Gilgal Mission India, CHENNAI V. ITO, Nagercoil

ITA 3067/CHNY/2014

• Counselvise Citation: 306721714 RSA 2014
• Duration Of Justice: 6 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-07-2015
• Appeal Filed By: Assessee
• Bench Allotted: D
• Next Hearing Date: 27-05-2015
• Assessment Year: misc
• Appeal Filed On: 16-12-2014
• Court: TRIBUNAL
• Department Lawyers: JOE SEBASTIAN
• Assessee Lawyers: A S SRIRAMAN
• Keywords: Charitable institution
• Section: 12AA

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH : CHENNAI . . . , . !' , # $ % [ BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER ] ./ I.T.A.NO.3067/MDS/2014 / ASSESSMENT YEAR : N.A M/S GILGAL MISSION INDIA GILGAL BHAVAN KIRATHOOR PO KOLLAMCODE VIA KANYAKUMARI DISTRICT 629181 VS. THE INCOME TAX OFFICER WARD I(1) NAGERCOIL [PAN AABTG 9362 Q ] ( &' / APPELLANT) ( ()&' /RESPONDENT) / APPELLANT BY : SHRI A.S. SRIRAMAN, ADVOCATE /RESPONDENT BY : SHRI JOE SEBASTIAN, CIT / DATE OF HEARING : 27 - 05 - 2015 ! / DATE OF PRONOUNCEMENT : 10 - 0 7 - 2015 / O R D E R PER N.R.S.GANESAN, JUDICIAL MEMBER THIS APPEAL OF THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME-TAX-I, MADURAI, DATED 2 3.09.2014 REJECTING THE APPLICATION OF THE ASSESSEE FOR REGI STRATION U/S 12AA OF THE ACT. ITA NO.3067/14 :- 2 -: 2. AT THE OUTSET, IT WAS NOTICED THAT THERE WAS A DELA Y OF SEVEN DAYS IN FILING THE APPEAL. THE ASSESSEE FILED APP LICATION TO CONDONE THE DAY. AFTER HEARING BOTH SIDES, WE FIND THAT THERE WAS SUFFICIENT CAUSE FOR NOT FILING THE APPEAL WITHIN THE PERIOD P RESCRIBED. ACCORDINGLY, THE DELAY OF SEVEN DAYS IN FILING THE APPEAL IS CONDONED AND THE APPEAL OF THE ASSESSEES IS ADMITTED. 3. SHRI A.S.SRIRAMAN, LD. COUNSEL FOR THE ASSESSEE SUB MITTED THAT THE ASSESSEE TRUST WAS ESTABLISHED BY A DEED OF TRUST DATED 10.11.2006 FOR CHARITABLE AND RELIGIOUS PURPOSE. TH E CIT REJECTED THE APPLICATION OF THE ASSESSEE FOR REGISTRATION U/S 12AA OF THE ACT ON THE GROUND THAT THE TRUST CANNOT HAVE BOTH CHARITAB LE AND RELIGIOUS OBJECTS. REFERRING TO THE JUDGMENT OF THE HON'BLE MADRAS HIGH COURT IN DIT VS SEERVI SAMAJ TAMBARAN TRUST [2014] 362 IT R 199, THE LD. COUNSEL SUBMITTED THE HIGH COURT FOUND THAT THE TRU ST CAN HAVE BOTH RELIGIOUS AND CHARITABLE OBJECTS. THEREFORE, ACCOR DING TO THE LD. COUNSEL, THE CIT IS NOT JUSTIFIED IN REJECTING THE APPLICATION OF THE ASSESSEE. 4. ON THE CONTRARY, SHRI JOE SEBASTIAN, LD. DEPARTMENT AL REPRESENTATIVE SUBMITTED THAT THE ASSESSEE CAN EST ABLISH A TRUST EITHER FOR RELIGIOUS OR CHARITABLE PURPOSE. THE A SSESSEE CANNOT HAVE BOTH CHARITABLE AND RELIGIOUS OBJECTS IN ONE TRUST. ACCORDING TO THE LD. ITA NO.3067/14 :- 3 -: DR, THE ASSESSEE CANNOT EXTEND ITS BENEFIT TO A PA RTICULAR CASTE OR RELIGION, THEREFORE, THE CIT HAS RIGHTLY REJECTED T HE APPLICATION OF THE ASSESSEE. 