Income Tax Appellate Tribunal - Chennai
Sri Premananda Trust, Chennai vs Assessee
IN THE INCOME TAX APPELLATE TRIBUNAL
BENCH "C" CHENNAI
BEFORE Dr. O.K. NARAYANAN, VICE PRESIDENT AND
SHRI S.S. GODARA, JUDICIAL MEMBER
I.T.A. No.2091 & 2092/Mds/2011
Sri Premananda Trust, The Asst. Commissioner of
Melapachakudi Village, Income Tax,
Fathima Nagar Post, v. Circle - I(2),
Viralimalai (Via), TIRUCHIRAPALLI.
PUDUKOTTAI Dist-621316.
PAN : AAFTS0833C.
(Appellant ) (Respondent)
Assessee by : Dr. (Mrs.) Anita Sumanth, Advocate
Department by : Shri P.B. Sekaran, CIT
Date of hearing : 27 Aug 2013
Date of Pronouncement : 29 Aug 2013
OR D E R
PER S.S. GODARA, JUDICIAL MEMBER :
These two are assessee's appeals. They arise from different orders of CIT-I, Tiruchirapalli both dated 31.11.2011, in same case No.6162E/CIT-1/TRY/2011-12, rejecting the 2 ITA 2091&2092/Mds/2011 assessee's application for registration under sec.12A and 80G of the Income Tax Act, 1961 (in short 'the Act').
2. In the course of hearing, the assessee vehemently argued that the CIT has wrongly rejected its above said applications seeking registration under sec.12A and 80G of the Act. Its contention is that it has been performing charitable activities since its coming into being ie. 08.7.1994 till date by running a school and by taking notice of the criminal act and conduct of its founder trustee namely, Swami Premananda, the CIT has wrongly implicated its name. To buttress its submissions, the assessee has chosen to place on record a paper book comprising of the following :-
Sl.No Date Description
01 8.7.1994 Trust Deed
02 27.07.1994 Proceedings of the Joint Director granting
permission to Premanada High School
03 23.02.2006 Supplementary Deed of Trust
04 18.11.2011 Letter from the Respondent to Appellant
05 23.11.2011 Reply by Appellant to the Respondent
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06 25.11.2011 Letter from the Respondent to Appellant
07 30.11.2011 Reply by Appellant to the Respondent.
Details of Meritorious performance, by the students of Premanda High School 08 Statements showing total number of students and list of beneficiaries for the years 1994-95, 1995-
96, 2000-01, 2010-11 and 2011-12
09 Project reports of the school run by the Appellant
Trust
09(a) Premananda High Secondary School
09(b) Parents Building
09© Premananda Boys Hostel Toilets
09(d) Premananda Students Hostel
In view thereof acceptance of both appeals has been prayed for at the instance of the assessee.
3. In reply, the Revenue has chosen to support the orders under challenge. The ld. CIT DR in the course of hearing has explained as to how the assessee's founder trustee was involved in the criminal acts of most heinous nature ie. sexual abuse of the ashram's child inmates which would cast a shadow on the activities performed by the assessee. It has been very strongly argued that keeping in mind the past history of the assessee's trust and its founder trustee, it does not deserve any 4 ITA 2091&2092/Mds/2011 consideration for registration under sec.12A as well as 80G of the Act.
4. We have heard both parties and perused the case file. The assessee's arguments are confined to purely legal aspects of registration of the trust claiming itself to be involved in charitable activities. Whereas the Revenue invokes the principles of morality to bar the relief of registration under both the aforesaid provisions to the assessee on the ground of past act and conduct of assessee's trustees.
