M/s. St. Dominic's Convent English Medium School, Thrissur V. The CIT, Trichur

ITA 518/COCH/2014

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 86418 (ITAT-COCHIN)
• Duration Of Justice: 2 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-03-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 10-02-2015
• Assessment Year: misc
• Appeal Filed On: 11-12-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: M ANIL KUMAR
• Assessee Lawyers: N R NEELAKANTAN
• Keywords: Charitable institution
• Section: 12AA

Judgement Text

1 ITA NO.518/COCH/2014 IN THE INCOME TAX APPELLATE TRIBUNAL COCHIN BENCH, COCHIN BEFORE SHRI N.R.S. GANESAN (JM) AND SHRI CHANDRA PO OJARI (AM) I.T.A NO. 518/COCH/2014 (ASSESSMENT YEAR 2014-15) M/S ST. DOMINICS CONVENT ENGLISH VS CIT, THRISSU R MEDIUM SCHOOL, MUKUNDAPURAM TALUK VELLANI, THRISSUR 680 701 PAN : AAJTS1502L (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI N.R. NEELAKANTAN RESPONDENT BY : SHRI M ANIL KUMAR, CIT DATE OF HEARING : 10-02-2015 DATE OF PRONOUNCEMENT : 06-03-2015 O R D E R PER N.R.S. GANESAN (JM) THE ASSESSEE FILED THE PRESENT APPEAL CHALLENGING THE CORRECTNESS OF THE ORDER OF THE ADMINISTRATIVE COMMISSIONER DAT ED 30-09-2014 REJECTING THE APPLICATION FOR REGISTRATION U/S 12AA OF THE ACT. 2. SHRI N.R. NEELAKANTAN, THE LD.REPRESENTATIVE FOR THE ASSESSEE SUBMITTED THAT THE ASSESSEE TRUST HAS ESTABLISHED A ND IS RUNNING A SCHOOL AFFILIATED TO CENTRAL BOARD OF SECONDARY EDUCATION. THE ASSESSEE FILED APPLICATION FOR REGISTRATION BEFORE THE COMMISSIONE R OF INCOME-TAX. 2 ITA NO.518/COCH/2014 ACCORDING TO THE LD.REPRESENTATIVE, THE ADMINISTRAT IVE COMMISSIONER REJECTED THE APPLICATION OF THE ASSESSEE ON TWO GRO UNDS (1) THE APPLICANT CAN TRANSFER THE ASSET TO EVEN A RELIGIOUS TRUST AN D THAT (II) THE LEASE DEED DOES NOT SPECIFY HOW THE ADDITION / ALTERATION MADE BY THE ASSESSEE BE TREATED AT THE TIME OF EXPIRY OF LEASE DEED. ACCOR DING TO THE LD.REPRESENTATIVE, U/S 12AA, THE COMMISSIONER OF IN COME-TAX CAN EXAMINE ONLY THE OBJECT AND ACTIVITY OF THE TRUST AND THE L EASE DEED AND OTHER THINGS CANNOT BE EXAMINED AT THE TIME OF GRANT OF REGISTRA TION. MOREOVER, AT THE TIME OF DISSOLUTION OF THE TRUST, THE ASSET OF THE TRUST CAN BE TRANSFERRED TO ANY SIMILARLY PLACED TRUST WITH SIMILAR OBJECT. TH EREFORE, ACCORDING TO THE LD.REPRESENTATIVE, THESE TWO GROUNDS RAISED BY THE COMMISSIONER FOR REJECTING THE APPLICATION IS NOT JUSTIFIED. 