Pr. Commissioner of Income Tax Exemptions V. Embassy Charitable Trust

ITA/459/2019

AI Insights

The case involves an appeal by the Pr. Commissioner of Income Tax Exemptions against the decision of the Income Tax Appellate Tribunal, which directed the Commissioner to grant registration under sections 12A and 80G of the Income Tax Act, 1961 to M/s. Embassy Charitable Trust. The revenue challenged the Tribunal's decision, arguing that the Trust was primarily engaged in commercial activities and had not demonstrated any charitable activities. The High Court of Karnataka examined the substantial questions of law regarding the nature of the Trust's activities and the compliance with the statutory requirements for registration under the specified sections of the Act.

• Counselvise Citation: [2022] 140 COUNSELVISE.COM (IT) 689628 (HC-KARNATAKA)
• Appeal Type: Others
• Pronouncement Date: 27-01-2022
• Assessment Year: misc
• Other Referred Cases: GANJAM NAGAPPA & SONS TRUST Vs. DIRECTOR OF INCOME TAX
• Laws Referred To: Income Tax Act 1961, Rule 11AA of the Rules, 1962
• Result in Favour of: Others
• Court: HIGH COURT
• Department Lawyers: SURYANARAYANA
• Assessee Lawyers: E I SANMATHI
• Keywords: Charitable Trust; Commercial activities; Financial Statements; Income Tax; Registration
• Section: 12A; 80G; 260-A

Judgement Text

"1 IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 27TH DAY OF JANUARY 2022 PRESENT THE HON’BLE MR. JUSTICE ALOK ARADHE AND THE HON’BLE MR. JUSTICE M.G.S. KAMAL I.T.A. NO.459 OF 2019 BETWEEN: PR. COMMISSIONER OF INCOME TAX EXEMPTIONS UNITY BUILDING ANNEXE MISSION ROAD BANGALORE-560027 .... APPELLANT (BY MR. E.I. SANMATHI, ADVOCATE) AND: M/S. EMBASSY CHARITABLE TRUST ROYAL OAKS, EMBASSY GOLF LINKS BUSINESS PARK OFF INERMIDIATE RING ROAD BANGALORE-560037. ... RESPONDENT (BY MR. SURYANARAYANA T, SR. COUNSEL FOR MRS. TANMAYEE RAJKUMAR, ADVOCATE) - - - THIS I.T.A. IS FILED UNDER SEC. 260-A OF INCOME TAX ACT 1961, ARISING OUT OF ORDER DATED 15.03.2019 PASSED IN ITA NO.111/BANG/2019, PRAYING TO (i) DECIDE THE FOREGOING QUESTION OF LAW AND/OR SUCH OTHER QUESTIONS OF LAW AS MAY BE FORMULATED BY THE HON'BLE COURT AS DEEMED FIT. (ii) SET ASIDE THE APPELLATE ORDER DATED 15.03.2019 PASSED BY THE INCOME TAX APPELLATE TRIBUNAL, 'A' BENCH, 2 BENGALURU (ANNEXURE-A) IN APPEAL PROCEEDINGS NO.ITA NO.111/BANG/2019 AS SOUGHT FOR IN THIS APPEAL AND TO GRANT SUCH OTHER RELIEF AS DEEMED FIT IN THE INTEREST OF JUSTICE. THIS I.T.A. COMING ON FOR HEARING, THIS DAY, ALOK ARADHE J., DELIVERED THE FOLLOWING: JUDGMENT This appeal under Section 260-A of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’, for short) has been filed by the revenue. The appeal was admitted on the following substantial questions of law: \"1. Whether on the facts and in the circumstances of the case, the Tribunal is right in directing the Commissioner of Income Tax to grant registration under section 12A and consequently under section 80G of the Act as well ignoring the fact that though the assessee- trust was formed predominantly for carrying out commercial activities such as construction and development, ignoring that no charitable activities were carried on by it till the date of application for approval under section 12A as well as 80G of the Act? 2. Whether on the facts and in the circumstances of the case, the Tribunal is right in not appreciating the fact that the assessee has failed to prove with financial 3 statements and activities carried out earlier, that they are charitable in nature as provided under Rule 11AA(3) of the Rules, 1962? 3. Whether on the facts and in the circumstances of the case, the Tribunal is right in not considering the fact that satisfaction on the part of the authority granting approval for recognition under section 12A and 80G is necessary in terms said provisions of the Act read with Rule 11AA of the Act? 4. Whether on the facts and in the circumstances of the case, the Tribunal is right in not following the decision of the jurisdictional High Court in the case of Ganjam Nagappa & Son Trust (supra). Wherein, it has been held that \"grant of exemption or renewal is not automatic in character\", in allowing the assessee's appeal?\" 2. For the reasons assigned by us in judgment passed today in ITA No.459/2019 the substantial questions of law Nos.1 to 3 involved in this appeal are answered against the revenue and in favour of the assessee. Sofar as 4th substantial question of law is concerned, the decision of the High Court in 'GANJAM NAGAPPA & SONS TRUST Vs. 4 DIRECTOR OF INCOME TAX' 269 ITR 59 KAR has no application to the facts of the case and therefore, aforesaid question is also answered against the revenue. In the result, the appeal fails and is hereby dismissed. Sd/- JUDGE Sd/- JUDGE ss "