M/s. Sri Swetambar Sthanakvasi Jain Sangh, CHENNAI V. Director of Income Tax (Exemptions), CHENNAI

ITA 849/CHNY/2012

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 61244 (ITAT-CHENNAI)
• Duration Of Justice: 2 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-06-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: misc
• Appeal Filed On: 18-04-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: G NANTHAKUMAR JT
• Assessee Lawyers: D ANAND
• Keywords: Charitable institution
• Section: 12AA; 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH : CHENNAI [BEFORE SHRI N.S. SAINI, ACCOUNTANT MEMBER AND SHRI V. DURGA RAO, JUDICIAL MEMBER] I.T.A.NO. 849/MDS/2012 ASSESSMENT YEAR : N.A M/S SRI SWETAMBAR STHANAKVASI JAIN SANGH 200, PAPER MILLS ROAD CHENNAI 600 082 VS DIRECTOR OF INCOME-TAX (EXEMPTIONS) CHENNAI (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI D. ANAND, ADVOCATE RESPONDENT BY : SHRI G.NANTHAKUMAR, JT. CIT DATE OF HEARING : 26-06-2012 DATE OF PRONOUNCEMENT : 29-06-2012 O R D E R PER N.S. SAINI, ACCOUNTANT MEMBER THIS IS AN APPEAL FILED BY THE AS SESSEE AGAINST THE ORDER OF THE DIT(E), CHENNAI, DATED 16.3.2012, BY RAISING THE FOLLOWING GROUNDS OF APPEAL: 1. THE ORDER OF LEARNED DIRECTOR OF INCOME TAX (EXEMPTIONS), IN DECLINING TO GRANT REGISTRATION T O THE APPELLANT SOCIETY U/S.12AA OF THE INCOME TAX ACT IS WRONG, ILLEGAL AND IS OPPOSED TO LAW AND FACTS OF T HE CASE. I.T.A.NO. 849/12 :- 2 -: 2. THE LEARNED DIRECTOR OF INCOME TAX (EXEMPTIONS) OUGHT TO HAVE GRANTED REGISTRATION UNDER SECTION 12AA TO THE APPELLANT IN SO FAR AS THE OBJECTS OF THE APPELLANT SOCIETY A ND ITS GENUINENESS HAS NOT BEEN QUESTIONED BY THE DIRECTOR OF INCOME TAX (EXEMPTIONS). 3. THE LEARNED DIRECTOR OF INCOME TAX (EXEMPTIONS) OUGHT TO HAVE SEEN THAT THE PREDOMINANT OBJECT OF THE APPEL LANT SOCIETY IS AND REMAINS TO BE CARRYING OUT CHARITAB LE PURPOSE OF ADVANCEMENT OF EDUCATIONAL FACILITIES, THE COMM ISSIONER OF INCOME TAX OUGHT NOT TO HAVE DECLINED TO GRANT REGI STRATION UNDER SECTION 12AA OF THE INCOME TAX ACT. 4. THE LEARNED DIRECTOR OF INCOME TAX (EXEMPTIONS) OUGHT TO HAVE SEEN THAT NO MATERIAL EXIST TO INFER THAT THE APPELLANT SOCIETY EXIST FOR PROFIT MOTIVE OR THE INCOME OF T HE SOCIETY HAS BEEN MISUSED AND THAT NO MATERIAL HAS BEEN BROUGHT ON RECORD TO SHOW HOW CONDITIONS OF GRANT OF REGISTRAT ION HAS BEEN BREACHED BY THE SOCIETY. 5. THE LEARNED DIRECTOR OF INCOME TAX (EXEMPTIONS ) OUGHT TO HAVE SEEN THAT THE APPELLANT SOCIETY IS CARRYING ON ACTIVITY AS DEFINED IN CLAUSE 2(15) AND IS CARRYING ON ACTIVIT Y OF CHARITABLE PURPOSE BY ADVANCEMENT OF EDUCATIONAL FACILITIES, T HE DIRECTOR OF INCOME TAX (EXEMPTIONS) OUGHT NOT TO HAVE DECLIN ED TO GRANT REGISTRATION UNDER SECTION 12AA OF THE INCOME TAX ACT. 6. THE LEARNED DIRECTOR OF INCOME TAX (EXEMPTION