V.Rangasamy Chettiar Educational and Charitable Trust, Komarapalayam V. CIT,

ITA 912/CHNY/2013

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 73734 (ITAT-CHENNAI)
• Duration Of Justice: 9 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-02-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 20-02-2014
• Assessment Year: misc
• Appeal Filed On: 07-05-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ANIRUDH RAI
• Assessee Lawyers: S SRIDHAR
• Keywords: Charitable institution
• Section: 80G; 12AA

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL , D B ENCH, CHENNAI . , !' # , $ % BEFORE SHRI A.MOHAN ALANKAMONY ACCOUNTANT MEMBER AND SHRI CHALLA NAGENDRA PRASAD, JUDICIAL MEMBER ./I.T.A.NOS. 882 & 912/MDS/2013 M/S. V.RANGASAMY CHETTIAR EDUCATION & CHARITABLE TRUST 3-A, VITTALPURI STREET, KOMARAPALAYAM-638 183. VS. COMMISSIONER OF INCOME TAX, SALEM. PAN: AAATV6616M ( /APPELLANT) ( /RESPONDENT) / APPELLANT BY : MR. S.SRIDHAR, ADVOCATE /RESPONDENT BY : MR. ANIRUDH RAI, CIT / DATE OF HEARING : 20 TH FEBRUARY, 2014 /DATE OF PRONOUNCEMENT : 28 TH FEBRUARY, 2014 & / O R D E R PER CHALLA NAGENDRA PRASAD, JM: BOTH THESE APPEALS ARE FILED BY THE ASSESSEE AGAINS T THE ORDERS OF COMMISSIONER OF INCOME TAX, SALEM DA TED 28.02.2013 IN REJECTING REGISTRATION UNDER SECTION 12AA & 80G(5) OF THE ACT. 2. THE COUNSEL FOR THE ASSESSEE SUBMITS THAT THE COMMISSIONER OF INCOME TAX REJECTED THE APPLICATION FOR ITA NOS.882 & 912/MDS/2013 2 REGISTRATION UNDER SECTION 12AA OF THE ACT STATING THAT ASSESSEE IS NOT CARRYING OUT CHARITABLE ACTIVITIES. THE COMMISSIONER WAS OF THE VIEW THAT ASSESSEE TRUST IS ONLY AS MEDIUM FOR RUNNING EDUCATIONAL INSTITUTION AND NO GENUINE TRUST EXISTS. THE COUNSEL FOR THE ASSESSEE SUBMITS THAT THE COMMISSIONER WENT WRONG IN REJECTING THE APPLICATIO N FOR REGISTRATION UNDER SECTION 12AA OF THE ACT IGNORING THE FACT THAT ASSESSEE IS RUNNING THE EDUCATIONAL INSTITUTIO N AND RUNNING AN EDUCATIONAL INSTITUTION IS CHARITY AND T RUST IS ENGAGED IN CHARITABLE ACTIVITIES. THE COUNSEL SUBM ITS THAT COMMISSIONER OF INCOME TAX HAS NOT GIVEN ANY VALID REASON FOR REJECTION OF APPLICATION FOR REGISTRATION. THE COUNSEL FOR THE ASSESSEE PLACES RELIANCE ON THE CO-ORDINATE BENCH D ECISION OF THIS TRIBUNAL IN THE CASE OF SREE VAARI TRUST IN ITA NOS.878 & 881/MDS/2013 DATED 29 TH JULY, 2013. REFERRING TO THIS DECISION THE COUNSEL SUBMITS THAT ON AN IDENTICAL S ITUATION, THE TRIBUNAL RESTORED THE APPEALS BACK TO THE COMMISSIO NER FOR THE REASON THAT COMMISSIONER OF INCOME TAX HAS NOT DISCUSSED ANY MATERIAL IN SUPPORT OF THE FINDINGS G IVEN BY HIM. ITA NOS.882 & 912/MDS/2013 3 3. THE DEPARTMENTAL REPRESENTATIVE SUPPORTS THE ORD ER OF THE COMMISSIONER OF INCOME TAX IN REJECTING REGIST RATION. THE