6. The concise facts of the case are that the assessee is a 'public' religious trust. It was formed on 8.7.1994 vide a trust deed. Its founder trustee was one Swami Premananda. There were seven other trustees on board. The objects of the trust read as under :-
5. OBJECTS OF THE TRUST:-
a. To establish, maintain, run, develop, improve, extend grant donations for and to aid and assist in the establishments, maintenance, running development, improvement and extension of Nursery, Primary, Secondary and Higher Secondary Schools, Colleges, Industrial, Technical, Vocational, Medical, other Arts, Craft and Science schools and colleges and institutions of learning 5 ITA 2091&2092/Mds/2011 Hostels for the benefit of students, and generally all kinds of educational institutions whether general, technical, vocational, professional or of other description whatsoever for the welfare and uplift of the general public without discrimination of case or creed and to institute and award scholarships in India for study, research and apprenticeship for all or any of the said purposes.
b. To establish, maintain, run develop, improve, extend, grant donations for and to aid and assist in the establishment, maintenance, running development, improvement and extension of libraries, reading rooms, recreation centres and all other facilities as are calculated to be of use in imparting education to the public without discrimination of caste, creed, colour, race or religion.
c. To establish, maintain, run, develop, improve, extend, grant donatins for and to aid and assist in the establishment, maintance, running, development, improvement and extension of hospitals, clinics, dispensaries, health homes, maternity homes, children's nutrition and allother similar instititutions as well and afford treatments , cure, recuperation, rest and other allied advantages in the way of alleviating the sufferings of humanity without discrimination of caste, creed, colour, race or religion.
d. To build, erect and construct and to aid and assist in the building, erection and construction of houses, tenements and places of residence for the poor, needy and defectives and to afford them all comforts and conveniences. Low cost as possible or even free of cost without discrimination of case, creed, colour, race or religion.
e. To conduct poor feeding and generally to give food and clothing and monetary aid to the poor, needy and defectives and to afford relief to the people in distress and affected by earth-quakes, fires, floods, famines, pestilence and other accidents, natural calamities without discrimination of caste, creed, colour, race or religion or grant donations for and to aid and asist in the support of the inmates of other orgphanges.
f. To establish, maintain, run , develop, extend, grant donations for and to aid and assist in the establishments, maintenance, running, development, improvement and extension of orgphanges, home for the elders and home for the deprived in society without discriminations of caste, creed, colour, race or religion.
g. To instal and conduct classes for the spread of vedantha and philosophy, and to make known to the people in general, the 6 ITA 2091&2092/Mds/2011 aims, ideals and system of yoga and knowledge and to work for its fulfilment in all possible ways and to attainment of a spiritualised society and to arrange for and conduct lectures for this.
h. To propagate through all accepted means or beliefs, devotion and meditation besides yoga and knowledge as means to attain spiritual perfection and for this to arrange for and conduct lectures.
i. To organise, encourage, promote and assist in the study, research and pursuit of science, literature, fine arts, philosophy and yoga.
j. To print, publish, sell and distribute either free or for prices, books, periodicals, bulletins journals, and other literatures for the promotion of the objects of the trust and in furtherance to produce, distribute and exhibit films.
k. To spread, propagate and enforce the study of truth non-violence, love and non possession and to impart, encourage and promote national unity and international peace and amity.
l. To practice and propagate the theory of equality among all human beings.
m. To provide accommodation, food, amenities and all other facilities to the devotees who have interests in the objects of the Trust.
n. To hold meetings of scholars and to conduct examinations for all students studying in classes conducted by the trust, and to award prizes and certificates in order of merits and also to create scholarships for the poor and deserving students. To create and manage endowments for the attainment of the objects of the Trust.
o. To print, publish, edit, issue and exhibit any books journals, magazines, periodicals, paper pamphlets, advertisements reports and lectures and other reading matter for the diffusion of useful knowledge and for the promotion benefit and advancement of the educational, cultural, social, scientific, technical, non- technical and charitable ideals of the trust.
p. To impart, encourage and promote communal and social harmony and brotherhood among public irrespective of caste and creed and to organise and conduct conference for this.7
ITA 2091&2092/Mds/2011 q. To establish, maintain and co-ordinate between institutions and persons in universe working on the basis of Sathya (Truth) and Ahimsa (non-violence).
