ACIT, CHENNAI V. M/s. Mamallan Educational Trust, CHENNAI

ITA 456/CHNY/2012

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 61052 (ITAT-CHENNAI)
• Duration Of Justice: 2 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-05-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 10-05-2012
• Assessment Year: 2007-2008
• Appeal Filed On: 01-03-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DR S MOHRANA
• Assessee Lawyers: T BANUSEKAR
• Keywords: Charitable institution
• Section: 12AA; 12; 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, CHENNAI BEFORE SHRI ABRAHAM P. GEORGE, ACCOUNTANT MEMBER AND SHRI VIKAS AWASTHY, JUDICIAL MEMBER I.T.A. NO. 456/MDS/2012 (ASSESSMENT YEAR : 2007-08) THE ASSISTANT COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE I(3), CHENNAI - 600 034 . (APPELLANT) V. M/S MAMALLAN EDUCATIONAL TRUST, NO.29, GANAPATHY STREET, ROYAPETTAH, CHENNAI - 600 014. PAN : AABTM1887E (RESPONDENT) APPELLANT BY : DR. S. MOHRANA, CIT-DR RESPONDENT BY : SHRI T. BANUSEKAR , CA DATE OF HEARING : 10.05.2012 DATE OF PRONOUNCEMENT : 10.05.2012 O R D E R PER ABRAHAM P. GEORGE, ACCOUNTANT MEMBER : IN THIS APPEAL FILED BY THE REVENUE, ITS GRIEVANC E IS THAT THE CIT(APPEALS) HELD PAYMENTS MADE BY THE ASSESSEE TO ONE M/S SIVARAJA RAMALINGA TRUST WAS NOT HIT BY SECTION 13(1)(C) OF INCOME-TAX ACT, 1961 (IN SHORT 'THE ACT'). IN OTHER WORDS, REVENUE IS A GGRIEVED THAT THE CIT(APPEALS) ALLOWED EXEMPTION UNDER SECTION 11 OF THE ACT TO THE ASSESSEE FOR THE IMPUGNED ASSESSMENT YEAR. FURTHER , AS PER REVENUE, 2 I.T.A. NO. 456/MDS/12 DECISION OF CO-ORDINATE BENCH OF THIS TRIBUNAL IN T HE CASE OF DCIT V. JEPPIAAR EDUCATIONAL TRUST IN I.T.A. NO. 3387/MDS/2 004 DATED 22.9.2006, RELIED ON BY THE CIT(APPEALS) HAS NOT BE EN ACCEPTED BY THE DEPARTMENT AND AN APPEAL IS PENDING BEFORE HONBLE JURISDICTIONAL HIGH COURT. 2. SHORT FACTS APROPOS ARE THAT ASSESSEE HAVING REG ISTRATION UNDER SECTIONS 11 AND 12 OF THE ACT, HAD IN ITS BALANCE S HEET FOR THE RELEVANT PREVIOUS YEAR SHOWN UNDER THE HEAD CURRENT ASSETS A SUM OF ` 77,93,000/- AGAINST THE NAME M/S SIVARAJA RAMALINGA TRUST. AS PER THE ASSESSING OFFICER, TRUSTEES OF THE ASSESSEE AND SOM E OF THE TRUSTEES OF M/S SIVARAJA RAMALINGA TRUST WERE SAME AND THEREFOR E, ASSESSEE WAS HIT BY SECTION 13(1)(C) READ WITH SECTION 13(3) OF THE ACT. HE DENIED THE CLAIM OF EXEMPTION UNDER SECTION 11 OF THE ACT AND TREATED THE ASSESSEE-TRUST AS AOP. 3. IN ITS APPEAL BEFORE CIT(APPEALS), ARGUMENT OF T HE ASSESSEE WAS THAT SECTION 13(1)(C)(II) COULD BE INVOKED ONLY WHE N ANY PART OF THE INCOME WAS USED FOR THE BENEFIT OF TRUSTEES, OR OTH ER PERSONS MENTIONED IN SECTION 13(3) OF THE ACT. AS PER THE ASSESSEE, THE TERM CONCERN MENTIONED IN SECTION 13(3) OF THE ACT DID NOT INCLU DE ANOTHER CHARITABLE TRUST. SIVARAJA RAMALINGA TRUST WAS A CHARITABLE T RUST AND THEREFORE, ANY PAYMENTS MADE TO THE SAID TRUST COULD NOT BE CO NSIDERED AS A 3 I.T.A. NO. 456/MDS/12 VIOLATION OF SECTION 13(1) OF THE ACT. RELIANCE WA S ALSO PLACED ON THE DECISION OF CO-ORDINATE BENCH OF THIS TRIBUNAL