3. ON THE CONTRARY, SHRI M ANIL KUMAR, THE LD.DR SU BMITTED THAT THE ASSESSEE TRUST IS ONLY CONDUCTING SCHOOL IN ENGLISH MEDIUM. OTHER THAN SCHOOL, NO CHARITABLE ACTIVITY WAS CARRIED ON. AT THE END OF THE PERIOD, THE FUNDS OF THE TRUST CAN BE TRANSFERRED TO EVEN A REL IGIOUS TRUST. ACCORDING TO THE LD.DR, THE FUNDS CAN BE TRANSFERRED ONLY TO TRU ST WHICH HAS SIMILAR OBJECTS. MOREOVER, THE LEASE DEED DOES NOT DISCLOSE THE OWNERSHIP OF THE INVESTMENT MADE BY THE TRUST IN THE LEASEHOLD LAND AFTER EXPIRY OF THE PERIOD. THEREFORE, ACCORDING TO THE LD.DR, THE COM MISSIONER OF INCOME- TAX HAS RIGHTLY REJECTED THE CLAIM OF THE ASSESSEE. THE LD.DR PLACED 3 ITA NO.518/COCH/2014 RELIANCE ON THE JUDGMENT OF THE KERALA HIGH COURT I N DAWN EDUCATIONAL CHARITABLE TRUST VS CIT 300 OF 2013DATED 12-02-2014 , COPY OF WHICH IS FILED BY THE LD.DR. THE LD.DR HAS ALSO PLACED RELI ANCE ON THE DECISION OF THIS TRIBUNAL IN M/S TRAVANCORE EDUCATION SOCIETY I N ITA NO.134/COCH/2014 ORDER DATED 27-06-2014. 4. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EITH ER SIDE AND ALSO PERUSED THE MATERIAL AVAILABLE ON RECORD. ADMITTED LY, THE ASSSESSEE HAS ESTABLISHED AND IS ADMINISTERING A SCHOOL WHICH IS AFFILIATED TO CBSE. EDUCATION ITSELF IS A CHARITABLE ACTIVITY. THEREFO RE, THE ASSESSEE, IN PURSUANCE OF ITS OBJECT HAS ESTABLISHED A SCHOOL, W HICH ITSELF, IS CHARITABLE ACTIVITY. THE QUESTION ARISES FOR CONSIDERATION IS WHETHER THE ASSESSEE IS ENTITLED FOR REGISTRATION U/S 12AA OF THE ACT? A B ARE READING OF THE TRUST DEED SHOWS THAT THE TRUST WAS ESTABLISHED BY A REGI STERED DEED EXECUTED BY REV.SR.TESSY KACHAPPILLY OP, THE SUPERIOR GENERA L OF THE CONGREGATION OF THE DOMINICAN SISTERS OF THE HOLY T RINITY. CLAUSE 24 OF THE TRUST DEED SHOWS THAT IN CASE OF DISSOLUTION, I F THE COUNCIL FEELS TO WIND UP THE TRUST, THEN THE PROPOSAL HAS TO BEEN SENT TO THE GENERAL COUNCIL OF THE CONGREGATION OF THE DOMINICAN SISTERS OF THE HO LY TRINITY FOR ITS DECISION AND ACTION SHALL BE TAKEN ACCORDING TO ITS DIRECTION. IT APPEARS THAT CONGREGATION OF THE DOMINICAN SISTERS OF THE H OLY TRINITY IS ALSO A REGISTERED TRUST U/S 12AA OF THE ACT. THEREFORE, P RIMA FACIE IT APPEARS THAT 4 ITA NO.518/COCH/2014 THE ASSESSEE HAS TO RUN ITS AFFAIRS ON THE BASIS OF THE DIRECTION THAT MAY BE ISSUED BY CONGREGATION OF THE DOMINICAN SISTERS OF THE HOLY TRINITY. A TRUST BEING AN ARTIFICIAL PERSON HAS TO CARRY OUT I TS OBLIGATION THROUGH ITS TRUSTEES. THE DECISION FOR RUNNING THE ADMINISTRAT ION HAS TO BE TAKEN BY THE TRUSTEES ITSELF. HOWEVER, IN THIS CASE IT