Madras High Court
The Director Of Income Tax vs Jito Chennai Chapterr on 13 December, 2011
Bench: P.Jyothimani, P.P.S.Janarthana Raja
IN THE HIGH COURT OF JUDICATURE AT MADRAS Dated : 13.12.2011 Coram The Honourable Mr.Justice P.JYOTHIMANI and The Honourable Mr.Justice P.P.S.JANARTHANA RAJA Tax Case Appeal Nos.337 & 338 of 2011 and M.P.No.1 of 2011 The Director of Income Tax, (Exemptions), Chennai. .. Appellant in both the appeals vs. JITO CHENNAI CHAPTERR, 1-7, VCI Estate, Erukanchery High Road, Vysarpadi, Chennai-39 .. Respondent in both the appeals The above tax case appeals are preferred under Section 260-A of the Income Tax Act, 1961, against the common order dated 8.2.2011 passed by the Income Tax Appellate Tribunal 'A' Bench, Chennai,in I.T.A.Nos.1468 and 1469/Mds/2010. For Appellant : Mr.T.Ravikumar For Respondent : Mr.A.Thiagarajan,Sr.counsel for Mr.S.Rameshkumar JUDGMENT
(Judgment of the Court was made by P.JYOTHIMANI.J.) The Revenue has preferred these tax case appeals as against the common order dated 8.2.2011 passed by the Income Tax Appellate Tribunal 'A' Bench, Chennai, in I.T.A.Nos.1468 and 1469/Mds/2010, suggesting the following substantial questions of law:
"Whether on the facts and circumstances of the case, the Tribunal was right in directing to grant registration under Section 12AA and approval under Section 80G of the Act?"
2. A reference to the order of the Director of Income Tax (Exemptions) shows that the application filed by the assessee under Section 12AA of the Income Tax Act for registration of the Society, has been rejected at the threshold holding that in the object clause of the deed, particularly, in clause 3(a) and 3(f), there is a provision for domestic and overseas markets and also settlement of disputes by arbitration and therefore, the Director of Income Tax(Exemptions) has come to a conclusion that the object is not charitable in accordance with Section 2(15) of the Act and is commercial in nature.
3. The Tribunal has considered the same and found that the object cannot be said to be not charitable. When a contention was raised before the Tribunal that the contents of Section 12AA are different, the Tribunal, in our view, has correctly held that it is only a procedural difference.
4. A reference to Section 12AA of the Act would show that at the initial stage, there is an obligation on the part of the authority to find out and give his opinion about the genuineness of the activity of the Society/Trust. Inasmuch as the order of the Director of Income Tax (Exemptions) has not spoken anything about the genuineness of the Society, the rejection of the application, in our view, is not in accordance with law.
5. Section 2(15) of the Act, which has been referred to by the authority below, explains about the charitable purpose and the same has not been properly construed by the Director of Income Tax (Exemptions).
6. We have gone through the object clauses, namely, 3(a) and 3(f), referred to by the Director of Income Tax(Exemptions), which are as follows:
"3(a). To be and act and serve as an Association of Persons who adopt Tenets of Truth, Non violence and Compassion towards all living beings as a way of life to serve the Society, our Nation and the World wherein Truth and Justice pervade all walks of life social, commercial and personal and wherein people of different cultures live in peace and harmony with one another and by bringing them together with a view to increase gainful employment of all through expansion of production of goods and services for domestics and overseas markets thereby raising living standard of society at large.
(f) To provide for arbitration in respect of settlement of disputes arising in the course of trade, services, vacations, industry or other business matters of the community and to secure the services of experts if found necessary or desirable."
7. We have also gone through the other clauses of the deed and it is very clear that the object of the Society is to propagate Non-violence and Tenets of Truth and to encourage universal spiritual uplifment as preached by the Tirthankar Bhagwants. What is stated about the settlement of dispute is only incidental thereto and cannot be stated to be commercial in nature.
7. In such view of the matter, no question of law much less substantial question of law would arise for consideration. Accordingly, the tax case appeals stand dismissed. Connected miscellaneous petition is closed. However, there is no order as to costs.
msk To
1.The Assistant Registrar,Income Tax Appellate Tribunal, Madras Bench "A".
2.The Secretary, Central Board of Direct Taxes, New Delhi.
3.The Commissioner of Income Tax (Appeals) V, 121, Mahatma Gandhi Road Chennai 600 034