DEPARTMENTAL REPRESENTATIVE SUBMITS THAT EDUCAT ION PER SE IS NOT CHARITY. THE DEPARTMENTAL REPRESENTATIVE S UBMITS THAT ASSESSEE IS NOT INVOLVED IN ANY CHARITABLE ACT IVITIES. THE DEPARTMENTAL REPRESENTATIVE PLACES RELIANCE ON THE DECISION OF HONBLE HIGH COURT OF UTTARAKHAND IN THE CASES OF CIT VS. NATIONAL INSTITUTE OF AERONAUTICAL ENGG. EDUCATIONA L SOCIETY (315 ITR 428), AND CIT VS. QUEENS EDUCATIONAL SOC IETY (319 ITR 160) AND THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF ADITANAR EDUCATIONAL INSTITUTION V S. ADDL. CIT (224 ITR 310). 4. HEARD BOTH SIDES. PERUSED ORDERS OF COMMISSIONER OF INCOME TAX AND THE SUBMISSIONS OF THE ASSESSEE AND THE CASE LAWS RELIED ON. THE COMMISSIONER OF INCOME TA X DENIED REGISTRATION UNDER SECTION 12AA OF THE ACT S TATING THAT TRUST IS RUNNING A SCHOOL AND SURPLUS CREATED FROM THE INSTITUTION IS TRANSFERRED TO THE TRUST. HE ALSO O BSERVED THAT INSTITUTION IS CLAIMING EXEMPTION UNDER SECTION 10( 23C) OF THE ITA NOS.882 & 912/MDS/2013 4 ACT. THE COMMISSIONER OF INCOME TAX WAS OF THE VIEW THAT INTENTION OF THE APPLICANT TRUST IS ONLY TO RUN THE EDUCATIONAL INSTITUTION AND NOT TO CREATE A TRUST. THEREFORE H E WAS OF THE OPINION THAT THERE IS NO GENUINE TRUST EXISTS. ON G OING THROUGH THE IMPUGNED ORDERS, WE FIND THAT THE COMMISSIONER OF INCOME TAX HAS NOT AT ALL EXAMINED ANY OBJECTS OF T HE TRUST, ACTIVITIES OF THE TRUST, WHETHER INSTITUTION IS RUN NING ON PROFIT OR WHETHER THE INSTITUTION IS IMPARTING EDUCATION, WHE THER IT IS DOING ANY CHARITY AND NOTHING HAS BEEN DISCUSSED. THE REASON STATED FOR REJECTION OF REGISTRATION IS THAT TRUST IS RUNNING A SCHOOL AND SURPLUS IS TRANSFERRED TO THE TRUST. ON THIS BASIS ALONE, WE DO NOT FIND ANY VALID REASON T O REJECT THE REGISTRATION WITHOUT GOING INTO THE ACTIVITIES, OBJ ECTS AND ANALYZING THE FACTS OF THE CASE. THE CASE LAWS RELI ED ON BY THE DEPARTMENTAL REPRESENTATIVE HAVE NO RELEVANCE A T THIS STAGE. WE ALSO FIND THAT ON ALMOST SIMILAR CIRCUM STANCES, THE CO-ORDINATE BENCH OF THIS TRIBUNAL IN THE CASE OF S REE VAARI TRUST VS. CIT (SUPRA) HELD AS UNDER:- ITA NOS.882 & 912/MDS/2013 5 2. A PERUSAL OF THE GROUNDS RAISED IN THE APPEALS MAKES IT CLEAR THAT THE ASSESSEE'S GRIEVANCES IN BOTH THE APPEALS RE S PE CT I VELY ARE THAT THE COMMISSIONER OF INCOME TAX, SALEM HAS W RONGLY REJECTED ITS APPLICAT I ON SEEKING REGISTRATION U/S.12A OF THE ACT AS WELL AS THAT FILED UNDER SEC . 80G OF THE ACT. 3. IN THE COURSE OF HEARING, SHRI S. SRIDHAR, ADVOCATE APPEARED AND UNDERTOOK TO FILE VAKALATH ON BEHALF OF THE ASS E SSEE IN THE COURSE OF THE DAY. HOWEVER, NO SUCH DOCUMENT HAS BEEN PLACED ON RECORD. SINCE WE HAVE HEARD THE SUBMISS I ONS OF THE PARTIES, WE PROCEED TO ADJUDICATE THE INSTANT APPEALS. 