M/s. Siva Ranga Charities, CHENNAI V. DDIT, CHENNAI

ITA 483/CHNY/2011

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 51966 (ITAT-CHENNAI)
• Duration Of Justice: 7 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-10-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 04-10-2011
• Assessment Year: misc
• Appeal Filed On: 11-03-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: P R RAVIKUMAR
• Assessee Lawyers: S SRIDHAR
• Keywords: Charitable institution
• Section: 80G; 12AA

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, CHENNAI BEFORE SHRI ABRAHAM P. GEORGE, ACCOUNTANT MEMBER AN D SHRI GEORGE MATHAN, JUDICIAL MEMBER .. I.T.A. NOS. 482 & 483/MDS/2011 ASSESSMENT YEAR : -- M/S. SIVA RANGA CHARITIES, 16, OLD NO. 18, 2 ND CROSS ROAD, RAJA ANNAMALAIPURAM, CHENNAI-600 028. [PAN : AABPC7206M] V. THE DEPUTY DIRECTOR OF INCOME- TAX (EXEMPTIONS), CHENNAI. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI S. SRIDHAR, ADVOCATE RESPONDENT BY : SHRI P. R. RAVIKUMAR, CIT-DR DATE OF HEARING : 04 -10-2011 DATE OF PRONOUNCEMENT : 14-10-2011 O R D E R PER GEORGE MATHAN, JUDICIAL MEMBER : ITA NO. 482/MDS/2011 IS AN APPEAL FILED BY THE ASS ESSEE AGAINST THE ORDER OF THE LEARNED DIRECTOR OF INCOME TAX (EEMPTIONS), CHEN NAI IN DIT(E)NO.2(1379)/09-10 DATED 29-09-2010 REJECTING TH E ASSESSEES APPLICATION FOR REGISTRATION UNDER SECTION12AA OF THE INCOME TAX AC T, 1961 (THE ACT FOR SHORT). ITA NO. 483/MDS/2011 IS AN APPEAL FILED BY THE ASSE SSEE AGAINST THE ORDER OF THE I.T.A. NOS. 482 & 483/MDS/2011 2 LEARNED DIRECTOR OF INCOME TAX (EXEMPTIONS), CHENNAI IN DIT(E) NO. 2 (1379)-09- 10 DATED 29-09-2010 REJECTING THE ASSESSEES APPLIC ATION FOR REGISTRATION UNDER SECTION 80G OF THE ACT. 2. SHRI S. SRIDHAR, ADVOCATE REPRESENTED ON BEHALF OF THE ASSESSEE AND SHRI P.R. RAVIKUMAR, LEARNED CIT-DR REPRESENTED ON BEHALF OF THE REVENUE. 3. IT WAS SUBMITTED BY THE LEARNED AUTHORISED REPRE SENTATIVE THAT THE ASSESSEE IS A CHARITABLE TRUST WHICH IS DOING THE ACTIVITY O F POOR FEEDING AND AWARDING SCHOLARSHIPS AS ALSO GIVING MEDICAL AID. IT WAS THE SUBMISSION THAT THE ASSESSEE TRUST HAD FILED APPLICATION FOR REGISTRATION UNDER SECTION 12AA AND 80G OF THE ACT ON 31-03-2010. IT WAS THE SUBMISSION THAT THE LEAR NED DIT HAS REFUSED TO GRANT REGISTRATION UNDER SECTION12AA AND THE CONSEQUENTIA L REFUSAL TO GRANT RECOGNITION UNDER SECTION 80G OF THE ACT ON THE GROUND THAT THE OBJECT CLAUSE 5(XVIII) OF THE TRUST DEED CLEARLY EMPOWERED THE TRUSTEES TO CARRY OUT RELIGIOUS ACTIVITIES. IT WAS THE SUBMISSION THAT THE SAID CLAUSE DID AGREE FOR A PPLYING FUNDS FOR RELIGIOUS ACTIVITIES. HOWEVER, SUCH APPLICATION