Madras High Court
Commissioner Of Income Tax vs Mani Guruswamy Seva Trust on 26 August, 2014
Author: R.Sudhakar
Bench: R.Sudhakar, G.M.Akbar Ali
In the High Court of Judicature at Madras Dated: 26.08.2014 Coram The Honourable Mr.JUSTICE R.SUDHAKAR and The Honourable Mr.JUSTICE G.M.AKBAR ALI Tax Case (Appeal) No.499 of 2014 Commissioner of Income Tax Coimbatore. .... Appellant Vs. Mani Guruswamy Seva Trust C/o Sri.T.N.Seetharaman, Advocate, #384 (Old No.196), Lloyds Road, Chennai 600 086. .... Respondent APPEAL under Section 260A of the Income Tax Act against the order dated 24.6.2013 made in I.T.A.No.368/Mds/2013 on the file of the Income Tax Appellate Tribunal, Madras 'B' Bench. For Appellant : Mr.T.R.Senthil Kumar Standing counsel for Income Tax For Respondent: Mr.R.Kumar ------- J U D G M E N T
(Delivered by G.M.AKBAR ALI,J.) This Tax Case (Appeal) is filed by the Revenue as against the order of the Income Tax Appellate Tribunal raising the following substantial questions of law:
1. Whether on the facts and circumstances of the case, the Tribunal was justified in granting registration under Section 12A, without considering the fact that the Trust had not commenced any activity even though it was in existence for one year?
2. Whether on the facts and circumstances of the case, the Tribunal was right in following the ratio laid down by the Karnataka High Court in the caseof Meenakshi Amma Endowment Trust (2011) 50 DTR (Kar.) 243?
2. The assessee is a charitable trust constituted under Deed of Trust dated 07.10.2011. The objects of the trust are to promote education, provide medical relief to the poor etc. The assessee had made an application for registration of Trust under Section 12 of the Income Tax Act before the Commissioner of Income Tax. The Commissioner of Income Tax rejected the said application for grant of registration on the ground that the trust is yet to commence its activities and it could not be recognized as charitable trust only on the basis of the stated objects. The Commissioner also held that the trust had not shown sufficient money to carry out all/and any of its lofty objects, so ostensibly stated in the trust deed. As against the order of the Commissioner of Income Tax, the assessee preferred an appeal before the Tribunal.
3. The Tribunal, by order dated 24.6.2013, following the decision of the Karnataka High Court in the case of Meenakshi Amma Endowment Trust reported in (2011) 50 DTR (Kar.) 243, allowed the appeal filed by the assessee. Aggrieved by the said order of the Tribunal, the Revenue has filed the present Tax Case (Appeal).
4. Mr.R.Kumar, learned counsel takes notice for the respondent/assessee. Both the learned standing counsel appearing for the Revenue and the learned counsel appearing for the assessee fairly submits that the issue involved in this appeal is covered by a decision of this Court in T.C.(A)No.975 of 2013 dated 05.08.2014, wherein this Court, after considering the provisions under Section 12AA(3) of the Income Tax Act and the definition of 'charitable purpose' under Section 2(15) of the Income Tax Act held as follows:
10. From a reading of the above provisions, it is clear that the authority has got power to subsequently satisfy itself about the activities of such trust or institutions as to whether it is genuine or not and whether the trust is being conducted in accordance with the objects of the trust and the authority has got the power to pass an order cancelling the registration of the trust or the institution. We find that the above provisions enables the authority to monitor the activities of the charitable trust and if it finds that its activities are not in the best interest of the trust and to subserve the interest of the trust, then it is open to the authority to cancel the registration of the trust or the institution.
5. In the present case also, the Commissioner of Income Tax had rejected the registration of the Trust at the threshold. The reasons given by the Original Authority are not in consonance with the provisions of the Income Tax Act. When R.SUDHAKAR,J.
AND G.M.AKBAR ALI,J.
there is an ample power under the law to rectify the error by cancelling the registration of the trust if there is any breach of the objects of the Trust, the Tribunal is right in setting aside the order of the Commissioner of Income Tax.
6. Accordingly, following the above-said order of this Court in T.C.(A)No.975 of 2013 dated 05.08.2014, this Tax Case (Appeal) stands dismissed. No costs.
Index :Yes/No (R.S.,J) (G.M.A.,J) Internet: Yes/No 26.08.2014 sl To 1. The Income Tax Appellate Tribunal, Madras 'B' Bench. 2. The Commissioner of Income Tax, Coimbatore.T.C.(A) No.499 of 2014