Allahabad High Court
Cit vs Shadiram Ganga Prasad Charitable Trust on 19 September, 2006
Author: R.K. Agrawal
Bench: R.K. Agrawal, Vikram Nath
ORDER R.K. Agrawal, J.
1. The Income Tax Appellate Tribunal, Allahabad, has referred the following questions of law under Section 256(1) of the Income Tax Act, 1961, hereinafter referred to as "the Act" for opinion to this Court:
1. Whether in law and circumstances of the case, the ITAT was justified in upholding the decision of the Appellate Assistant Commissioner directing to allow exemption under Section 11 of the Income Tax Act, 1961 ignoring the fact that there can be no valid transfer of immovable property without a registered and stamped instrument of transaction?
2. Whether in law and circumstances of the case, the ITAT was justified in holding that the provisions of Section 123 of Transfer of Property Act and Section 17 of Indian Registration Act, 1908 do not apply to the dedication/endowment made to the Charitable Trust?
3. Whether transfer of an immovable property by any person without any consideration to a Trust which is not regarded as Charitable Trust, is covered under the definition of dedication/endowment?
2. The present reference relates to the assessment year 1982-83.
3. Briefly stated the facts giving rise to the present references are as follows:
The assessee-trust claimed itself to be a charitable trust and pleaded before the Income Tax Officer that its income was exempt under Section 11 of the Act. The claim of the assessee was, however, rejected by the Income Tax Officer by observing as below:
In response to notice issued under Section 143(2), Shri B.K. Agarwal, attended on behalf of the assessee trust and filed the details as called for during the course of assessment proceedings. He submitted that the trust has been registered under Section 12A of the Income Tax Act and produced the copy of the order under Section 12A of the Income Tax Act and produced the copy of the order under Section 12A of the Commissioner, Kanpur dated 19-10-1984. Similarly the trust has been granted exemption under Section 80C vide order dated 14-12-1984 by the Commissioner, Kanpur. The assessee has also filed the photo-copies of these orders. Three properties No. 44,200,112, Harrisganj, Kanpur, have been mutated in the name of the trust during the year under consideration. Photo-copies of these mutation orders have been filed. The other three properties claimed by the trust as belonging to it have not been mutated till the end of the accounting year under consideration.
In the preceding assessment years, the income from all the six properties was protectively taxed in the hands of the trust and it was substantially taxed in the hands of M/s. SRGP, HUF, to whom these properties belong. This was because of the various decisions quoted in the assessment order for the assessment year 1981-82. However, since during the accounting year, three properties have been mutated in the name of the trust, the income of Rs. 1,765 approximately relatable to these three properties would be taxed substantially in the hands of the trust. The rest of the income from properties ie., Rs. 15,148 will be taxed in the hands of M/s. SRGP HUF, to whom these properties belong. This was because of the various decisions quoted in the assessment order for the assessment year 1981-82. However, since during the accounting year, three properties have been mutated in the name of the trust, the income of Rs. 1,765 approximately relatable to these three properties would be taxed substantially in the hands of the trust. The rest of the income from properties, ie., Rs. 15,148 will be taxed in the hands of M/s. SRGP HUF, to whom these properties belong. The exemption as per rule against the property income would be allowed.
4. The assessee appealed before the Appellate Assistant Commissioner, who reversed the order of the Income Tax Officer by observing as follows:
The appeal has been filed against Income Tax Officer's action of refusing to allow exemption under Section 11. The facts of the case are that the trust was created on 31-10-1986 when six parties of Sadi Ram Ganga Prasad HUF, were transferred to the appellant. The Income Tax Officer found that out of six properties 3 were mutated in the name of the appellant trust while remaining 3 still remained in the name of the HUF. Accordingly, the income of the three properties was assessed in the hands of the appellant trust substantially while the income of the remaining three properties was assessed in the hands of the HUF.
In my order dated 9-1-1986 for the assessment years 1980-81 and 1981-82,1 have held that all six properties belong to trust and that the appellant is entitled to exemption under Section 11. As per the reasons given therein the assessment is set aside with the directions that the Income Tax Officer will re-complete the assessment after determining the income from all six properties in the hands of the appellant trust allowing exemption under Section 11 subject to fulfilment of conditions mentioned in Section 11.
5. The revenue appealed against the order to the Tribunal, who confirmed the order of the Appellate Assistant Commissioner in view of their order in the case of Dr. Chandra Kanta Rohatgi.
6. We have heard Sri R.K. Upadhyay, learned Counsel appearing for the revenue and Sri R.S. Agrawal, learned Counsel appearing for the respondent-assessee.
7. It has been pointed out by Shri R.K. Upadhyay that similar questions were referred for opinion to this Court in ITR No. 127 of 1989, inter partes, in which this Court vide order of date upheld the order passed by the Tribunal and answered all the three questions in the affirmative, i.e., in favour of the assessee and against the revenue.
8. Respectfully following the aforesaid decision, we uphold the order passed by the Tribunal and answer all the three questions referred to us in the affirmative, ie., in favour of the assessee and against the revenue. There shall be no order as to costs.