Income Tax Appellate Tribunal - Chennai
Sri Swetambar Sthanakvasi Jain Sangh, , ... vs Assessee on 26 June, 2012
IN THE INCOME TAX APPELLATE TRIBUNAL
'A' BENCH : CHENNAI
[BEFORE SHRI N.S. SAINI, ACCOUNTANT MEMBER
AND SHRI V. DURGA RAO, JUDICIAL MEMBER]
I.T.A.No. 849/Mds/2012
Assessment year : N.A
M/s Sri Swetambar vs Director of Income-tax
Sthanakvasi Jain Sangh (Exemptions)
200, Paper Mills Road Chennai
Chennai 600 082
(Appellant) (Respondent)
Appellant by : Shri D. Anand, Advocate
Respondent by : Shri G.Nanthakumar, Jt. CIT
Date of Hearing : 26-06-2012
Date of Pronouncement : 29-06-2012
ORDER
PER N.S. SAINI, ACCOUNTANT MEMBER
This is an appeal filed by the assessee against the order of the DIT(E), Chennai, dated 16.3.2012, by raising the following grounds of appeal:
"1. The order of learned Director Of Income Tax (Exemptions), in declining to grant registration to the Appellant Society U/s.12AA of the Income Tax Act is wrong, illegal and is opposed to law and facts of the case.:- 2 -: I.T.A.No. 849/12
2. The learned Director Of Income Tax (Exemptions) ought to have granted registration under section 12AA to the appellant in so far as the objects of the Appellant Society and its genuineness has not been questioned by the Director Of Income Tax (Exemptions).
3. The learned Director Of Income Tax (Exemptions) ought to have seen that the predominant object of the appellant Society is and remains to be carrying out charitable purpose of advancement of Educational facilities, the Commissioner of Income Tax ought not to have declined to grant Registration Under Section 12AA of The Income Tax Act.
4. The learned Director Of Income Tax (Exemptions) ought to have seen that no material exist to infer that the appellant Society exist for profit motive or the income of the Society has been misused and that no material has been brought on record to show how conditions of grant of registration has been breached by the Society.
5. The learned Director Of Income Tax (Exemptions) ought to have seen that the appellant society is carrying on activity as defined in clause 2(15) and is carrying on activity of charitable purpose by advancement of Educational facilities, the director of Income Tax (Exemptions) ought not to have declined to grant registration under section 12AA of the Income Tax Act.
6. The learned Director Of Income Tax (Exemptions) erred in law in declining to grant registration to the appellant under section 12AA under the pretext that the Society Deed contains mixed objects i.e. both religious and charitable. Assuming without conceding that the appellant society has mixed objectives, the learned Director Of Income Tax (Exemptions), ought to have seen that the language used in the provision is religious or charitable and not either religious or charitable purpose.
For these and other reasons that may be advanced at the time of hearing most humbly prayed that the Honourable Tribunal be pleased direct the learned Director of Income Tax (Exemptions) to grant Registration to the appellant society under section 12AA of the Income Tax Act and thus render justice.":- 3 -: I.T.A.No. 849/12
2. The A.R of the assessee, at the time of hearing, submitted that the only issue involved in this appeal of the assessee is that the DIT(E) was not justified in declining to grant registration to the assesse-society u/s 12AA of the Act on the ground that the deed of the society contains mixed objects i.e. both religious and charitable. He submitted that the issue is no longer res integra and that the Hon'ble Madras High Court in the case of CIT vs Arulmigu Sri Kamatchi Amman Trust in Tax Case appeal No.643 of 2011, order dated 25.1.2012, a copy of which is placed on record, has held that the income derived from the property held under the trust wholly for charitable and religious purposes was not to be included in the total income of the Trust. Therefore, the proviso would be applicable to both the Trusts established with the object of charitable as well as religious purposes. Hence, he submitted that the registration should be granted to the assessee u/s 12AA of the Act.
3. The DR very fairly conceded that the issue is covered in favour of the assessee by the aforesaid decision of the Hon'ble Madras High Court.
4. After considering the rival submissions and perusing the materials available on record, we find that the DIT(E), Chennai, in his order dated 16.3.2012 has observed that the trust deed contains mixed objects, both religious and charitable objects. The same is not permissible as either object should be religious or charitable as per :- 4 -: I.T.A.No. 849/12 the wordings of section 11 which deals with exemption of income of the Trust. He has observed that section 11 of the Act restricts the purpose of the Trust either for charitable or for religious and relied on section 11(1)(a) of the Act. Therefore, he dismissed the application of the assessee for grant of registration u/s 12AA of the Act.
5. We find that the Hon'ble Madras High Court in the case of CIT vs Arulmigu Sri Kamatchi Amman Trust (supra) has held as under:
"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 [l][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 from application to such purposes in India, to the extent to which the income should be 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 :- 5 -: I.T.A.No. 849/12 the objects, law does not make any disqualification for the trust to make 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 question of fact. Therefore, we find no ground to cause our interference in 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."
6. The DR has fairly conceded that the issue is covered in favour of the assessee and against the Revenue by the aforesaid decision of the Hon'ble Madras High Court. Respectfully following the above quoted decision of the Hon'ble Madras High Court, we set aside the order of the DIT(E) dated 16.3.2012 and direct him to grant registration to the assessee u/s 12AA of the Act. Thus, the grounds of appeal of the assessee are allowed.
7. In the result, the appeal of the assessee is allowed.
Order pronounced on Friday, the 29th of June, 2012, at Chennai.
Sd/- Sd/-
(V. DURGA RAO) (N.S.SAINI)
JUDICIAL MEMBER ACCOUNTANT MEMBER
Dated: 29th June, 2012
RD
Copy to: Appellant/Respondent/CIT(A)/CIT/DR