The above objects shallbe independent of each other and the founder trustee shall apply the funds of the Trust in carrying out all or any of the aforesaid objects of the trust as he may think fit.
6. a. This trust is a public charitable trust, the benefits of which shall ensure to the public without distinction of caste, creed, religion, sex etc., b. No activities of the trust will be carried outside India and the Trust shall not operate with profit motive at any point of time.
c. The Trust shall not carry out any activity which is in the nature of business and/or not consistent with the objects of the Trust as described in the deed.
7. The Trust shall be irrevocable and it shall be commenced from the date of its incorporation.
8. The funds and income of the trust shall be soley utilised towards the achievements of the objects and no portion of its shall be utilised for payment to trustees by way of profit, interest, dividends etc.,
9. In furtherance of the objects stated in para no.5 of this deed the board of trustees are empowered to the following.
i. To apply for and obtain assistance from the government and other organisation of national and international, financial institutions, companies, individuals, charitable trusts or societies or social welfare boards for developing all or any of the objects of the Trust. Ii. To establish own, run, erect, construct, manage, take or lease or otherwise acquire buildings, structures, apartments and other premises and to sell, mortgage, lease or let on hire such properties acquired as aforesaid. 8
ITA 2091&2092/Mds/2011 iii. To apply and use the funds for all or any of the objects of the Trust an/or to accumulate the surplus unapplied portion of income and invest the same, subject to the provisions of the income-tax act 1961 as amended from time to time, relating to accumulation of income and investment thereof. The funds of the Trust shall be invested in the modes specified under the provisions of the income-tax act, 1961 governing charitable trust. iv. To expand the programmes of the trust by purchasing/acquiring activities, rights and properties of charitable societies, trusts whose objects are similar to that of this trust being registered.
v. To conduct musical programmes, dramas and other entertainment programmes for augmenting funds to the trust.
10. The following persons shall constitute the Board of Trustees and they shall be designated as follows:-
01. Swamy Premananda :Managing Trustee
02. Divya Devi Mathaji : President.
03. Swamy Kamalananda : Secretary
04. Rukmani Devi Mathaji : Treasurer.
05. Dhamayanthi Mathaji : Board ember
06. T. Vivekanandan :Board Member 07 P.M. Mylvaganam :Board Member 08 Swamy Satchidanda :Board Member.
The aforesaid persons shall be the life trustees.
7. As it emanates from record, the assessee got approval for running a high School at village Melapachakudi, District Pudukottai from the Joint Director, Secondary School Education, Govt. of Tamilnadu which came on 27.7.1994. Since 9 ITA 2091&2092/Mds/2011 then till date, the school in question is being run by the assessee. It is claimed that the school is providing free education, food and accommodation to the children belonging to predominantly rural belt with the help of donations only.
8. Coming to the impugned registration, we notice that the assessee had filed the application under sec.12A of the Act before the CIT on 7.10,1994. During the pendency thereof, the assessee's founder trustee along with other trustees was arrested on 19.11.1994 and prosecuted for having subjected the girl inmates of the ashram run by him to sexual abuse and other heinous activities. The parties are unanimous in informing us that after the arrest, the founder trustee along with the other tainted trustees was awarded life imprisonment which has been maintained upto the hon'ble Apex court. It is to be seen from the case file at page 68 that their lordships came down heavily on the heinous conduct of the trustees in the judgment dated 05.4.2005 as under :-
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ITA 2091&2092/Mds/2011 "The facts of this case, as revealed by the prosecution, shocked the judicial conscience. It illustrate a classis example as to how the ...... The ashram whichis supposed to b God abode turned out to be devil's workshop. A-1 to whom the inmates of the Ashram regarded as God having the divine power turned out to be a monster. It is a classic case of betrayal of fatherly and divinely trust of the inmates of the Ashram girls who were mostly orphans and destitutes, brought from Srilanka........ The facts of the case also illustrate a classis example as to how a gamekeeper has become a poacher or a treasury guard has become a robber."