4. A PERUSAL OF THE CASE FILES REVEALS THAT THE ASSESSEE IS A ' TR UST' CREATED BY A TRUST DEED EXECUTED ON 2.2.2009. ON 3 . 8. 2 0 1 2 , I T CHOSE TO FI LE APPL I CATIONS SEEKING REG I STRATION UNDER SEC . 1 2M AS WELL SEC . 80G(5) OF THE ACT BEFORE THE COMMISSIONER OF INCOME TAX, SA L EM. IT IS TO BE SEEN THAT VIDE ORDER UNDER C H A L L ENG E I N I TA NO.878 / MDS/2013, T HE APP L I CAT I ON SEEKING REG I STRAT ION UNDER SEC.12A HAS BEEN REJECTED. THE REASONS AS HEL D B Y COMMISSIONER O F INCOME TAX A R E THAT THE SURPLUS C REATED F R OM THE INSTITUTION, NAMELY ROYAL INTERNATIONAL SCHOOL IS BEIN G TRANSFERRED TO THE ASSESSEE AND THE I NCOME OF THE I NSTITUTI O N I S C L A I M ED TO BE EXEMP T U NDER SEC . L0(23C) OF T H E ACT. IN VI E W THE REOF , THE COMM I SSIO N ER OF INCOME TAX PROCEEDS TO O B S ER VE THAT THE INTENTION OF THE ASSESSEE IS ONLY TO RUN THE SC H OO L AND NOT TO CREATE A TRUST . HE HAS ALSO RECORDED A FINDING THAT NO C H ARITAB L E ACTIVITY HAS BEEN CARRIED OUT BY THE ASSESSEE SO F A R. ALONG WITH TH E SAME, THE COMMISSIONER OF INCOME TAX H AS ALSO ITA NOS.882 & 912/MDS/2013 6 T U RNED DOWN THE ASSESSEE'S APPLICATION UNDE R SEC.80G O F T H E ACT . IT IS IN THIS BACKDROP OF FACTS THAT THE ASSESSEE HAS PREFERRED THESE TWO APPEALS. 5. AFTER GIVING OUR THOUGHTFU L CONSIDERATION TO THE GROUNDS RAISED BY THE ASSESSEE AS WELL AS THE ARGUMENTS OF THE REVENUE, WE ARE OF THE VIEW THAT BEFORE REJECTING THE ASSESSEE'S APPLICATIONS (SUPRA) FOR REGISTRATION, THE COMMISSIONER OF INCOME TAX HAS NOT DISCUSSED ANY MATERIAL IN SUPPORT OF THE FINDINGS UNDER CHALLENGE. WE NOTICE FROM THE ORDERS UNDER CHALLENGE THA T THE ASSESSEE WAS NEVER ISSUED A SHOW CAUSE NOTICE BY THE COMMISSIONER OF INCOME TAX BEFORE FORMING THE OP I N I ON IN QUESTION. IN THESE CIRCUMSTANCES, WE DEEM IT APPROPRIATE THAT THE MATTER REQUIRES RECONS I DERATION BY THE COMMISSIONER OF INCOME TAX. ACCORDINGLY, WE RESTORE THE APPEALS BACK TO THE FILE OF COMMISSIONER OF INCOME TAX, SALEM, WHO SHALL PASS FRESH ORDERS AFTER GIVING ADEQUATE OPPORTUNITY OF HEARING TO THE ASSESSEE. 5. IN VIEW OF OUR ABOVE DISCUSSION, WE ARE OF THE CONSIDERED VIEW THAT THIS MATTER SHOULD GO BACK TO THE FILE OF THE COMMISSIONER OF INCOME TAX, SALEM AND THE COMMISSIONER SHALL PASS FRESH ORDERS IN BOTH THESE APPEALS GIVING OPPORTUNITY TO THE ASSESSEE AND AFTER EXAMIN ING ALL THE ASPECTS OF THE ISSUE. ITA NOS.882 & 912/MDS/2013 7 6. IN THE RESULT, BOTH THE APPEALS OF THE ASSESSEE ARE ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON FRIDAY, TH E 28 TH DAY OF FEBRUARY, 2014 AT CHENNAI. SD/- SD/- (A.MOHAN ALANKAMONY) (CHALLA NAGEN DRA PRASAD) ACCOUNTANT MEMBER JUDI CIAL MEMBER CHENNAI, DATED THE 28 TH FEBRUARY, 2014. SOMU COPY TO: (1) APPELLANT (4) CIT(A) (2) RESPONDENT (5) D.R (3) CIT (6) G.F.