NOORAL ISLAM TRUST V. COMMISSIONER OF INCOME TAX

ITA/336/2010

AI Insights

The case involves the Nooral Islam Trust, which sought registration under Section 12AA of the Income Tax Act to qualify for tax exemptions. Initially, the trust deed did not allow for amendments, but an amendment was later made to include the operation of a dental college as one of its objectives. The Commissioner of Income Tax rejected the registration application based on the original deed's restrictions, and this decision was upheld by the Tribunal. The High Court, however, found that the Trust Act's provisions, which allow for such amendments, could apply, and thus remanded the case for further consideration after obtaining a civil court's validation of the amendment.

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 699358 (HC-KERALA)
• Appeal Type: Others
• Pronouncement Date: 17-11-2011
• Assessment Year: misc
• Laws Referred To: Income Tax Act, Trust Act, C.P.C., Specific Relief Act, 1963
• Result in Favour of: Applicant
• Court: HIGH COURT
• Department Lawyers: P K R MENON; JOSE JOSEPH
• Assessee Lawyers: P BALAKRISHNAN; P M SANEER
• Keywords: Educational Institutions; Income tax appeal; Public charitable trust; Registration Denial; Civil Court Order
• Section: 11; 12AA; 92; 26; 10(23)(c)

Judgement Text

" IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE C.N.RAMACHANDRAN NAIR & THE HONOURABLE MR. JUSTICE K.VINOD CHANDRAN THURSDAY, THE 17TH NOVEMBER 2011 / 26TH KARTHIKA 1933 ITA.No. 336 of 2010() --------------------- ITA.487/COCH/2009 of I.T.A.TRIBUNAL,COCHIN BENCH .................... APPELLANT ----------------------------- NOORAL ISLAM TRUST, V/64, GROUND FLOOR, A1-AZHAR CAMPUS, PERUMBILLICHIRA P.O., THODUPUZHA, IDUKKI DISTRICT. BY ADV. SRI.P.BALAKRISHNAN (E) SRI.P.M.SANEER RESPONDENT: --------------- COMMISSIONER OF INCOME TAX, COCHIN. ADV. SRI.P.K.R.MENON,SR.COUNSEL, GOI(TAXES) SRI.JOSE JOSEPH, SC, FOR INCOME TAX THIS INCOME TAX APPEAL HAVING BEEN FINALLY HEARD ON 17/11/2011, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: APPENDIX ANNEXURE A: TRUE COPY OF TRUST DEED DT.23.7.1998. ANNEXURE B: TRUE COPY OF TRUST DEED DT.24.2.2005. ANNEXURE C: PROCEEDINGS OF THE COMMISSIONER OF INCOME TAX. ANNEXURE D: TRUE COPY OF CERTIFICATE DT.27.7.2009 ISSUED BY NATIONAL COMMISSION FOR MINORITY EDUCATION INSTITUTION. ANNEXURE E: TRUE COPY OF APPEAL FILED BY THE APPELLANT BEFORE THE INCOME TAX TRIBUNAL. ANNEXURE F: CERTIFIED COPY OF THE ORDER DT.2.8.2010. TRUE COPY P.S. TO JUDGE C.N.RAMACHANDRAN NAIR & K.VINOD CHANDRAN, JJ. .................................................................... I.T. Appeal No.336 of 2010 .................................................................... Dated this the 17th day of November, 2011. JUDGMENT Ramachandran Nair, J. The appeal is filed against order of the Tribunal confirming order of the C.I.T.(Appeals) declining registration to appellant's trust under Section 12AA of the Income Tax Act. We have heard Adv. Sri.P.Balakrishnan appearing for the appellant-assessee and Standing Counsel for the respondent. 2. The appellant is a pubic charitable trust registered in 1998. Admittedly among other things appellant's objective is running of educational institutions. The appellant applied for registration of the trust under Section 12AA of the Act. However, the application for registration was withdrawn which was granted by the department. Thereafter the appellant amended the trust deed elaborating the object clause specifically including it's main object as running Dental College. When the amended deed after registration in 2005 was presented for registration under Section 12AA of the Income Tax Act, the ITA 336/2010 2 Commissioner of Income Tax rejected the application for the reason that the original deed did not contain any provision for amendment of the deed. It is against this order of the Commissioner the assessee filed appeal which was dismissed by the Tribunal. The appellant is before us in second appeal. 3. After hearing both sides what we notice is that only the amended trust deed was considered for registration under Section 12AA by the Commissioner of Income Tax. The only ground on which application was turned down is the amendment carried out which is not authorised under the original deed. It is specifically stated in the Commissioner's order that the provisions of the Trust Act will apply. However, the contention now raised by counsel for the appellant is that the Trust Act does not apply to Public Charitable Trust. It is further pointed out by the counsel for the appellant that under Section 92 of the C.P.C. read with Section 26 of the Specific Relief Act, 1963, the appellant is entitled to file Scheme Suit and get amendment declared valid by a competent civil court. As of now department has not assessed the Trust on any income. The objects are admittedly charitable in nature entitling the assessee to claim exemption, if the ITA 336/2010 3 conditions of Section 11 are satisfied. Moreover, educational institutions are entitled to separate exemption on income earned by it under Section 10(23)(c) of the Income Tax Act. In any case since the assessee wants to correct a technical omission before the civil court, we feel an opportunity can be granted to the assessee to get appropriate orders from civil court. Accordingly without going into the merits of the case we allow the appeal by setting aside the order of the Tribunal and that of the Commissioner and remand the case to the Commissioner for reconsideration after giving assessee an opportunity to get orders from civil court. The assessee is granted four months' time to obtain orders from the civil court and produce the same before the Commissioner. However, we make it clear that the assessee shall not be entitled to claim any exemption on ground of limitation reckoning the period of four months granted by us from today. C.N.RAMACHANDRAN NAIR Judge K.VINOD CHANDRAN Judge pms "