Income Tax Appellate Tribunal - Chennai
Mamallan Educational Trust, Chennai vs Department Of Income Tax on 10 May, 2012
IN THE INCOME TAX APPELLATE TRIBUNAL
'B' BENCH, CHENNAI
BEFORE SHRI ABRAHAM P. GEORGE, ACCOUNTANT MEMBER
AND SHRI VIKAS AWASTHY, JUDICIAL MEMBER
I.T.A. No. 456/Mds/2012
(Assessment Year : 2007-08)
The Assistant Commissioner M/s Mamallan Educational Trust,
of Income Tax, No.29, Ganapathy Street,
Central Circle I(3), v. Royapettah, Chennai - 600 014.
Chennai - 600 034 .
PAN : AABTM1887E
(Appellant) (Respondent)
Appellant by : Dr. S. Mohrana, CIT-DR
Respondent by : Shri T. Banusekar, CA
Date of Hearing : 10.05.2012
Date of Pronouncement : 10.05.2012
O R D E R
PER ABRAHAM P. GEORGE, ACCOUNTANT MEMBER :
In this appeal filed by the Revenue, its grievance is that the CIT(Appeals) held payments made by the assessee to one M/s Sivaraja Ramalinga Trust was not hit by Section 13(1)(c) of Income-tax Act, 1961 (in short 'the Act'). In other words, Revenue is aggrieved that the CIT(Appeals) allowed exemption under Section 11 of the Act to the assessee for the impugned assessment year. Further, as per Revenue, 2 I.T.A. No. 456/Mds/12 decision of co-ordinate Bench of this Tribunal in the case of DCIT v. Jeppiaar Educational Trust in I.T.A. No. 3387/Mds/2004 dated 22.9.2006, relied on by the CIT(Appeals) has not been accepted by the Department and an appeal is pending before Hon'ble jurisdictional High Court.
2. Short facts apropos are that assessee having registration under Sections 11 and 12 of the Act, had in its balance sheet for the relevant previous year shown under the head "Current Assets" a sum of ` 77,93,000/- against the name M/s Sivaraja Ramalinga Trust. As per the Assessing Officer, trustees of the assessee and some of the trustees of M/s Sivaraja Ramalinga Trust were same and therefore, assessee was hit by Section 13(1)(c) read with Section 13(3) of the Act. He denied the claim of exemption under Section 11 of the Act and treated the assessee-Trust as AOP.
3. In its appeal before CIT(Appeals), argument of the assessee was that Section 13(1)(c)(ii) could be invoked only when any part of the income was used for the benefit of trustees, or other persons mentioned in Section 13(3) of the Act. As per the assessee, the term "concern" mentioned in Section 13(3) of the Act did not include another charitable Trust. Sivaraja Ramalinga Trust was a charitable Trust and therefore, any payments made to the said Trust could not be considered as a 3 I.T.A. No. 456/Mds/12 violation of Section 13(1) of the Act. Reliance was also placed on the decision of co-ordinate Bench of this Tribunal of this Tribunal in the case of Jeppiaar Educational Trust (supra). The CIT(Appeals) was appreciative of these contentions. According to him, the money given by the assessee was to a "concern" mentioned in Section 13(3) of the Act. Therefore, the decision of co-ordinate Bench of this Tribunal in the case of Jeppiaar Educational Trust (supra) squarely applied. He held that the assessee could not be denied exemption under Section 11 of the Act and directed the A.O. to grant such exemption.
4. Before us, learned D.R., strongly assailing the order of CIT(Appeals), submitted that it was an accepted position that M/s Sivaraja Ramalinga Trust and assessee-Trust were having some common trustees. Relying on Section 13(3) of the Act, learned D.R. submitted that any concern in which any trustee, who had substantial interest, would fall with the mischief of Section 13(1)(c) of the Act. Assessee-Trust had placed part of its funds with another Trust in which the trustees had substantial interest and therefore, the trustees had directly or indirectly derived benefit. According to him, CIT(Appeals) fell in error in allowing the assessee exemption under Section 11 of the Act.
5. Per contra, A.R. strongly supported the order of CIT(Appeals). 4 I.T.A. No. 456/Mds/12
6. We have perused the orders and heard the rival submissions. There is no dispute that M/s Sivaraja Ramalinga Trust, to which assessee had given money, was a Trust registered under Section 12AA of the Act. The A.R. has placed a copy of order under Section 12AA of the Act granting registration to such Trust. Two things are very clear. One is that M/s Sivaraja Ramalinga Trust was a Trust and second is that some of the trustees were common. However, in our opinion, trustees hold the property of the Trust in a fiduciary capacity and not as owners. The owners of the Trust property were always its beneficiaries and trustees were holding the property and income therefrom for the benefit of beneficiaries and not for themselves. We cannot say that just because two Trusts are having common trustees, they are related concerns. Trust will not fall within the concept of "concern" mentioned in clause (e) of sub-section (3) of Section 13 of the Act. Invocation of Section 13(1), in such a situation, was not at all warranted. CIT(Appeals) was justified in relying on the decision of co-ordinate Bench of this Tribunal in the case of Jeppiaar Educational Trust (supra) and holding that assessee was eligible for exemption under Sections 11 and 12 of the Act. We find no reason to interfere with the order of CIT(Appeals).
7. In the result, appeal filed by the Revenue is dismissed. 5 I.T.A. No. 456/Mds/12 Order pronounced in the open court after conclusion of hearing on Thursday, the 10th of May, 2012, at Chennai.
sd/- sd/-
(Vikas Awasthy) (Abraham P. George)
Judicial Member Accountant Member
Chennai,
Dated the 10th May, 2012.
Kri.
Copy to: (1) Appellant
(2) Respondent
(3) CIT(Appeals)-I, Chennai-34
(4) CIT, Central-I, Chennai
(5) D.R.
(6) Guard file