SO FOR THE BENEFIT OF THE CHRISTIAN COMMUNITY ONLY. ACCORDINGLY, REGISTRATION UNDER THE ACT WAS DENIED TO THE ASSESSEE-TRUST VIDE THE IMPUGNED ORDER. AGGRIEVED, THE ASSESSEE I S IN FIRST APPEAL. 3. BEFORE US, THE ASSESSEE RELIED ON THE DECISION I N THE CASE OF SOCIETY OF PRESENTATION SISTERS VS. I.T.O. (2009) 318 ITR (AT) 287 (COCHIN) (TM) [(2009) 121 ITD 422 (COCHIN) (TM)], STATING IT TO BE COVERING ITS CASE, WHILE TH E LD. DR RELIED ON THE IMPUGNED ORDER. 4. WE HAVE HEARD THE PARTIES, AND PERUSED THE MATER IAL ON RECORD, INCLUDING THE OBJECT CLAUSE OF THE APPELLANT-TRUST, WHICH IS LISTED AT P ARA 4 OF THE TRUST DEED. IN THE CITED CASE, THE ASSESSEE-TRUST/S WAS ALREADY REGISTERED U/S. 12 A OF THE ACT, AND THE ISSUE BEFORE THE TRIBUNAL WAS QUA EXEMPTION U/S. 11(1)(A) OF THE ACT. IT WAS HELD PE R A MAJORITY DECISION THAT THE EXEMPTION U/S. 11(1)(A) COULD BE DENIED ON LY WHERE SEC. 13(1) IS ATTRACTED. NO CASE HAD BEEN MADE OUT BY THE REVENUE U/S. 13(1)(B) OR ANY OTHER CLAUSE OF SEC. 13 OF THE ACT. IN THE INSTANT CASE, WE FIND THAT THE DENIAL OF REGISTRATION IS PRINCIPALLY ON ACCOUNT OF APPLICATION OF SEC. 13(1)(B). HOWEVER, THE SAID PRO VISION COMES INTO OPERATION ONLY IN THE CASE OF A CHARITABLE TRUST OR INSTITUTION. THAT IS, THERE IS NO SCOPE FOR APPLICATION OF SECTION 13(1)(B) IF THE TRUST OR INSTITUTION IS NOT REGISTE RED UNDER THE ACT AS A CHARITABLE INSTITUTION/TRUST, OR IS NOT ELIGIBLE FOR REGISTRAT ION THERE-UNDER AS ONE, WHICH IS WHAT THE ASSESSEES APPLICATION, WHICH STANDS REJECTED, IS T OWARD. THIS COULD IN FACT BE SAID FOR OTHER CLAUSES OF SECTION 13 AS WELL, SOME OF WHICH APPLY TO RELIGIOUS TRUSTS/INSTITUTIONS AS I.T.A. NO.267 /COCH/2010 NORTH MALABAR PROVINCE OF OCD V. CIT, KANNUR 3 WELL, EITHER EXCLUSIVELY OR IN CONJUNCTION WITH CHA RITABLE INSTITUTIONS. AS SUCH, THE APPLICATION OR OTHERWISE OF SEC. 13 (INCLUDING S. 1 3(1)(B)) IS NOT AN ISSUE AT THE TIME OF REGISTRATION OF AN APPLICANT-TRUST UNDER THE ACT, B UT ONLY SUBSEQUENT TO THE TRUST OR INSTITUTION BEING REGISTERED AS A CHARITABLE INSTIT UTION. THE SOLE CRITERIA WHILE CONSIDERING AN APPLICATION U/S. 12AA FOR REGISTRATION WOULD BE WHETHER THE OBJECTS OF THE TRUST ARE CHARITABLE OR RELIGIOUS IN NATURE AND, WHERE SO, WH ETHER THE TRUST/INSTITUTION, IMPLYING ITS OBJECTS AND ACTIVITIES, AS EVIDENCED BY THE DOCUMEN TS OR MATERIALS FURNISHED, INCLUDING TOWARD ITS CONSTITUTION (WHICH SHOULD BE IN WRITIN G), ARE GENUINE OR NOT. THAT, MIXED OBJECTS, I.E., PARTLY RELIGIOUS AND PARTLY CHARITAB LE, COULD SUBSIST SIMULTANEOUSLY, STANDS CLARIFIED BY THE TRIBUNAL PER ITS DECISION IN THE C ASE OF SOCIETY OF PRESENTATION SISTERS VS. I.T.O. (SUPRA). THE REFERENCE TO SEC. 11(1A) OF THE ACT B Y THE LD. CIT IS, THEREFORE, OF NO CONSEQUENCE, WHICH PROVISION, IN OUR VIEW, HAS BEEN