Madras High Court
The Commissioner Of vs Arulmigu Sri Kamatchi Amman on 25 January, 2012
Author: D.Murugesan
Bench: D.Murugesan, P.P.S.Janarthana Raja
IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED: 25.1.2012 CORAM: THE HONOURABLE MR.JUSTICE D.MURUGESAN and THE HONOURABLE MR.JUSTICE P.P.S.JANARTHANA RAJA Tax Case Appeal No.643 of 2011 The Commissioner of Income Tax-I, Madurai. .. Appellant vs. Arulmigu Sri Kamatchi Amman Trust, Karaikudi. .. Respondent ----- PRAYER: Tax Case Appeal filed under Section 260-A of the Income-Tax Act, 1961 praying for the relief stated therein. For appellant : Mr.T.Ravikumar ----- J U D G M E N T
(Judgment of the Court was made by D.MURUGESAN,J.) The above appeal, at the instance of the Revenue, challenges the order of the Income Tax Appellate Tribunal, Chennai Bench "B", made in I.T.A. No.110/Mds/2011 dated 13.06.2011, raising the following substantial questions of law:-
"1.Whether on the facts and in the circumstances of the case, the Income-tax Appellate Tribunal was right in law in holding that the assessee trust is entitled to registration under Section 12AA of the Act, even though the trust not entitled to claim exemption since the trust has twin objectives which are both charitable and religious in nature?
2. Whether on the facts and in the circumstances of the case, the Income-tax Appellate Tribunal was right in law in directing the Commissioner of Income-tax to grant registration under Section 12AA of the Act to the assessee trust, even though the assessee not established two parameters i.e., genuineness of the trust and charitable activities carried out in terms of the trust deed in terms of the provisions of Section 12AA[1][b][ii] of the Income Tax Act, 1961?"
2.The respondent/assessee, viz., Arulmigu Sri Kamatchi Amman Trust, applied under Section 12AA of the Income Tax Act to the Commissioner of Income Tax, for the grant of registration of the Trust on the ground that the object of the Trust was religious. The Commissioner of Income Tax considered the said application and rejected the same by its order dated 11.11.2010 on the ground that the Trust was spending money in receipts towards religious and administrative purposes. According to the Commissioner of Income Tax, the activities claimed to have been carried out by the applicant Trust are admixture of both religious and charitable.
3.The Trust took the said order to the Income Tax Appellate Tribunal, which, by its order dated 13.6.2011 allowed the said appeal on the ground that there is no longer a provision having admixture of both religious and charitable objects. For the said purpose, the Tribunal had relied upon the judgments reported in 227 ITR 578 [CIT vs. Upper Ganges Sugarmills Ltd.] and 231 ITR 787 [State of Kerala vs. M.P.Shantiverma Jain].
4.Heard Mr.T.Ravikumar, learned counsel appearing for the appellant/Revenue and perused the materials placed on record. The learned counsel would contend that the order passed by the Tribunal is without any basis and justification and that the Tribunal failed to appreciate the activities claimed to have been carried out by the assessee are admixture of both religious and charitable in nature. It is also further contended that the Commissioner of Income Tax made an enquiry as contemplated under Section 12AA[1][b][ii] of the Act and passed an order and the same is in accordance with law. It is also contended that the assessee is not entitled to claim exemption under Section 11 of the Act since the the objects of the Trust are both charitable and religious in nature. Therefore, the learned counsel seeks to set aside the order of the Tribunal.
5.We have carefully considered the above submission. For the purpose of making an application under Section 12AA, the applicant must apply in Form 10. The said Form prescribes the format of the notice of accumulation of income to be given by charitable and religious trusts under Section 11[2] of the Act. For the purpose of availing the benefit of Section 11, registration is required. Section 11[1][a] reads as under:-
"11[1]. Subject to the provisions of sections 60 to 63, the following income shall not be included in the total income of the previous year of the person in receipt of the income--
[a] income derived from property held under trust wholly for charitable or religious purposes, to the extent to which such income is applied to such purposes in India; and, where any such income is accumulated or set apart for application to such purposes in India, to the extent to which the income so accumulated or set apart is not in excess of fifteen per cent of the income from such property;"
6.From a reading of the above, it is clear that the income derived from the property held under trust wholly for charitable or religious purposes, shall not be included in the total income of the Trust. Therefore, the said provision would be applicable to both the Trusts established with the object of charitable as well as religious purposes. Therefore, Section 12AA of the Act does not make any difference between the Trusts created with the object of charitable and religious purposes and, even if the Trust is not created with both the objects, law does not make any disqualification for the trust to make an application for registration. Therefore, the Tribunal has correctly applied the provision of law and allowed the appeal, which finding is based on valid material evidence. The finding of the Tribunal is not perverse and it is a question of fact. Therefore, we find no ground to cause our interference into the order passed by the Tribunal. Accordingly, the order passed by the Tribunal is confirmed and both the substantial questions of law raised herein are answered against the Revenue.
7. In the result, the appeal is devoid of merits and hence the same is dismissed.
gs. [D.M., J.] [P.P.S.J., J.]
25.1.2012
Index:Yes/No.
Internet:Yes/No.
gs.
D.MURUGESAN, J.
and
P.P.S.JANARTHANA RAJA, J.
TCA No.643 of 2011
25.1.2012
The learned counsel would submit that inasmuch as the definition of 'charitable purpose' defined under Section 2[15] of the Act, would not include religious purpose, as the 'charitable purpose' means relief of the poor, education, medical relief and preservation of monuments or places or objects of artistic or historic interest and the advancement of any other object of general public utility. Hence, when a Trust is with an object of both religious and charitable in nature, is not entitled to claim exemption under Section 11 of the Act.