WAS NOT AUTH ORIZED TO EXCEED SUCH PER CENTAGE AS WAS PERMITTED BY THE INCOME TAX ACT, 196 1. IT WAS THE SUBMISSION THAT AS PER THE PROVISIONS OF EXPLANATION 3 TO CLAUS E (II) OF SEC. 80G(5), 5% OF THE GROSS RECEIPTS THE ASSESSEE COULD APPLY FOR RELIGI OUS ACTIVITIES AND THE SAME WOULD NOT AFFECT THE CHARITABLE NATURE OF THE ASSES SEES ACTIVITIES. IT WAS THE SUBMISSION THAT IN VIEW OF THE SAID CLAUSE (II) OF SUB-SECTION (5) OF SECTION 80G AND AS THE CLAUSE 5(XVIII) OF THE TRUST DEED DID RE STRICT THE APPLICATION THE I.T.A. NOS. 482 & 483/MDS/2011 3 ASSESSEE WAS ENTITLED TO THE BENEFIT OF REGISTRATIO N UNDER SECTION 12AA AND THE RECOGNITION UNDER SECTION 80G OF THE ACT. 4. IN REPLY, THE LEARNED DR VEHEMENTLY SUPPORTED TH E ORDER OF THE LEARNED DIRECTOR OF INCOME TAX (EXEMPTIONS). 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. A PER USAL OF THE ORDER OF THE LEARNED DIT SHOWS THAT THE LEARNED DIT HAS REFUSED TO GRANT THE REGISTRATION ONLY ON THE GROUND THAT CLAUSE 5(XVIII) OF THE TRUST DEE D EMPOWERED THE TRUSTEES TO CARRY OUT RELIGIOUS ACTIVITIES. FOR BETTER UNDERST ANDING, THE SAID CLAUSE IS REPRODUCED HEREINBELOW : (XVIII) TO APPLY ON SUCH RELIGIOUS ACTIVITIES AS T HE TRUSTEES MAY MUTUALLY AGREE UPON FROM TIME TO TIME. HOWEVER ANY SUCH RELIGIOUS APPLICATION SHALL NOT EX CEED SUCH PERCENTAGE OF TRUSTS INCOME AS MAY BE PERMITTED BY THE INCOME-TAX ACT, 1961 FROM TIME TO TIME. A PERUSAL OF THE SAID CLAUSE CLEARLY SHOWS THAT THE APPLICATION OF INCOME FOR RELIGIOUS ACTIVITIES IS NOT SPECIFICALLY TO ANY REL IGION. IT IS ALSO NOTICED THAT THE SAID CLAUSE ITSELF CARRIES IN IT OR RESTRICTS COVENANT B Y RESTRICTING APPLICATION TO SUCH PERCENTAGE AS IS PERMITTED BY THE INCOME TAX ACT, 1 961. A PERUSAL OF THE PROVISIONS OF THE EXPLANATION 3 AND CLAUSE (II) OF S UB-SECTION (5) OF SECTION 80G OF THE ACT SHOWS THAT UPTO 5% APPLICATION IS PERMITTED AND IS NOT TREATED AS A VIOLATION OF CHARITABLE ACTIVITIES. IN THE CIRCUMS TANCES, WE ARE OF THE VIEW THAT THE FINDING OF THE LEARNED DIT IS NOT ON A RIGHT FOOTIN G. IN THE CIRCUMSTANCES, THE I.T.A. NOS. 482 & 483/MDS/2011 4 ORDER OF THE LEARNED DIT IS REVERSED ON THIS ISSUE AND THE LEARNED DIT IS DIRECTED TO REGISTER THE ASSESSEE TRUST AS A CHARITABLE TRUS T AND GRANT THE ASSESSEE REGISTRATION UNDER SECTION 12AA AS ALSO RECOGNITION UNDER SECTION 80G OF THE ACT. IN THE CIRCUMSTANCES, THE APPEALS OF THE ASSESSEE A RE ALLOWED. 6. THE ORDER WAS PRONOUNCED IN THE COURT ON 14/10/2 011. SD/- SD/- (ABRAHAM P. GEORGE) (GEORGE MATHAN) ACCOUNTANT MEMBER JUDICIAL MEMBER CHENNAI, DATED THE 14 TH OCTOBER, 2011. H. COPY TO: ASSESSEE/AO/CIT (A)/CIT/D.R./GUARD FILE