MISCONSTRUED BY HIM AS BEING TO THAT EFFECT, I.E., AS PRECLUDING MIXED OBJECTS, WHI LE THE SAME ONLY REQUIRES THAT THE PROPERTY HELD UNDER TRUST SHOULD BE SO HELD WHOLLY FOR CHARITABLE OR RELIGIOUS PURPOSES, NOTHING MORE, AND WHICH IS SO IN THE INSTANT CASE. THAT IS, IT IS NOT PERMISSIBLE TO HOLD THE PROPERTY PARTLY FOR CHARITABLE AND PARTLY FOR NON-C HARITABLE PURPOSES; AND LIKE-WISE FOR RELIGIOUS PURPOSES. THE WORD `OR IN THE SAID SECTI ON, AS ALSO IN SECTION 11(1), IS USED CONJUNCTIVELY, AND THE MUTUAL EXCLUSIVITY INFERRED BY THE LD. CIT, BY STATING IT BE AN `EITHER/OR CRITERION, DOES NOT EMANATE FROM THE PL AIN AND CLEAR LANGUAGE OF THE PROVISION/S. THIS ISSUE STANDS ALSO CLARIFIED BY TH E AFORE-CITED DECISION BY THE TRIBUNAL. FURTHER, SEC. 13(1)(B) WOULD APPLY WHERE CHARITABLE ACTIVITIES OF THE TRUST/INSTITUTION ARE DIRECTED TOWARD A PARTICULAR RELIGIOUS COMMUNITY OR CASTE, WHILE THE LD. CIT HAS HIMSELF CLARIFIED THAT THE CHARITABLE ACTIVITIES OF THE ASS ESSEE-TRUST INURE TO THE BENEFIT OF THE GENERAL PUBLIC. WE, THEREFORE, FIND NO TENABLE GROU ND FOR THE DENIAL OF THE REGISTRATION TO THE APPELLANT-TRUST BY THE COMPETENT AUTHORITY AND, ACCORDINGLY, REVERSE HIS ORDER DIRECTING SO. THE APPELLANT IS ACCORDINGLY DIRECTED TO BE REGISTERED AS A RELIGIOUS AND CHARITABLE TRUST, I.E., IN TERMS OF ITS CONSTITUTIN G DEED. SO, HOWEVER, IT WOULD ONLY BE IN ORDER TO STATE THAT WHERE THE CHARITABLE ACTIVITIES OF THE TRUST ARE FOUND IN ACTUAL PRACTICE AS BEING NOT IN CONFORMITY WITH ITS CONSTITUTION, I.E. , AS NOT INURING TO THE BENEFIT OF THE GENERAL PUBLIC, BUT FOR THAT OF ANY PARTICULAR COMM UNITY/S (OTHER THAT EXCEPTED CASTES, I.T.A. NO.267 /COCH/2010 NORTH MALABAR PROVINCE OF OCD V. CIT, KANNUR 4 CLASSES), IT WOULD BE OPEN FOR THE REVENUE TO PROCE ED TO DENY THE ASSESSEE THE BENEFIT/S ACCORDED BY OR UNDER THE ACT TO A CHARITABLE TRUST/ INSTITUTION, I.E., IN TERMS OF, AND BY FOLLOWING THE DUE PROCESS OF LAW. ALSO, IN VIEW OF THE RESTRICTION PLACED BY LAW PER SEC. 13(1)(B), WHICH HAS BEEN FOUND AS HAVING BEEN OBSER VED BY THE APPELLANT-TRUST, I.E., INSOFAR AS IT CHARTER GOES, IT SHALL BE OBLIGED TO MAINTAIN SEPARATE RECORDS IN RESPECT OF ITS CHARITABLE AND RELIGIOUS ACTIVITIES, AS, IN ITS ABS ENCE, IT WOULD NOT BE POSSIBLE FOR IT TO EXHIBIT THE COMPLIANCE OF SEC. 13(1)(B), NOR FOR TH E REVENUE TO VERIFY THE ASSESSEES CLAIM/S IN ITS RESPECT. WE DECIDE ACCORDINGLY. 5. IN THE RESULT, THE ASSESSEES APPEAL IS ALLOWED. SD/- SD/- (N.R.S.GANESAN) (SANJAY ARORA) JUDICIAL MEMBER ACCOUNTANT MEMBER PLACE: ERNAKULAM DATED: 25TH NOVEMBER, 2011 GJ COPY TO: 1. NORTH MALABAR PROVINCE OF THE OCD, MOUNT CARMEL ASHRAM, PERAVOOR (P.O.), KANNUR - 670 673 2. THE COMMISSIONER OF INCOME-TAX, KANNUR. 3. D.R., I.T.A.T., COCHIN BENCH, COCHIN. 4. GUARD FILE .