OF T HIS TRIBUNAL IN THE CASE OF JEPPIAAR EDUCATIONAL TRUST (SUPRA). THE CIT(APP EALS) WAS APPRECIATIVE OF THESE CONTENTIONS. ACCORDING TO HI M, THE MONEY GIVEN BY THE ASSESSEE WAS TO A CONCERN MENTIONED IN SECTIO N 13(3) OF THE ACT. THEREFORE, THE DECISION OF CO-ORDINATE BENCH OF THI S TRIBUNAL IN THE CASE OF JEPPIAAR EDUCATIONAL TRUST (SUPRA) SQUARELY APPL IED. HE HELD THAT THE ASSESSEE COULD NOT BE DENIED EXEMPTION UNDER SECTIO N 11 OF THE ACT AND DIRECTED THE A.O. TO GRANT SUCH EXEMPTION. 4. BEFORE US, LEARNED D.R., STRONGLY ASSAILING THE ORDER OF CIT(APPEALS), SUBMITTED THAT IT WAS AN ACCEPTED POS ITION THAT M/S SIVARAJA RAMALINGA TRUST AND ASSESSEE-TRUST WERE HA VING SOME COMMON TRUSTEES. RELYING ON SECTION 13(3) OF THE A CT, LEARNED D.R. SUBMITTED THAT ANY CONCERN IN WHICH ANY TRUSTEE, WH O HAD SUBSTANTIAL INTEREST, WOULD FALL WITH THE MISCHIEF OF SECTION 1 3(1)(C) OF THE ACT. ASSESSEE-TRUST HAD PLACED PART OF ITS FUNDS WITH AN OTHER TRUST IN WHICH THE TRUSTEES HAD SUBSTANTIAL INTEREST AND THEREFORE , THE TRUSTEES HAD DIRECTLY OR INDIRECTLY DERIVED BENEFIT. ACCORDING TO HIM, CIT(APPEALS) FELL IN ERROR IN ALLOWING THE ASSESSEE EXEMPTION UNDER S ECTION 11 OF THE ACT. 5. PER CONTRA, A.R. STRONGLY SUPPORTED THE ORDER OF CIT(APPEALS). 4 I.T.A. NO. 456/MDS/12 6. WE HAVE PERUSED THE ORDERS AND HEARD THE RIVAL SUBMISSIONS. THERE IS NO DISPUTE THAT M/S SIVARAJA RAMALINGA TRU ST, TO WHICH ASSESSEE HAD GIVEN MONEY, WAS A TRUST REGISTERED UN DER SECTION 12AA OF THE ACT. THE A.R. HAS PLACED A COPY OF ORDER UN DER SECTION 12AA OF THE ACT GRANTING REGISTRATION TO SUCH TRUST. TWO T HINGS ARE VERY CLEAR. ONE IS THAT M/S SIVARAJA RAMALINGA TRUST WAS A TRUS T AND SECOND IS THAT SOME OF THE TRUSTEES WERE COMMON. HOWEVER, IN OUR OPINION, TRUSTEES HOLD THE PROPERTY OF THE TRUST IN A FIDUCIARY CAPAC ITY AND NOT AS OWNERS. THE OWNERS OF THE TRUST PROPERTY WERE ALWAYS ITS BE NEFICIARIES AND TRUSTEES WERE HOLDING THE PROPERTY AND INCOME THERE FROM FOR THE BENEFIT OF BENEFICIARIES AND NOT FOR THEMSELVES. WE CANNOT SAY THAT JUST BECAUSE TWO TRUSTS ARE HAVING COMMON TRUSTEES, THEY ARE RELATED CONCERNS. TRUST WILL NOT FALL WITHIN THE CONCEPT O F CONCERN MENTIONED IN CLAUSE (E) OF SUB-SECTION (3) OF SECTION 13 OF THE ACT. INVOCATION OF SECTION 13(1), IN SUCH A SITUATION, WAS NOT AT ALL WARRANTED. CIT(APPEALS) WAS JUSTIFIED IN RELYING ON THE DECISI ON OF CO-ORDINATE BENCH OF THIS TRIBUNAL IN THE CASE OF JEPPIAAR EDUC ATIONAL TRUST (SUPRA) AND HOLDING THAT ASSESSEE WAS ELIGIBLE FOR EXEMPTIO N UNDER SECTIONS 11 AND 12 OF THE ACT. WE FIND NO REASON TO INTERFERE WITH THE ORDER OF CIT(APPEALS). 7. IN THE RESULT, APPEAL FILED BY THE REVENUE IS DI SMISSED. 5 I.T.A. NO. 456/MDS/12 ORDER PRONOUNCED IN THE OPEN COURT AFTER CONCLUSION OF HEARING ON THURSDAY, THE 10 TH OF MAY, 2012, AT CHENNAI. SD/- SD/- (VIKAS AWASTHY) (ABRAHAM P. GEORGE) JUDICIAL MEMBER ACCOUNTANT MEMBER CHENNAI, DATED THE 10 TH MAY, 2012. KRI. COPY TO: (1) APPELLANT (2) RESPONDENT (3) CIT(APPEALS)-I, CHENNAI-34 (4) CIT, CENTRAL-I, CHENNAI (5) D.R. (6) GUARD FILE