APPE ARS THAT THE ULTIMATE DECISION HAS TO BE APPROVED BY CONGREGATION OF THE DOMINICAN SISTERS OF THE HOLY TRINITY WHICH IS SEPARATE AND INDEPENDENT TRUST. THEREFORE, THERE IS A CONFUSION WHETHER THE PRESENT ASSESSEE IS INDE PENDENT TRUST BY ITSELF OR IT ACTS ONLY AS PER THE DIRECTIONS AND MANAGEMEN T OF THE MOTHER TRUST, VIZ. CONGREGATION OF THE DOMINICAN SISTERS OF THE H OLY TRINITY. THIS ASPECT WAS NOT EXAMINED BY THE COMMISSIONER OF INCOME-TAX. MOREOVER, AT THE TIME OF WINDING UP THE ASSETS OF THE TRUST SHALL BE TRANSFERRED TO A SIMILARLY PLACED TRUST WITH SIMILAR OBJECTS. CLAUSE 24 OF TH E TRUST DEED CLEARLY SAYS THAT WHAT IS REMAINING AFTER SATISFYING THE LIABILI TY OF THE TRUST SHALL BE TRANSFERRED TO ANY TRUST WITH SIMILAR OR NEARLY SIM ILAR AIMS AND OBJECTIVES OF THE TRUST DULY REGISTERED UNDER THE THEN PREVAILING LAWS AND WHICH FUNCTION UNDER THE CONTROL OF THE CONGREGATION OF THE DOMINI CAN SISTERS OF THE HOLY TRINITY. THIS TRIBUNAL IS OF THE CONSIDERED OPINIO N THAT IN VIEW OF THIS CLAUSE, WE HAVE TO EXAMINE WHETHER THE TRUST IS AN INDEPENDENT TRUST BY ITSELF OR IT HAS TO FUNCTION ON THE TERMS DICTATED BY CONGREGATION OF THE DOMINICAN SISTERS OF THE HOLY TRINITY. IF THE ASSE SSEE TRUST IS NOT INDEPENDENT ONE AND IT HAS TO FUNCTION AS PER THE T ERMS DICTATED BY 5 ITA NO.518/COCH/2014 CONGREGATION OF THE DOMINICAN SISTERS OF THE HOLY T RINITY THEN WHETHER SUCH A TRUST CAN BE CONSIDERED TO BE A CHARITABLE T RUST WITHIN THE MEANING OF SECTION 2(15) R.WS.S. 12AA OF THE ACT? SINCE TH ESE MATTERS HAVE NOT BEEN CONSIDERED BY THE COMMISSIONER OF INCOME-TAX A ND THE ASSESSEE ALSO HAS NOT EXPLAINED THE SITUATION AND CIRCUMSTAN CES UNDER WHICH IT IS FUNCTIONING. THEREFORE, THIS TRIBUNAL IS OF THE CO NSIDERED OPINION THAT THE COMMISSIONER HAS TO CONSIDER THIS ISSUE AFRESH. ACC ORDINGLY, THE ORDER OF THE COMMISSIONER IS SET ASIDE AND THE REMITTED TO H IS FILE. THE COMMISSIONER SHALL RE-EXAMINE THE ISSUE AND THEREAF TER DECIDE THE SAME IN ACCORDANCE WITH LAW AFTER CONSIDERING ALL THE IS SUES AND PROVIDING OPPORTUNITY OF HEARING TO THE ASSESSEE. 5. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 06 TH MARCH, 2015. SD/- SD/- (CHANDRA POOJARI) (N.R.S. GANESAN) ACCOUNTANT MEMBER JUDICIAL MEMBER COCHIN, DT : 06 TH MARCH, 2015 PK/- COPY TO: 1. M/S ST. DOMINICS CONVENT ENGLISH MEDIUM SCHOOL, MUKUNDAPURAM TALUK, VELLANI, THRISSUR 680 701 2. THE CIT, THRISSUR 3. THE DR (TRUE COPY) BY ORDER ASSTT. REGISTRAR, INCOME-TAX APPELLATE TRIBUNAL, COCHIN BENCH