9. The assessee has also stated at the bar that the founder trustee accused died in the year 2007 while serving the sentence.
10. Since there was huge uproar in media after the arrest and prosecution of the trustees above said, as per CIT's order under challenge, he ordered the registration issue to be kept in abeyance. This position continued upto the year 2011 ie. on the one hand the assessee's school in question continued functioning whose record is available in the paper book before us by the name of Premananda High School. On the other hand, the registration matter did not attain finality. In the year 2011, the 11 ITA 2091&2092/Mds/2011 assessee approached the Hon'ble jurisdictional High Court (Madurai Bench) for appropriate directions to the CIT. The paper book indicates that the writ petition filed by the assessee was disposed of by their lordships after directing the CIT to proceed with the registration issue as per law.
11. In compliance thereof, the CIT took up the matter and sought all the details from the assessee including those pertaining to Swamy Premananda. It is not in dispute that the assessee provided all the information sought for. Even the history of litigation as well as the latest update of criminal proceedings were submitted before the CIT. What we notice from the impugned order is that firstly the CIT is of the view that the assessee trust had got caught in criminal proceedings (para 4.4), though that is not the case. There is no finding by the CIT nor is there any allegation even in the course of arguments that any school student run by the assessee has ever been subjected to the heinous offence of child abuse. Thereafter, in the order under challenge, predominantly being swayed by the 12 ITA 2091&2092/Mds/2011 criminal proceedings resulting into life sentence to the assessee's trustees, the applications in question stand rejected. The relevant findings read as under :-
"6. I am of the opinion that no further details are needed and also that no prior hearing before conclusion of proceedings is again required. The issue, as well as the matrix of the argument is not going to change much. The petitioner trust's core argument is that the activities of the trustee(s) are in his (their) individual capacity and that should not influence the decision regarding the trust's claim for recognition. Nothing new can be said other than representing the same in different ways. I therefore proceed to dispose of the claim for recognition considering the arguments made both in writing (detailed above) and orally during the discussions.
7. One of the objectives of the trust was running of an orphanage. In fact the trust came with orphans from Srilanka and expanded on that activity. Unfortunately it is the inmates of the very orphanage who were subjected to gross abuse and what the Supreme Court had called something which shocks the judicial conscience.
8. It was stated that while the activities of the trust would be impacted or influenced by the role played by the trustee in his capacity as a trustee, his personal affairs and conduct are wholly irrelevant to determine the nature and genuineness of the activities of the trust itself. Unfortunately, in the instant case, the conduct of the individual trustees had a bearing on the trust as their conduct (abuse) directly impinged on the so called beneficiaries of the trust. Unfortunately, the very so called "charitable activity'' of the trust provided the victims/ The same considered and was put to the trust in para 5 and 6 of the show cause letter.
9. A trust by definition is created with noble objectives and with the intention of doing public good. As the very name indicates the element of ''TRUST''is an essential ingredient for you believe that someone/somebody would do good. When that 13 ITA 2091&2092/Mds/2011 trust is betrayed, the soul is lost in the organization. It was this betrayal which was affirmed repeatedly at every judicial for a starting from Circle Court to the Hon'ble Supreme Court.
10. As mentioned in the show cause notice, conducting of certain charitable activities meet the requirement of form but not the spirit. Form an a mechanical ticking of various activities is not the only thing while considering granting registration of the trust. A grant of registration by the Income Tax Department u/s 12A and u/s 80G puts a stamp of approval by the Government on the trust as it tells the whole community and society at large that donations given to this trust are exempt and that its income is also exempt as it is doing good for the society. It is here that the criminal proceedings against the trustees connect them and vitiate the very trust that they created."
On the same analogy, the application under sec.80G of the Act has also been declined.