S) ERRED IN LAW IN DECLINING TO GRANT REGISTRATION TO THE APPELLANT UNDER SECTION 12AA UNDER THE PRETEXT THAT THE SOCIETY DEED CONTAINS MIXED OBJECTS I.E. BOTH RELIGIOUS AND CHARITABLE. A SSUMING WITHOUT CONCEDING THAT THE APPELLANT SOCIETY HAS MI XED OBJECTIVES, THE LEARNED DIRECTOR OF INCOME TAX (EXE MPTIONS), OUGHT TO HAVE SEEN THAT THE LANGUAGE USED IN THE PROVISION IS RELIGIOUS OR CHARITABLE AND NOT EITHER RELIGIOUS OR CHARITABLE PURPOSE. FOR THESE AND OTHER REASONS THAT MAY BE ADVANCED AT THE TIME OF HEARING MOST HUMBLY PRAYED THAT THE HONOURABLE TRIBUNAL BE PLEASED DIRECT THE LEARNED DIRECTOR OF INCOME TA X (EXEMPTIONS) TO GRANT REGISTRATION TO THE APPELLANT SOCIETY UNDER SECTION 12AA OF THE INCOME TAX ACT AND THUS R ENDER JUSTICE. I.T.A.NO. 849/12 :- 3 -: 2. THE A.R OF THE ASSESSEE, AT THE TIME OF HEARING, S UBMITTED THAT THE ONLY ISSUE INVOLVED IN THIS APPEAL OF THE ASSESSEE IS THAT THE DIT(E) WAS NOT JUSTIFIED IN DECLINING TO GRANT REGI STRATION TO THE ASSESSE-SOCIETY U/S 12AA OF THE ACT ON THE GROUND T HAT THE DEED OF THE SOCIETY CONTAINS MIXED OBJECTS I.E. BOTH RELIGIOUS AND CHARITABLE. HE SUBMITTED THAT THE ISSUE IS NO LONGER RES INTEGRA A ND THAT THE HON'BLE MADRAS HIGH COURT IN THE CASE OF CIT VS ARULMIGU SR I KAMATCHI AMMAN TRUST IN TAX CASE APPEAL NO.643 OF 2011, ORDER DATE D 25.1.2012, A COPY OF WHICH IS PLACED ON RECORD, HAS HELD THAT TH E INCOME DERIVED FROM THE PROPERTY HELD UNDER THE TRUST WHOLLY FOR C HARITABLE AND RELIGIOUS PURPOSES WAS NOT TO BE INCLUDED IN THE TO TAL INCOME OF THE TRUST. THEREFORE, THE PROVISO WOULD BE APPLICABLE TO BOTH THE TRUSTS ESTABLISHED WITH THE OBJECT OF CHARITABLE AS WELL A S RELIGIOUS PURPOSES. HENCE, HE SUBMITTED THAT THE REGISTRATION SHOULD BE GRANTED TO THE ASSESSEE U/S 12AA OF THE ACT. 3. THE DR VERY FAIRLY CONCEDED THAT THE ISSUE IS COVER ED IN FAVOUR OF THE ASSESSEE BY THE AFORESAID DECISION O F THE HON'BLE MADRAS HIGH COURT. 4. AFTER CONSIDERING THE RIVAL SUBMISSIONS AND PERUSIN G THE MATERIALS AVAILABLE ON RECORD, WE FIND THAT THE DI T(E), CHENNAI, IN HIS ORDER DATED 16.3.2012 HAS OBSERVED THAT THE TRUST D EED CONTAINS MIXED OBJECTS, BOTH RELIGIOUS AND CHARITABLE OBJECT S. THE SAME IS NOT PERMISSIBLE AS EITHER OBJECT SHOULD BE RELIGIOUS O R CHARITABLE AS PER I.T.A.NO. 849/12 :- 4 -: THE WORDINGS OF SECTION 11 WHICH DEALS WITH EXEMPTI ON OF INCOME OF THE TRUST. HE HAS OBSERVED THAT SECTION 11 OF THE ACT RESTRICTS THE PURPOSE OF THE TRUST EITHER FOR CHARITABLE OR FOR R ELIGIOUS AND RELIED ON SECTION 11(1)(A) OF THE ACT. THEREFORE, HE DISMISS ED THE APPLICATION OF THE ASSESSEE FOR GRANT OF REGISTRATION U/S 12AA O F THE ACT. 5. WE FIND THAT THE HON'BLE MADRAS HIGH COURT IN THE C ASE OF CIT VS ARULMIGU SRI KAMATCHI AMMAN TRUST (SUPRA) HA S HELD AS UNDER: 5. WE HAVE CAREFULLY CONSIDERED THE ABOVE