THE COMMISSIONER OF INCOME TAX V. SOCIETY OF FRIARS MINOR

ITTA/283/2006

AI Insights

The case involves an appeal under Section 260A of the Income Tax Act, 1961, challenging the order of the Income Tax Appellate Tribunal, Hyderabad, which had confirmed the decision of the Commissioner of Income Tax. The dispute centered on whether the trust, which imparts religious training to candidates aspiring to become Catholic priests, qualifies for tax exemption under Section 11 of the Income Tax Act. The primary authority had initially denied the exemption, citing a violation of Section 13(1)(b), which restricts benefits to trusts not serving the general public. However, the Commissioner of Income Tax reversed this decision, viewing the trust's activities as educational rather than purely religious. The Tribunal upheld this view, leading to the Revenue's appeal, which was later withdrawn following the CBDT's directive on appeals with a tax effect below Rs.1,00,000.

• Counselvise Citation: [2022] 140 COUNSELVISE.COM (IT) 681157 (HC-HYDERABAD)
• Appeal Type: Others
• Pronouncement Date: 31-03-2022
• Assessment Year: misc
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Respondent
• Court: HIGH COURT
• Keywords: Appeal Withdrawal; Charitable Trust; Income Tax; Tax Exemption; Religious Training
• Section: 11; 12A; 260A; 13(1)(b)

Judgement Text

"HONOURABLE SRI JUSTICE C. PRAVEEN KUMAR And HONOURABLE SMT. JUSTICE V. SUJATHA I.T.T.A.No.283 of 2006 ORDER: (Per Hon’ble Sri Justice C. Praveen Kumar) The present appeal is filed under Section 260A of the Income Tax Act, 1961, challenging the order passed in I.T.A.No.42/Hyd/2001, on the file of Income Tax Appellate Tribunal, Hyderabad Bench-B, Hyderabad, as illegal, improper and incorrect. 2. The facts in issue are that the respondent-Assessee is a Trust deriving income from property held by trust for charitable purposes. Income Tax returns for the Assessment Year 1996-1997 are filed on 30.10.1996 declaring the taxable income as NIL. It is said that the Assessee was granted registration under Section 12A of the Income Tax Act, 1961, by the Commissioner of Income Tax. The material filed by the Trust reveals that the trust is imparting religious training to candidates who aspire to become catholic religious priests. It is held by the primary authority that as the main function of the trust was to give training to students to become religious priests, the entire expenditure incurred by it was for the propagation of Christian religion, and thus has not incurred the benefit of general public at large and that the trust had violated the provisions of Section 13 (1) (b) of the Income Tax CPK, J & VS, J ITTA.No.283 of 2006 2 Act, and hence, is not eligible for exemption under Section 11 of the Income Tax Act. 3. On appeal, the Commissioner of Income Tax, allowed the appeal filed by the Assessee, holding that the trust is a charitable institution within the meaning of Section 11 of the Income Tax Act, on the ground that the main activity of the trust is to train the students to become catholic priests and that the said activity is only a mode of education and the students may or may not become religious priests and thus the institution is providing only education and cannot be held as a religious institution. Aggrieved by the same, the Revenue preferred the appeal before the Income Tax Appellate Tribunal, Hyderabad Bench-B. The Income Tax Appellate Tribunal, having considered rival contentions of the parties and on perusal of the material on record as well as the case laws cited before it, dismissed the appeal confirming the order of the Commissioner of Income Tax. Challenging the same, the present appeal came to be filed. 4. Heard Smt. M. Kiranmayee, learned standing counsel for the appellant and the learned counsel appearing on behalf of the respondents. 5. When the matter came up for hearing, learned standing counsel appearing for the Income Tax Department would submit that in terms of Central Board Direct Taxes Circular No.17 of 2019, dated 08.08.2019, all appeals where the tax CPK, J & VS, J ITTA.No.283 of 2006 3 effect is below Rs.1,00,00,000/- are required to be withdrawn and as the value of the present appeal is less than Rs.1,00,00,000/-, the appellant may be permitted to withdraw the appeal. Learned Standing counsel would further submit that liberty may be granted, to file an application for restoration of the appeal, in case it is found later that the subject matter of the appeal falls within the exceptions mentioned in the circular issued by the Central Board. 6. Recording the said submission, the appeal is dismissed as withdrawn with the liberty stated above. There shall be no order as to costs. As a sequel thereto, miscellaneous petitions, if any, shall stand closed. _________________________ C. PRAVEEN KUMAR, J ________________ V. SUJATHA, J Date: 31.03.2022 Ksn "