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EITHER SIDE AND ALSO PERUSED THE MATERIAL AVAILABLE ON RECORD. THE CIT REJECTED THE APPLICATION OF THE ASSESSEE FOR REGISTRATION U/S 12AA OF THE ACT ON THE GROUND THAT THERE CANNOT BE TWIN OBJECTS I.E RELIGI OUS AND CHARITABLE IN NATURE. AN IDENTICAL ISSUE WAS CONSIDERED BY THE H ON'BLE MADRAS HIGH COURT IN THE CASE OF SEERVI SAMAJ TAMBARAN TRUST (S UPRA) AND FOUND THAT THE TRUST CAN HAVE TWIN OBJECTS. IN FACT, THE HON'BLE MADRAS HIGH COURT HAS OBSERVED AS FOLLOWS: 6. THE VERY ISSUE RAISED BY THE REVENUE HAS BEEN D EALT WITH BY A DIVISION BENCH OF THIS COURT IN THE CASE OF CIT V. ARULMIGHU SRI KAMATCHI AMMAN TRUST REPORTED IN (2012) 206 TAXMAN 69. IN THE SAID CASE, THE RESPONDENT/ASSESSEE SOUGHT FOR REGISTRATION UNDER SECTION 12AA OF THE INCOME TAX ACT ON THE GROUND TH AT THE OBJECT OF THE TRUST WAS RELIGIOUS. THE COMMISSI ONER OF INCOME TAX REJECTED THE APPLICATION ON THE GROUND THAT THE TRUST WAS SPENDING MONEY IN RECEIPTS TOWAR DS RELIGIOUS AND ADMINISTRATIVE PURPOSES AND THE ACTIV ITIES CLAIMED TO BE CARRIED ON BY THE SAID TRUST WERE AN ADMIXTURE OF BOTH RELIGIOUS AND CHARITABLE. THE SAI D TRUST FILED AN APPEAL BEFORE THE INCOME TAX APPELLATE TRI BUNAL. FOLLOWING THE DECISION IN THE CASE OF CIT VS. UPPER GANGES SUGAR MILLS LTD. REPORTED IN 227 ITR 578 AND IN THE CASE OF STATE OF KERALA V. MP.SHANTIVERMA JAIN REPORTED IN (1998) 231 ITR 787 (SC), THE TRIBUNAL ALLOWED THE APPEAL. CHALLENGING THE SAME, THE REVENUE FILED AN APPEAL BEFORE THIS COURT CONTENDING THAT THE TRIBUNAL FAIL ED TO APPRECIATE THE ACTIVITIES CLAIMED TO BE CARRIED ON BY THE SAID ASSESSEE, WHICH WAS AN ADMIXTURE OF BOTH RELIG IOUS AND CHARITABLE IN NATURE. THEREFORE, THE TRIBUNAL O UGHT NOT TO HAVE INTERFERED WITH THE ORDER OF THE COMMIS SIONER OF INCOME TAX. THE DIVISION BENCH OF THIS COURT, AFTER TAKING INTO CONSIDERATION THE PROVISION UNDER SECTI ON ITA NO.3067/14 :- 4 -: L1(L)(A) OF THE INCOME TAX ACT, WHICH STATES THAT SUBJECT TO THE PROVISIONS OF SECTIONS 60 TO 63, THE INCOME DERIVED FROM PROPERTY HELD UNDER TRUST WHOLLY FOR CHARITABL E OR RELIGIOUS PURPOSES, TO THE EXTENT OF WHICH SUCH INC OME IS APPLIED TO SUCH PURPOSES IN INDIA; AND, WHERE ANY S UCH INCOME IS ACCUMULATED OR SET APART FOR APPLICATION TO SUCH PURPOSES IN INDIA, TO THE EXTENT TO WHICH THE INCOM E SO ACCUMULATED OR SET APART IS NOT IN EXCESS OF FIFTEE N PER CENT OF THE INCOME FROM SUCH PROPERTY SHALL NOT BE INCLUDED IN THE TOTAL INCOME OF THE PREVIOUS YEAR O F THE PERSON IN RECEIPT OF THE INCOME. THUS, THE DIVISION