SUBMISSION. FOR THE PURPOSE OF MAKING AN APPLICATION UNDER SECT ION 12AA, THE APPLICANT MUST APPLY IN FORM 10. THE SAID FORM PRESCRIBES THE FORMAT OF THE NOTICE OF ACCUMULATION OF INCOME TO BE GIVEN BY CHARITABLE AND RELIGIOUS TRUS TS UNDER SECTION 11[2] OF THE ACT. FOR THE PURPOSE OF AVAILING THE BENEFIT OF SECTION 11, REGISTRATION IS REQUIRED. SECTION 11 [L][A] READS AS UNDER:- '11[1]. SUBJECT TO THE PROVISIONS OF SECTIONS 60 TO 63, THE FOLLOWING INCOME SHALL NOT BE INCLUDED IN THE TOTAL INCOME OF THE PREVIOUS YEAR OF THE PERSON IN RECEIPT OF T HE INCOME-- [A] INCOME DERIVED FROM PROPERTY HELD UNDER TRUST W HOLLY FOR CHARITABLE OR RELIGIOUS PURPOSES, TO THE EXTENT TO WHICH SUCH INCOME IS APPLIED TO SUCH PURPOSES IN IN DIA; AND, WHERE ANY SUCH INCOME IS ACCUMULATED OR SET AP ART FROM APPLICATION TO SUCH PURPOSES IN INDIA, TO THE EXTENT TO WHICH THE INCOME SHOULD BE ACCUMULATED OR SET A PART IS NOT IN EXCESS OF FIFTEEN PER CENT OF THE INCOME FROM SUCH PROPERTY;' 6. FROM A READING OF THE ABOVE, IT IS CLEAR THAT TH E INCOME DERIVED FROM THE PROPERTY HELD UNDER TRUST W HOLLY FOR CHARITABLE OR RELIGIOUS PURPOSES, SHALL NOT BE INCLUDED IN THE TOTAL INCOME OF THE TRUST. THEREFORE, THE SA ID 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 ACT DOES NOT MAKE ANY DIFFERENCE BETWEEN THE TRUSTS CREATED WITH THE OBJECT OF CHARITABLE AND RELIGIOUS PURPOSES AND, EVEN IF THE TRUST IS NOT CREATED WITH BOTH I.T.A.NO. 849/12 :- 5 -: THE OBJECTS, LAW DOES NOT MAKE ANY DISQUALIFICATION FOR THE TRUST TO MAKE APPLICATION FOR REGISTRATION. THE REFORE, THE TRIBUNAL HAS CORRECTLY APPLIED THE PROVISION O F LAW AND ALLOWED THE APPEAL, WHICH FINDING IS BASED ON V ALID MATERIAL EVIDENCE. THE FINDING OF THE TRIBUNAL IS N OT PERVERSE AND IT IS QUESTION OF FACT. THEREFORE, WE FIND NO GROUND TO CAUSE OUR INTERFERENCE IN THE ORDER PASS ED BY THE TRIBUNAL. ACCORDINGLY, THE ORDER PASSED BY THE TRIBUNAL IS CONFIRMED AND BOTH THE SUBSTANTIAL QUES TIONS OF LAW RAISED HEREIN ARE ANSWERED AGAINST THE REVE NUE. 7. IN THE RESULT, THE APPEAL IS DEVOID OF MERITS AN D HENCE THE SAME IS DISMISSED. 6. THE DR HAS FAIRLY CONCEDED THAT THE ISSUE IS COVERE D IN FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE BY THE AFORESAID DECISION OF THE HON'BLE MADRAS HIGH COURT. RESPECT FULLY FOLLOWING THE ABOVE QUOTED DECISION OF THE HON'BLE MADRAS HIGH COURT, WE SET ASIDE THE ORDER OF THE DIT(E) DATED 16.3.2012 AND D IRECT HIM TO GRANT REGISTRATION TO THE ASSESSEE U/S 12AA OF THE ACT. THUS, THE GROUNDS OF APPEAL OF THE ASSESSEE ARE ALLOWED. 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS AL LOWED. ORDER PRONOUNCED ON FRIDAY, THE 29 TH OF JUNE, 2012, AT CHENNAI. SD/- SD/- (V. DURGA RAO) JUDICIAL MEMBER (N.S.SAINI) ACCOUNTANT MEMBER DATED: 29 TH JUNE, 2012 RD COPY TO: APPELLANT/RESPONDENT/CIT(A)/CIT/DR