Shri Ganesh Charitable Trust (Regd.), Narangwal, Ludhiana V. Chief Commissioner of Income Tax, Ludhiana

CWP/2976/2013

AI Insights

The case involves Shri Ganesh Charitable Trust, which sought a writ of certiorari to challenge the rejection of its application for tax exemption under Section 10(23C)(vi) of the Income Tax Act, 1961, for the assessment year 2011-12. The Chief Commissioner of Income Tax, Ludhiana, had rejected the application on grounds that were deemed irrelevant and incomprehensible by the court. The petitioner argued that the trust had been operating an educational institution and had received similar exemptions in the past. The court found the reasons provided by the Chief Commissioner to be inadequate and lacking legal basis, leading to the decision to set aside the impugned order and remand the case for a fresh decision.

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 820554 (HC-CHANDIGARH)
• Appeal Type: Others
• Pronouncement Date: 26-09-2013
• Assessment Year: misc
• Other Referred Cases: M/s Pinegrove International Charitable Trust Vs. Union of India and others
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Applicant
• Court: HIGH COURT
• Department Lawyers: SAVITA SAXENA
• Assessee Lawyers: AKSHAY BHAN
• Keywords: Certiorari; Certiorari; Charitable Trust; Educational institution; Exemption; Income Tax
• Section: 10(23C)(vi)

Judgement Text

"C.W.P. No.2976 of 2013 -1- IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH C.W.P. No.2976 of 2013. Date of Decision:-26.09.2013. Shri Ganesh Charitable Trust (Regd.), Narangwal, Ludhiana. .........Petitioner. Versus Chief Commissioner of Income Tax, Ludhiana. .........Respondent. CORAM: Hon'ble Mr. Justice Rajive Bhalla Hon'ble Mr. Justice Dr. Bharat Bhushan Parsoon. ***** Present:- Mr. Akshay Bhan, Advocate for the petitioner. Ms. Savita Saxena, Advocate for the respondent. Rajive Bhalla, J (Oral) The petitioner prays for issuance of a writ in the nature of certiorari setting aside order dated 21.9.2012 (Annexure P-4) whereby the petitioner’s application for exemption under Section 10(23C)(vi) of the Income Tax Act, 1961 (for short, the Act), for the assessment year 2011-12, has been rejected. Counsel for the petitioner submits that the petitioner was granted exemption under Section 10(23C)(vi) of the Act in the preceding ten assessment years. Approval under Section 10(23C)(vi) of the Act for assessment year 2011-12 has been declined on the ground that State law prohibits family members from becoming life members, but without Yag Dutt 2013.10.11 17:02 I attest to the accuracy and integrity of this document C.W.P. No.2976 of 2013 -2- referring to any “State Law” or any statute, enacted by the State of Punjab, prohibiting a person or persons of the same family from becoming life members of a trust. It is further submitted that reasons assigned in para 8 (b), (c) and (d) and other paragraphs of the impugned order are as incomprehensible as they are irrelevant as no facts have been assigned for the inference that the trust has not been constituted for educational purposes or that its objectives are unrelated to an educational institution. The petitioner has been running an educational institution from its inception. It is further submitted that judgment in CWP No.6031 of 2009 titled M/s Pinegrove International Charitable Trust Vs. Union of India and others has been referred to in the impugned order without assigning any reason as to how the judgment applies to the case in hand. Counsel for the revenue submits that impugned order is legal and valid as conclusions assigned are preceded by reasons, namely, that the petitioners are lifelong trustees. The impugned order cannot be said to suffer from any error of law much less an error of jurisdiction as to invite interference. It is further contended that discretion to grant exemption/approval lies with the Chief Commissioner of Income Tax and, therefore, any factor that may suggest that the trust is a mere camouflage for a family to perpetuate its personal interest is sufficient to hold that a trust is not a charitable institution. We have heard counsel for the parties, perused the impugned order and have no hesitation in holding that reasons assigned by the Chief Yag Dutt 2013.10.11 17:02 I attest to the accuracy and integrity of this document C.W.P. No.2976 of 2013 -3- Commissioner of Income Tax are irrelevant, contradictory and even incomprehensible. A perusal of the order reveals that a paragraph is quoted from a book titled as “Law and Procedure on Charitable Trusts and Religious Institutions” while holding that “State laws” prohibit office bearers from becoming life members. The order, however, does not refer to any “State law” that enacts such a prohibition. Accepting for a moment that there may be a situation where a charitable trust is created to camouflage the true intent of a family but this alone does not empower the Chief Commissioner of Income Tax to make such a general statement of law, without reference to the “State law”. Counsel for the respondent is unable to refer to legal provision in any statute, enacted by the State of Punjab, or in the Societies Registration Act, 1860 or in the Indian Trusts Act, 1882 as would enable us to affirm the opinion recorded by the Chief Commissioner of Income Tax. The Chief Commissioner of Income Tax has thankfully held that exemption is available under Section 10(23C)(vi) of the Act to a charitable institutions but thereafter goes on to hold, without referring to any facts, as under: “From the above discussion it is clear that the institution have objectives which are unrelated to the promotion of education. In these circumstances the claim of exemption under Section 10(23C)(vi) is not justified.” The matter does not rest here. After holding as above, reference is made to a judgment of this Court in M/s Pinegrove International Yag Dutt 2013.10.11 17:02 I attest to the accuracy and integrity of this document C.W.P. No.2976 of 2013 -4- Charitable Trust Vs. Union of India and others, but no opinion has been recorded as to how, why and in what circumstances factors set out in the aforesaid judgment or in the other judgments referred to in the body of the impugned order apply to the present case. The petitioner has admittedly been running a nursing school since 2003 and as asserted by counsel for the petitioner, is functioning after compliance with all statutory requirements and obtaining all statutory permissions. The order passed by the Chief Commissioner of Income Tax discloses fundamental errors of jurisdiction, particularly with respect to parameters considered while passing the order. An officer of the rank of the Chief Commissioner of Income Tax is not expected to pass orders so casually. In view of what has been stated hereinabove, the writ petition is allowed, the impugned order is set aside and the matter is remitted for adjudication afresh in accordance with law within two months of the petitioner putting in appearance before the Chief Commissioner of Income Tax, Ludhiana on 30.10.2013. (Rajive Bhalla) Judge (Dr. Bharat Bhushan Parsoon) Judge September 26, 2013 'Yag Dutt' Yag Dutt 2013.10.11 17:02 I attest to the accuracy and integrity of this document "