BENCH HELD 'FROM A READING OF THE ABOVE, IT IS CLEAR THAT THE INCOME DERIVED FROM THE PROPERTY HELD UNDER TRUST W HOLLY FOR CHARITABLE OR RELIGIOUS PURPOSE, SHALL NOT BE I NCLUDED IN THE TOTAL INCOME OF THE TRUST. THEREFORE, THE SAID PROVISION WOULD BE APPLICABLE TO BOTH THE TRUSTS ESTABLISHED WITH THE OBJECT OF CHARITABLE AS WELL A S RELIGIOUS PURPOSES. THEREFORE, SECTION 12AA OF THE INCOME TAX ACT DOES NOT MAKE ANY DIFFERENCE BETWEEN THE TRUSTS CREATED WITH THE OBJECT OF CHARITABLE AN D RELIGIOUS PURPOSES AND, EVEN IF THE TRUST IS NOT CREATED WITH BOTH THE OBJECTS, LAW DOES NOT MAKE AN Y DISQUALIFICATION FOR THE TRUST TO MAKE AN APPLICATI ON FOR REGISTRATION. THEREFORE, THE TRIBUNAL HAS CORRECTLY APPLIED THE PROVISION OF LAW AND ALLOWED THE APPEAL .' 7. THE ABOVE-SAID DECISION SQUARELY APPLIES TO THE FACTS OF THE PRESENT CASE. FURTHER, IN THE CASE OF THE DIRECTOR OF INCOME TAX (EXEMPTIONS), CHENNAI V. THE CHARTERED ACCOUNTANT STUDY CIRCLE REPORTED IN CDJ 2012 MHC 658, THE DIVISION BENCH OF THIS COURT, AFTER TAKING NOTE OF THE OBJECTS OF THE SAID TRUST, WHICH AMONG OTHER THINGS WAS TO CONDUCT PERIODICAL MEETINGS ON PROFESSIONAL SUBJECTS AND TO ACHIEVE THE SAID OBJEC TS, THE ASSESSEE WAS PUBLISHING BOOKS, BOOKLETS, ETC. ON PROFESSIONAL SUBJECTS AND SELLING THE SAME ONLY ON THE SUBJECTS RELATED TO AUDIT AND NOT ON ANY OTHER SUBJ ECT AND AFTER ANALYSING THE OBJECTS OF THE SAID TRUST, POINTED OUT THAT THE ACTIVITIES OF THE SAID TRUST IN PUBLIS HING AND SELLING BOOKS OF PROFESSIONAL INTEREST, WHICH WERE MEANT TO BE USED AS A REFERENCE MATERIAL EVEN BY THE GENE RAL PUBLIC AS WELL AS THE PROFESSIONALS IN RESPECT OF B ANK AUDIT, TAX AUDIT ETC., COULD NOT BE CONSTRUED TO BE ONE OF COMMERCE IN NATURE. FURTHER, IT WAS POINTED OUT THA T UNDER SECTION 12AA OF THE INCOME TAX ACT, WHILE CONSIDERING THE APPLICATION, THE OFFICER HAS TO SAT ISFY ABOUT THE GENUINENESS OF THE ACTIVITY OF THE TRUST OR THE INSTITUTION AND FOR THAT REASON, HE MAY ALSO MAKE S UCH ENQUIRIES AS HE DEEM IT NECESSARY IN THAT BEHALF. 6. IN VIEW OF THE ABOVE, THIS TRIBUNAL IS OF THE CONS IDERED OPINION THAT THERE IS NO JUSTIFICATION IN REJECTING THE APPLICATION OF THE ITA NO.3067/14 :- 5 -: ASSESSEE. ACCORDINGLY, THE CIT IS DIRECTED TO GR ANT REGISTRATION U/S 12AA OF THE ACT TO THE ASSESSEE. 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLO WED. ORDER PRONOUNCED IN THE OPEN COURT ON 10 TH OF JULY, 2015, AT CHENNAI. SD/- SD/- ( . !' ) (A. MOHAN ALANKAMONY) # / ACCOUNTANT MEMBER ( . . . ' ) (N.R.S. GANESAN) / JUDICIAL MEMBER #$ / CHENNAI %& / DATED: 10 TH JULY, 2015 RD &' ()*) / COPY TO: 1 . / APPELLANT 4. + / CIT 2. / RESPONDENT 5. ),- . / DR 3. +/' / CIT(A) 6. -01 / GF