It is in this back drop of facts, the assessee has preferred the instant appeals.
12. After having heard both parties, in our view, the question which arises for our adjudication is as to whether because of heinous inhuman crimes committed by the founder and other trustees, the assessee can be declined registration or not under sec.12A and sec.80G of the Act. At the cost of repetition we deem it appropriate to again re-narrate the facts. 14
ITA 2091&2092/Mds/2011 The assessee trust has been created by a trust deed on 8.7.1994. In July, I got approval for running the school. On 7.10.1994 the application seeking registration under sec.12A of the Act was filed. On 19.11.1994, the trustees were arrested, prosecuted and in due course awarded life imprisonment for having abused sexually some of the inmates of the ashram (supra). The CIT nowhere even alleges that the school in question and ashram are the same institutions. There is no iota of evidence in the order under challenge that the activities of the assessee of providing free education, food and accommodation to the school children from 27.7.1994 till date has been discontinued or no charitable activity is performed. The record of the case suggests that the founder trustee along with other 'tainted' trustees ceased to be the members of the assessee's trust with effect from the year 1997 (para 52 of the paper book). In other words, the school is being run by the name of Premananda High School for the name sake only. In these peculiar circumstances, we are of the considered opinion that 15 ITA 2091&2092/Mds/2011 since the school is being run in the name of its founder trustee does not ipso facto convert it into an institution exploiting innocence of the children getting education therein. In this regard, we rely on the evidence produced by the assessee in the paper book at pages 74 to 191 qua the services offered by the school to its students for the past 19 years. We deem it appropriate to mention here that in our opinion, it is in the interest of providing education to the school children which has influenced the mind of the bench. Hence, taking exception to the wishful approach of the CIT in the order under challenge, we hold that an institution which is otherwise engaged in charitable activities duly proved from the evidence on record which has remained unrebutted, deserves to get benefits of registration under sec.12A and 80G. The same cannot be declined merely because once upon a time, its founder trustee etc had been accused of heinous crimes and that too, not related to the school in question. We reiterate that a registration either under sec.12A or 80G of the Act does not itself give rise to heinous 16 ITA 2091&2092/Mds/2011 crime as these are the benefits conferred by the Sovereign to encourage charitable activities for the benefit of the society at large.
13. Further, even a perusal of the charitable purpose defined under sec.2(15) of the Act does not envisage the terms and conditions sought to be imposed by the ld.CIT. By making reference to the said provision as well as 1st proviso introduced by the legislature in the Act, we hold that there cannot be any other condition except those expressly stated in the statute itself. In other words, once the legislature has itself restricted the nature of charitable purposes, our agreement with the reasons adopted by the learned CIT would amount to enlarging the scope of the proviso inserted in the statute with effect from 01.4.2009. Whilst holding so, we form our opinion on the settled law that a taxing statute has to be interpreted literally instead of liberally. On the similar lines, a proviso restricting the scope of charitable purposes defined under sec.2(15) of the Act also deserves to be interpreted strictly. Proceeding on this reasoning, we hold 17 ITA 2091&2092/Mds/2011 that the learned CIT has erred in rejecting the impugned application seeking registration under sec.12A of the Act filed by the assessee.
14. Coming to the assessee's application under sec.80G subject matter in ITA No.2092/Mds/2011, we hold that this is also accepted in view of our findings herein above in sec.12A proceedings.
14. Consequently, the appeals are allowed.
Order pronounced on Thursday, the 29th day of August 2013 at Chennai.
Sd/- sd/-
( Dr. O.K. NARAYANAN ) ( S.S. GODARA )
VICE PRESIDENT JUDICIAL MEMBER
Chennai,
Dated : 29th August 2013
Jls.
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Copy to:-
(1) Appellant
(2) Respondent
(3) CIT(A) Chennai
(4) CIT, Chennai
(5) D.R. (6) Guard file.